TORTUGA CAPITAL, LLC
FORT MYERS, FLORIDA

Tortuga Capital is an Investment Adviser registered in the state of Florida. The firm offers two internally managed investment strategies through separately managed accounts. The firm seeks long-term capital appreciation for clients by identifying, purchasing, and patiently holding securities trading significantly below their intrinsic worth. Tortuga Capital is independently owned and operated and all investment research is conducted in-house. Matthew DePaola is a long-time practitioner of the deep value investing approach. He cofounded Tortuga Capital after having concluded that few institutional money managers follow a true value investing approach. Matthew has broad experience in business finance and asset valuation, and has engineered the leveraged purchase and recapitalization of several small businesses. Matthew has also spent several years as a financial analyst in the residential real estate development field. He earned his MBA from the University of Florida’s Hough Graduate School of Business and holds a BS in Finance from Florida Gulf Coast University. Christopher DePaola oversees the firm’s regulatory compliance and business operations and serves as an analyst on special assignments. Prior to cofounding Tortuga Capital, Christopher had overseen the physical improvements, financial recapitalization, and repositioning efforts for a small real estate partnership. Christopher has also overseen the operations for several small businesses. Earning his Juris Doctorate from the University of Florida’s Levin College of Law, Christopher also holds a BA in Political Science and Economics from the University of Florida and is a member of the Florida Bar. Financial advisers, or financial planners, work with clients to understand their goals and create financial plans based on those goals. Financial advisers and planners generally create financial plans for clients based on “asset allocation”, or the percentage of a client’s portfolio to be invested in a given asset class, such as stocks or bonds. For example, a financial adviser might recommend that an individual with a high risk tolerance and many years until retirement have the majority of her investment portfolio in stocks. Most financial advisers outsource the actual investment portion of their clients’ portfolios to mutual funds or other institutionally managed financial products. Value investing is an approach to security selection in which an investor purchases a security when the security’s price is substantially below the security’s underlying appraised business value and patiently waits until other market participants recognize the mispricing and force up the security’s price. Value investing is, thus, a long-term approach to investing. The difference between a security’s price and its appraised business value is referred to as the security’s “margin of safety”. The value investing approach was first formulated by Benjamin Graham and David Dodd in their 1934 work Security Analysis. This approach is followed by such famed investors as Warren Buffett, Seth Klarman, Carl Icahn, Bruce Berkowitz, Mason Hawkins, and Mohnish Pabrai, among others. How does Tortuga Capital define and calculate a security’s “intrinsic value”? We define a security’s intrinsic value based on the “private market value” of a company, or what we believe a sophisticated and informed buyer would pay for the entire business. We then allocate that value to the financial claim (security) being analyzed. In other words, we view ourselves as business owners when analyzing a security. We calculate intrinsic value primarily by discounting a company’s future free cash flows. We define free cash flow as the discretionary cash flow available to all capital providers after all expenditures have been made to maintain the business in its current state. This approach, referred to as the discounted cash flow approach, is based on the premise that an asset is worth the present value of the future cash benefits which it will generate over its life. We supplement the discounted cash flow approach by also analyzing a company’s net asset value and by viewing market valuations on similar companies. Business valuation is as much art as science, requiring many subjective inputs. We try to be very conservative in our assumptions, placing particular emphasis on downside scenarios. We deal with the inherent subjective nature of business valuation by using multiple valuation methods and performing rigorous scenario analysis. We also only invest in businesses whose economics we can thoroughly understand, shunning firms whose cash flows are too unpredictable or whose assets are unanalyzable. How does Tortuga Capital view and manage investment risk? Inherent in the modern finance view of risk is the assumption that security prices fully and appropriately reflect all available information. In other words, modern finance adherents view a security’s price changes as perfect recalibrations of value. We at Tortuga Capital highly refute this assumption. We have observed that often a security’s short-term price volatility is far in excess of changes in a company’s underlying fundamentals. In view of how we define risk, we seek to minimize risk by (1) always demanding a margin of safety, (2) diversifying among securities to eliminate any overexposure to a particular company or industry, (3) holding large amounts of cash in client portfolios when bargain prices are difficult to find, and (4) hedging when appropriate. Can I invest with Tortuga Capital if I currently work with a financial adviser or financial planner? We recommend that a client work with a financial adviser or financial planner on certain aspects of their financial life, since we do not provide many of the services which such professionals provide. However, we prefer to work directly with clients with regards to any capital invested with us. It is important for a client to understand that true value investing has very little institutional representation. As such, it is likely that most financial advisers and financial planners will have different views of security selection and portfolio management than we do. We believe it should be up to the client to determine if our approach is right for them.