“The problem is to distinguish between being contrary to a misguided consensus and merely
being stubborn.” - Robert Arnott and Robert Lovell Jr.

The following table represents Logos LP’s 2017 total unlevered net return compared a basket of relevant indexes. The current price per unit (as of January 9th) is $26.19 compared to $19.15 as of December 30th, 2016:

At 21.36% compounded annually, the fund is about 37% above the rate of the S&P 500 ($CAD). $100 invested in the fund on March 26th, 2014 (at $12.52 per unit) would be worth $209.19 as of the date of this letter. However, we caution that our current rate of performance will be difficult to maintain over the long-term. We are likely closer to the end of this aging bull market than we are to its middle and thus we don't expect to see the same returns in 2018 that we saw in 2017.

As we re-set expectations in an environment suggesting lower returns we will do the things we have always done remaining largely fully invested employing more caution than usual especially with regards to price and we will work diligently to find special low-risk, high-uncertainty/high return opportunities which typically lie “off the beaten track” as multiples continue to stretch relative to historical averages.

At present we are finding a relatively small investable universe vs. previous years yet we see opportunity in underfollowed and unloved stocks under $3bn in market cap which generates above-average profits and returns relative to their peer and industry groups.

As such, we will be looking to continue rotating out of certain peripheral positions that have risen significantly in 2017 reaching our estimated intrinsic values in order to allocate into companies that have high rates of operating income growth, declining capex spending, below average forward PE ratios and low (or zero) levels of debt that have underperformed in 2017.


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