Investment Lifecycle and Strategies

CASE STUDY #3: AFTERPAY (ASX: APT) 2 WE PURCHASED AFTERPAY IN 2020, AT AN INITIAL PRICE OF $27 AUD. Thesis: We believed that Millennials and Gen-Z consumers would increasingly favor Buy-Now-Pay-Later services over traditional credit cards due to changing consumer preferences, and a strong generational preference to avoid traditional credit. Afterpay already had dominant market share and was highly profitable in its home market of Australia. We believed, based on conversations with merchants and consumers, that Afterpay's business would be successful in the US as well 1 – a market that's 10x larger than its home market. At the initial purchase price, the market was only ascribing value to the Australian business. Our research led us to believe that US merchant adoption would be even faster than in Australia, due to an "arms war" among Afterpay's traditionally "impulse" oriented categories of Fashion and Beauty. As more national brands signed onto Afterpay, the smaller brands were forced to adopt BNPL solutions quickly, else risk losing customers. Since Afterpay's profits are primarily derived from small merchants (5-6% take-rates) and national brands are break-even in exchange for building brand recognition, we thought the US business would reach profitability quicker than the market expected. US customers grew from 2M to 10M, and GMV from ~$1BN to $10BN over this period. In 2021, Afterpay was acquired by Block (formerly called Square) in an all-stock deal, equivalent to ~$138 AUD. We have publicly discussed Afterpay in our previous investor communications here: Afterpay Writeup, Q3 2020 Letter, 02 2021 Letter Share Price (AU$) $600.0 $500.0 $400.0 $300.0 $200.0 $100.0 $61.0 $0.0 2Q2020 AFTERPAY LELAL 4Q2020 $101.5 Share Price 2Q2021 $121.3 % of Total NAV 4Q2021 Shares Owned HAYDEN CAPITAL 21

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