Attached files
| file | filename |
|---|---|
| EX-32.1 - EXHIBIT 31.1 - Endeavor Emerging Opportunities Fund, LP | exh31_1.htm |
| EXCEL - IDEA: XBRL DOCUMENT - Endeavor Emerging Opportunities Fund, LP | Financial_Report.xls |
| EX-32.1 - EXHIBIT 32.1 - Endeavor Emerging Opportunities Fund, LP | exh32_1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2013
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ____ TO___
Commission File No. 000-53118
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
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Delaware
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20-8870560
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(a Delaware Partnership)
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(I.R.S. Employer
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Identification No.)
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4647 Saucon Creek Road, Suite 205
Center Valley, PA 18034
(610) 366-3922
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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YES
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X
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NO ____
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer______
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Accelerated Filer ______
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Non-accelerated filer ______
(do not check if a Smaller reporting company)
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Smaller Reporting Company X
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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YES
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____
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NO X
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BRIDGETON GLOBAL DIRECTIONAL FUND, LP
INDEX TO FORM 10-Q
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PART I – FINANCIAL INFORMATION
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||
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Page
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||
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Item 1.
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Financial Statements
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1 |
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Statements of Financial Condition
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1 | |
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Condensed Schedules of Investments
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2 | |
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Statements of Income (Loss)
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4 | |
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Statements of Changes in Partners’ Capital (Net Asset Value)
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5 | |
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Notes to Financial Statements
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7 | |
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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20 |
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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22 |
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Item 4.
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Controls and Procedures
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22 |
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PART II – OTHER INFORMATION
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||
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Item 1.
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Legal Proceedings
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23 |
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Item 1A.
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Risk Factors
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23 |
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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23 |
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Item 3.
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Defaults Upon Senior Securities
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23 |
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Item 4.
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Mine Safety Disclosures
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23 |
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Item 5.
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Other Information
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23 |
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Item 6.
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Exhibits
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23 |
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PART I - FINANCIAL INFORMATION
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||||||||
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Item 1. Financial Statements
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||||||||
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BRIDGETON GLOBAL DIRECTIONAL FUND, LP
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||||||||
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STATEMENTS OF FINANCIAL CONDITION
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||||||||
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As of March 31, 2013 (Unaudited) and December 31, 2012
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||||||||
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_______________
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||||||||
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March 31,
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December 31,
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|||||||
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ASSETS
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2013
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2012
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||||||
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Equity in Trading Accounts:
|
||||||||
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Due from brokers (including margin deposits of
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||||||||
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$658,131 for 2013 and $781,836 for 2012)
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$ | 1,340,027 | 1,733,762 | |||||
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Net unrealized (losses) on open futures contracts
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(129,808 | ) | (182,929 | ) | ||||
| 1,210,219 | 1,550,833 | |||||||
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Cash and cash equivalents
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2,677,917 | 3,564,407 | ||||||
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Due from General Partner
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8,909 | 11,011 | ||||||
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TOTAL ASSETS
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$ | 3,897,045 | $ | 5,126,251 | ||||
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LIABILITIES AND PARTNERS’ CAPITAL (NET ASSET VALUE)
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||||||||
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LIABILITIES
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||||||||
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Redemptions payable
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$ | 80,835 | $ | 656,091 | ||||
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Other accrued expenses
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37,452 | 48,182 | ||||||
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Accrued management fees
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20,422 | 26,916 | ||||||
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TOTAL LIABILITIES
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138,709 | 731,189 | ||||||
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PARTNERS’ CAPITAL (NET ASSET VALUE)
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||||||||
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Limited partners – Investor Class (2,383.0389 and 2,881.6996
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||||||||
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fully redeemable units at March 31, 2013 and
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||||||||
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December 31, 2012, respectively)
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1,845,680 | 2,197,738 | ||||||
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Limited partners – Institutional Class – Series 1 (1,027.2286 and 1,023.4918
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||||||||
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fully redeemable units at March 31, 2013 and
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||||||||
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December 31, 2012, respectively)
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1,000,525 | 974,083 | ||||||
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Limited partners – Institutional Class – Series 2 (1,003.7914 and 1,374.2865
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||||||||
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fully redeemable units at March 31, 2013 and
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||||||||
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December 31, 2012, respectively)
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910,580 | 1,221,733 | ||||||
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General partner – Institutional Class – Series 3 (0.4655 and 0.4633
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||||||||
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fully redeemable units at March 31, 2013 and
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||||||||
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December 31, 2012, respectively)
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1,551 | 1,508 | ||||||
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TOTAL PARTNERS’ CAPITAL (NET ASSET VALUE)
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3,758,336 | 4,395,062 | ||||||
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TOTAL LIABILITIES AND PARTNERS’ CAPITAL (NET ASSET VALUE)
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$ | 3,897,045 | $ | 5,126,251 | ||||
See Notes to Financial Statements.
1
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BRIDGETON GLOBAL DIRECTIONAL FUND, LP
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|||||||||||||
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CONDENSED SCHEDULE OF INVESTMENTS
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|||||||||||||
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As of March 31, 2013 (Unaudited)
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|||||||||||||
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_______________
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|||||||||||||
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|||||||||||||
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LONG FUTURES CONTRACTS
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|||||||||||||
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Range of
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Unrealized | % of | |||||||||||
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No. of
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Expiration
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Gain |
Partners'
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||||||||||
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Contracts
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Dates
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Future Industry Sector
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(Loss), Net
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Capital*
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|||||||||
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Commodities
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$ | (18,815 | ) | (0.501 | )% | ||||||||
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Currencies
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(1,130 | ) | (0.030 | )% | |||||||||
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Energy
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61,996 | 1.650 | % | ||||||||||
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Financials
|
52,314 | 1.392 | % | ||||||||||
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Metals
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|||||||||||||
| 75 |
6/19/13 - 3/19/14
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London Aluminum
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(337,514 | ) | (8.980 | )% | |||||||
| 19 |
6/19/13 - 6/18/14
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London Copper
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(189,163 | ) | (5.033 | )% | |||||||
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Other Metals
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(55,346 | ) | (1.473 | )% | |||||||||
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Stock indices
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1,551 | 0.041 | % | ||||||||||
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Total long futures contracts
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(486,107 | ) | (12.934 | )% | |||||||||
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SHORT FUTURES CONTRACTS
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|||||||||||||
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Range of
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Unrealized | % of | |||||||||||
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No of
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Expiration
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Gain |
Partners'
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||||||||||
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Contracts
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Dates
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Future Industry Sector
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(Loss), Net
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Capital*
|
|||||||||
|
Commodities
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$ | 12,492 | 0.332 | % | |||||||||
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Currencies
|
(6,550 | ) | (0.174 | )% | |||||||||
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Energy
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(93,366 | ) | (2.484 | )% | |||||||||
|
Financials
|
(6,333 | ) | (0.168 | )% | |||||||||
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Metals
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|||||||||||||
| 82 |
6/19/13 - 6/18/14
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London Aluminum
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247,904 | 6.596 | % | ||||||||
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Other Metals
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203,639 | 5.418 | % | ||||||||||
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Stock indices
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(1,487 | ) | (0.040 | )% | |||||||||
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Total short futures contracts
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356,299 | 9.480 | % | ||||||||||
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Total futures contracts
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$ | (129,808 | ) | (3.454 | )% | ||||||||
*Except for London Copper and London Aluminum, no single contract’s value exceeds 5% of Partners’ Capital
See Notes to Financial Statements.
2
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
CONDENSED SCHEDULES OF INVESTMENTS (CONTINUED)
As of December 31, 2012
_______________
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LONG FUTURES CONTRACTS
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|||||||||
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Unrealized
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% of
|
||||||||
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Gain
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Partners’
|
||||||||
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Futures Industry Sector
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(Loss), Net
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Capital*
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|||||||
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Commodities
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$ | (16,935 | ) | (0.385 | )% | ||||
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Currencies
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32,169 | 0.732 | % | ||||||
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Energy
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35,283 | 0.803 | % | ||||||
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Financials
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2,644 | 0.060 | % | ||||||
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Metals
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(121,701 | ) | (2.769 | )% | |||||
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Stock indices
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19,912 | 0.453 | % | ||||||
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Total long futures contracts
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$ | (48,628 | ) | (1.106 | )% | ||||
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SHORT FUTURES CONTRACTS
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|||||||||
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Unrealized
|
% of
|
||||||||
|
Gain
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Partners’
|
||||||||
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Futures Industry Sector
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(Loss), Net
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Capital*
|
|||||||
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Commodities
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$ | 8,972 | 0.204 | % | |||||
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Currencies
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10,706 | 0.244 | % | ||||||
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Energy
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(37,322 | ) | (0.849 | )% | |||||
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Financials
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(2,382 | ) | (0.054 | )% | |||||
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Metals
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(103,523 | ) | (2.356 | )% | |||||
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Stock indices
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(10,752 | ) | (0.245 | )% | |||||
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Total short futures contracts
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$ | (134,301 | ) | (3.056 | )% | ||||
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Total futures contracts
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$ | (182,929 | ) | (4.162 | )% | ||||
|
*No single contract’s value exceeds 5% of Partners’ Capital
|
|||||||||
See Notes to Financial Statements.
3
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
STATEMENTS OF INCOME (LOSS)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
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Three Months Ended
|
||||||||
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March 31,
|
||||||||
|
2013
|
2012
|
|||||||
|
NET INVESTMENT (LOSS)
|
||||||||
|
Income:
|
||||||||
|
Interest income
|
$ | 440 | $ | 2,369 | ||||
|
Expenses:
|
||||||||
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Brokerage commissions
|
40,352 | 132,002 | ||||||
|
Management fees
|
28,971 | 78,879 | ||||||
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Professional fees
|
19,563 | 26,142 | ||||||
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Accounting, administrative fees and other expenses
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10,534 | 32,130 | ||||||
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Total expenses
|
99,420 | 269,153 | ||||||
|
Net investment (loss)
|
(98,980 | ) | (266,784 | ) | ||||
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TRADING PROFITS (LOSSES)
|
||||||||
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Profits (losses) on trading of commodity futures and
|
||||||||
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forward currency contracts:
|
||||||||
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Net realized gains on closed contracts
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137,891 | 420,226 | ||||||
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Change in net unrealized gains (losses) on open contracts
|
53,121 | (474,841 | ) | |||||
|
Net trading profits (losses)
|
191,012 | (54,615 | ) | |||||
|
NET INCOME (LOSS)
|
$ | 92,032 | $ | (321,399 | ) | |||
|
NET INCOME (LOSS) PER UNIT
|
||||||||
|
(based on weighted average number of units
|
||||||||
|
outstanding during the period)
|
||||||||
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Investor Class
|
$ | 15.57 | $ | (31.49 | ) | |||
|
Institutional Class – Series 1
|
$ | 22.24 | $ | (26.47 | ) | |||
|
Institutional Class – Series 2
|
$ | 24.99 | $ | (30.09 | ) | |||
|
Institutional Class – General Partner – Series 3
|
$ | 76.04 | $ | (91.53 | ) | |||
See Notes to Financial Statements.
4
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (NET ASSET VALUE)
For the Three Months Ended March 31, 2013
(Unaudited)
_______________
|
Partners' Capital (Net Asset Value)
|
||||||||||||||||||||||||||||||||||||
|
Institutional Class
|
||||||||||||||||||||||||||||||||||||
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Series 3
|
||||||||||||||||||||||||||||||||||||
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Investor Class
|
Series 1
|
Series 2
|
General Partner
|
|||||||||||||||||||||||||||||||||
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Units
|
Amount
|
Units
|
Amount
|
Units
|
Amount
|
Units
|
Amount
|
Total
|
||||||||||||||||||||||||||||
|
Balances at
January 1, 2013 |
2,881.6996 | $ | 2,197,738 | 1,023.4918 | $ | 974,083 | 1,374.2865 | $ | 1,221,733 | 0.4633 | $ | 1,508 | $ | 4,395,062 | ||||||||||||||||||||||
|
Additions
|
- | - | 3.7368 | 3,629 | - | - | 0.0022 | 8 | 3,637 | |||||||||||||||||||||||||||
|
Redemptions
|
(498.6607 | ) | (392,239 | ) | - | - | (370.4951 | ) | (340,156 | ) | - | - | (732,395 | ) | ||||||||||||||||||||||
|
Net income
|
- | 40,181 | - | 22,813 | - | 29,003 | - | 35 | 92,032 | |||||||||||||||||||||||||||
|
Balances at
March 31, 2013
|
2,383.0389 | $ | 1,845,680 | 1,027.2286 | $ | 1,000,525 | 1,003.7914 | $ | 910,580 | 0.4655 | $ | 1,551 | $ | 3,758,336 | ||||||||||||||||||||||
|
Net Asset Value Per Unit
|
||||||||||||||||||||||||||||||||||||
|
Institutional Class
|
||||||||||||||||||||||||||||||||||||
|
Series 3
|
||||||||||||||||||||||||||||||||||||
| Investor Class | Series 1 | Series 2 | General Partner | |||||||||||||||||||||||||||||||||
|
January 1, 2013
|
$ | 762.65 | $ | 951.73 | $ | 888.89 | $ | 3,254.91 | ||||||||||||||||||||||||||||
|
March 31, 2013
|
$ | 774.51 | $ | 974.00 | $ | 907.14 | $ | 3,331.90 | ||||||||||||||||||||||||||||
See Notes to Financial Statements.
5
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (NET ASSET VALUE) (CONTINUED)
For the Three Months Ended March 31, 2012
(Unaudited)
_______________
|
Partners' Capital (Net Asset Value)
|
||||||||||||||||||||||||||||||||||||
|
Institutional Class
|
||||||||||||||||||||||||||||||||||||
|
Series 3
|
||||||||||||||||||||||||||||||||||||
|
Investor Class
|
Series 1
|
Series 2
|
General Partner
|
|||||||||||||||||||||||||||||||||
|
Units
|
Amount
|
Units
|
Amount
|
Units
|
Amount
|
Units
|
Amount
|
Total
|
||||||||||||||||||||||||||||
|
Balances at
January 1, 2012 |
8,872.8542 | $ | 8,185,420 | 1,100.3619 | $ | 1,226,979 | 3,047.6238 | $ | 3,208,675 | 0.4504 | $ | 1,718 | $ | 12,622,792 | ||||||||||||||||||||||
|
Additions
|
93.1338 | 85,000 | 17.8215 | 19,814 | 47.8306 | 50,000 | 0.0038 | 14 | 154,828 | |||||||||||||||||||||||||||
|
Transfers
|
(66.7673 | ) | (60,937 | ) | - | - | 58.2958 | 60,937 | - | - | - | |||||||||||||||||||||||||
|
Redemptions
|
(4,692.8985 | ) | (4,245,008 | ) | (36.2204 | ) | (40,240 | ) | (616.4527 | ) | (637,180 | ) | - | - | (4,922,428 | ) | ||||||||||||||||||||
|
Net (loss)
|
- | (209,698 | ) | - | (29,022 | ) | - | (82,638 | ) | - | (41 | ) | (321,399 | ) | ||||||||||||||||||||||
|
Balances at
March 31, 2012 |
4,206.3222 | $ | 3,754,777 | 1,081.9630 | $ | 1,177,531 | 2,537.2975 | $ | 2,599,794 | 0.4542 | $ | 1,691 | $ | 7,533,793 | ||||||||||||||||||||||
|
Net Asset Value Per Unit
|
||||||||||||||||||||||||||||||||||||
|
Institutional Class
|
||||||||||||||||||||||||||||||||||||
|
Series 3
|
||||||||||||||||||||||||||||||||||||
|
Investor Class
|
Series 1
|
Series 2
|
General Partner
|
|||||||||||||||||||||||||||||||||
|
January 1, 2012
|
$ | 922.52 | $ | 1,115.07 | $ | 1,052.84 | $ | 3,814.39 | ||||||||||||||||||||||||||||
|
March 31, 2012
|
$ | 892.65 | $ | 1,088.33 | $ | 1,024.63 | $ | 3,723.03 | ||||||||||||||||||||||||||||
See Notes to Financial Statements.
6
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
1. BASIS OF PRESENTATION
The interim financial statements of Bridgeton Global Directional Fund, LP (formerly RFMC Global Directional Fund, LP) (the “Partnership”), included herein, have been prepared by us without audit according to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and Rule 8-03 of Regulation S-X may be omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC. The Partnership follows the same accounting policies in the preparation of interim reports as set forth in the annual report. In the opinion of management, the financial statements reflect all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the financial position, results of operations and changes in partners’ capital for the interim periods presented. The results of operations for the three months ended March 31, 2013 and 2012 are not necessarily indicative of the results to be expected for a full year or for any other period.
2. PARTNERSHIP ORGANIZATION
The Partnership, a Delaware limited partnership, was organized on March 19, 2007 and commenced trading operations on August 1, 2007. The Partnership’s business is to trade, buy, sell or otherwise acquire, hold or dispose of commodity futures contracts, options on physical commodities and on commodity futures contracts, forward contracts, and instruments that may be subject of a futures contract, including equities, indices and sectors ("Commodity Interests"), and any rights pertaining thereto and to engage in all activities incident thereto. The Partnership may also invest in entities (including without limitation other partnerships, separate managed accounts, exchange traded funds or other types of funds) that primarily trade in exchange traded securities, options on exchange traded securities, exchange traded funds, or Commodity Interests. The objective of the Partnership is the appreciation of its assets through speculative trading.
From the Partnership’s start until February 1, 2011, Ruvane Fund Management Corporation, a Delaware corporation (“Ruvane”, or the "General Partner" for periods prior to March 1, 2011), was the sole general partner of the Partnership. From that date until March 1, 2011, Bridgeton Fund Management, LLC (“Bridgeton”, or the "General Partner" for periods on or after March 1, 2011) was a co-general partner of the Partnership with Ruvane. Effective March 1, 2011, Bridgeton is the sole general partner of the Partnership. The General Partner of the Partnership is registered as a Commodity Pool Operator and a Commodity Trading Advisor with the Commodity Futures Trading Commission (CFTC). The General Partner is required by the Limited Partnership Agreement, as amended and restated, (the “Agreement”) to contribute $1,000 to the Partnership.
In accordance with the Agreement, the Partnership offers limited partnership interests through a private offering pursuant to Regulation D as adopted under section 4(2) of the Securities Act of 1933, as amended. The Partnership will offer limited partnership interests up to an aggregate of $100,000,000; provided that the General Partner may increase the amount of interests that will be offered in increments of $10,000,000, after notice to the limited partners.
The Partnership offers two classes of limited partnership interests; the Institutional Class and the Investor Class. Commission charges, General Partner management fees and incentive allocations to the General Partner will differ between Classes and/or Series, but in all other respects the Institutional Class interests and the Investor Class interests will be identical. The Institutional Class and Investor Class interests will also be traded pursuant to the same trading program and at the same Trading Level (as defined in the Confidential Offering Memorandum).
7
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
2. PARTNERSHIP ORGANIZATION (CONTINUED)
The General Partner has selected Welton Investment Corporation (the “Advisor”) as the Partnership’s trading advisor. All of the Partnership’s assets will initially be traded pursuant to the Advisor’s Global Directional Portfolio, which follows a proprietary quantitative trading strategy. The General Partner, in the future, may allocate the Partnership’s assets to other trading strategies and investment programs.
The Partnership shall end upon the withdrawal, insolvency or dissolution of the General Partner, or a decline of greater than fifty percent of the net assets of the Partnership (as defined in the Agreement), or the occurrence of any event which shall make it unlawful for the existence of the Partnership to be continued.
3. SIGNIFICANT ACCOUNTING POLICIES
|
|
A.
|
Method of Reporting
|
|
|
The Partnership’s financial statements are prepared in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income (loss) and expenses during the reporting period. Actual results could differ from these estimates.
|
|
|
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), referred to as ASC or the Codification, is the single source of U.S. GAAP.
|
|
|
The Partnership has elected not to provide a statement of cash flows as permitted under ASC Topic 230, Statement of Cash Flows.
|
|
|
B.
|
Cash and Cash Equivalents
|
|
|
The Partnership has defined cash and cash equivalents as cash and short-term, highly liquid investments with maturities of three months or less when acquired. Money market mutual funds, which are included in cash equivalents, are classified as Level 1 fair value estimates (unadjusted quoted prices in active markets for identical assets) under the fair value hierarchy provisions as described in ASC Topic 820, Fair Value Measurements and Disclosures. At March 31, 2013 and December 31, 2012, the Partnership had investments in money market mutual funds of $2,016,020 and $2,965,547, respectively. Interest received on cash deposits and dividends received from money market mutual funds are included as interest income and recognized on an accrual basis.
|
|
|
C.
|
Due from Brokers
|
|
|
Due from brokers represents deposits required to meet margin requirements and excess funds not required for margin. Due from brokers at March 31, 2013 and December 31, 2012 consisted of cash on deposit with brokers of $1,340,027 and $1,733,762, respectively, including cash on deposit with a forward currency dealer of $0 and $417,416, respectively. The Partnership is subject to credit risk to the extent any broker or forward currency dealer with whom the Partnership conducts business is unable to deliver cash balances or securities, or clear securities transactions on the Partnership’s behalf. The General Partner monitors the financial condition of the brokers and forward currency dealer with which the Partnership conducts business and believes that the likelihood of loss under the aforementioned circumstances is remote.
|
8
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
D.
|
Investments in Futures and Forward Currency Contracts
|
|
|
Investments in futures and forward currency contracts are recorded on the trade date and open contracts are reported in the financial statements at their fair value on the last business day of the reporting period, based on market prices. The value of futures (exchange-traded) contracts is determined by the various futures exchanges, and reflects the settlement price for each contract as of the close of the last business day of the reporting period. Accordingly, such contracts are classified as Level 1 fair value estimates under the fair value hierarchy as described within ASC Topic 820, Fair Value Measurements and Disclosures. The fair value of forward currency (non-exchange traded) contracts is determined based on the interpolation of mid spot rates and forward points, as provided by a leading data provider. Such valuation technique for forward currency contracts represents both a market approach and an income approach to fair value measurements, and accordingly, forward currency contracts are categorized as Level 2 fair value estimates under ASC Topic 820.
|
Gains or losses are realized when contracts are liquidated, on a first-in-first-out basis. Realized gains are netted with realized losses for financial reporting purposes and shown under the caption “Net realized gains on closed contracts” in the Statements of Income (Loss).
As each broker has the individual right of offset, the Partnership presents the aggregate net unrealized gains with a broker as “Net unrealized gains on open contracts” and the aggregate net unrealized losses with a broker as “Net unrealized (losses) on open contracts” in the Statements of Financial Condition. The net unrealized gains on open contracts from one broker are not offset against net unrealized losses on open contracts from another broker in the Statements of Financial Condition. The unrealized gains or losses on open contracts is the difference between contract trade price and quoted market price.
Any change in net unrealized gain or loss from the preceding period is reported in the Statements of Income (Loss) under the caption “Change in net unrealized gains (losses) on open contracts.”
9
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
E.
|
Brokerage Commissions
|
|
|
Investor Class interests pay the General Partner a monthly flat-rate brokerage commission of up to approximately 0.4167% of the net asset value of such interests as of the beginning of each month (an annual rate of 5.00%). For the three months ended March 31, 2012, the General Partner was paid monthly brokerage commissions from the Investor Class interests at an annual rate of 6.00%. The General Partner will pay from this amount up to 3% per annum to properly registered selling agents as compensation for their ongoing services to the Partnership. To the extent the General Partner pays less than 3% to a selling agent with respect to any limited partnership interests sold by such selling agent, the brokerage commission charged with respect to those limited partnership interests will be reduced accordingly. A separate series of Investor Class interests will be established for differing brokerage commission rates charged. During the three months ended March 31, 2013 and 2012, all Investor Class interests were charged a flat rate brokerage commission equal to an annual rate of 5.00% and 6.00%, respectively.
|
|
|
During the three months ended March 31, 2013 and 2012, Institutional Class interests pay the General Partner a monthly flat-rate brokerage commission of 0.25% and 0.33% (3.00% and 4.00% per annum), respectively, of the net asset value of such interests as of the beginning of each month.
|
|
|
In addition to any applicable selling agent fees, the General Partner will also pay from its brokerage commission all floor brokerage, exchange, clearing and NFA fees with respect to the Partnership’s trading, but the Partnership will pay all other trading execution costs, including give-up charges and service fees. Actual trading commissions incurred by the Partnership and paid out of the General Partner's brokerage commission totaled $11,302 and $16,510 for the three months ended March 31, 2013 and 2012, respectively. Execution costs paid directly by the Partnership totaled $0 and $10 for the three months ended March 31, 2013 and 2012, respectively. Approximately 35% to 45% of actual trading commissions incurred by the Partnership are remitted to an Introducing Broker affiliated with Bridgeton.
|
|
|
Commissions and execution costs charged to each Class or Series were as follows:
|
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Investor Class | $ | 25,000 | $ | 91,358 | ||||
| Institutional Class – Series 1 | 7,469 | 12,136 | ||||||
| Institutional Class – Series 2 | 7,871 | 28,491 | ||||||
| Institutional Class – General Partner – Series 3 | 12 | 17 | ||||||
| Total | $ | 40,352 | $ | 132,002 | ||||
|
|
As of March 31, 2013 and December 31, 2012, $7,654 and $9,677, respectively, was due from the General Partner for reimbursement on broker commissions advanced by the Partnership.
|
10
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
F.
|
Allocation of Income (Loss)
|
|
|
Net realized and unrealized trading profits and losses, interest income and other operating income and expenses, prior to flat-rate brokerage commissions, management fees and incentive allocations, are allocated to the partners monthly in proportion to their capital account balances, as defined in the Agreement. Each partner is then charged its applicable Class and/or Series flat-rate brokerage commission, management fees and incentive allocations.
|
|
|
G.
|
Incentive Allocation
|
|
|
The General Partner is entitled to a quarterly incentive allocation equal to 20% of New Profits (as defined in the Confidential Offering Memorandum), if any. The term “New Profits” for the purpose of calculating the General Partner's incentive allocation only, is defined as the excess (if any) of (A) the net asset value of the Partnership as of the last day of any calendar quarter (before deduction of incentive allocations made or accrued for such quarter), over (B) the net asset value of the Partnership as of the last day of the most recent quarter for which an incentive allocation was paid or payable (after deduction of such incentive allocation). In computing New Profits, the difference between (A) and (B) above shall be (i) increased by the amount of any distributions or redemptions paid or accrued by the Partnership as of or subsequent to the date in (B) through the date in (A), (ii) adjusted (either decreased or increased, as the case may be) to reflect the amount of any additional allocations or negative reallocations of Partnership assets from the date in (B) to the last day of the quarter as of which the current incentive allocation calculation is made, and (iii) increased by the amount of any losses attributable to redemptions. For the three months ended March 31, 2013 and 2012, the General Partner earned no incentive allocations.
|
|
|
The General Partner will pay three-fourths of any incentive allocation it receives to the Advisor, and the General Partner may distribute a portion of its share of the incentive allocation to properly registered selling agents as compensation for their ongoing services to the Partnership.
|
|
|
H.
|
Management Fees
|
|
|
Investor Class and Institutional Class – Series 2 interests pay the General Partner a quarterly management fee equal to ¼ of 1% (1% annually) of the net assets of the Partnership (as defined in the Agreement) as of the beginning of each calendar quarter before deducting accrued ordinary legal, accounting and auditing fees and before any incentive allocation to the General Partner. Institutional Class Series 1 and Series 3 interests are not assessed a management fee by the General Partner. Management fees earned by the General Partner were as follows:
|
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Investor Class | $ | 5,494 | $ | 20,463 | ||||
| Institutional Class – Series 2 | 3,054 | 8,097 | ||||||
| Total | $ | 8,548 | $ | 28,560 | ||||
|
|
As of March 31, 2013 and December 31, 2012, no management fees were due to the General Partner.
|
11
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
H.
|
Management Fees (Continued)
|
|
|
In addition to the management fee paid to the General Partner, the Advisor also assesses each Class and Series of interests a management fee equal to 1/12 of 2% (2% per year) of the month-end Trading Level for each month during such quarter. Trading Level shall mean the Partnership’s net assets allocated to the Advisor times the leverage to be employed by the Advisor from time to time upon the discretion of the General Partner. Throughout the three months ended March 31, 2013 and 2012, no trading leverage was employed by the Advisor. The management fees earned by the Advisor were as follows:
|
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Investor Class | $ | 10,095 | $ | 30,177 | ||||
| Institutional Class – Series 1 | 5,019 | 6,017 | ||||||
| Institutional Class – Series 2 | 5,301 | 14,116 | ||||||
| Institutional Class – General Partner – Series 3 | 8 | 9 | ||||||
| Total | $ | 20,423 | $ | 50,319 | ||||
|
|
As of March 31, 2013 and December 31, 2012, $20,423 and $26,916, respectively, was due to the Advisor for management fees.
|
|
|
I.
|
Administrative Expenses
|
|
|
The Partnership pays all legal, accounting, auditing, and other administrative and operating expenses and fees associated with the operation of the Partnership. The General Partner pays the continuous offering costs of the Partnership.
|
|
|
J.
|
Income Taxes
|
|
|
No provision for income taxes has been provided in the accompanying financial statements as each partner is individually liable for taxes, if any, on his or her share of the Partnership’s profits.
|
|
|
The Partnership applies the provisions of Codification Topic 740, Income Taxes, which prescribe the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity before being measured and recognized in the financial statements. This accounting standard requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s financial statements to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions with respect to tax at the Partnership level not deemed to meet the “more-likely-than-not” threshold would be recorded as an expense in the current period. The Partnership has elected an accounting policy to classify interest and penalties, if any, as interest expense. The General Partner has concluded there is no tax expense or interest expense related to uncertainties in income tax positions for the three months ended March 31, 2013 and 2012.
|
12
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
J.
|
Income Taxes (Continued)
|
|
|
The Partnership files U.S. federal and state tax returns. The 2010 through 2012 tax years generally remain subject to examination by U.S. federal and most state authorities.
|
|
|
K.
|
Subscriptions
|
|
|
Partnership units may be purchased on the first day of each month at the net asset value per unit determined on the last business day of the previous month. Partners’ contributions received in advance for subscriptions are recorded as “Prepaid subscriptions” in the Statements of Financial Condition.
|
|
|
L.
|
Redemptions
|
|
|
Limited partners may redeem some or all of their units at net asset value per unit as of the last business day of each month with at least ten days written notice to the General Partner.
|
|
|
M.
|
Foreign Currency Transactions
|
|
|
The Partnership’s functional currency is the U.S. dollar; however, it transacts business in currencies other than the U.S. dollar. Assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect at the date of the Statements of Financial Condition. Income and expense items denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect during the period. Gains and losses resulting from the translation to U.S. dollars are reported as a component of “Net Realized Gains on Closed Contracts” in the Statements of Income (Loss) and totaled $1,777 and $(27) for the three months ended March 31, 2013 and 2012, respectively.
|
|
|
N.
|
Recently Issued Accounting Pronouncements
|
|
|
In December 2011, the FASB issued Accounting Standards Update N0. 2011-11 (“ASU 2011-11”), entitled Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 enhances current disclosures about financial instruments and derivative instruments that are either offset on the statement of financial condition or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset on the statement of financial condition. Entities are required to provide both net and gross information for these assets and liabilities in order to facilitate comparability between financial statements prepared on the basis of U.S. GAAP and financial statements prepared in accordance with International Financial Reporting Standards. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
In January 2013, the FASB issued Accounting Standards Update No. 2013-01 ("ASU 2013-01"), entitled Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which highlights the scope of transactions that are subject to the disclosures about offsetting. The standard clarifies that ordinary trade receivables and payables are not in the scope of ASU 201l-l1, discussed above, but applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in Codification or subject to a master netting arrangement or similar agreement. The standard will enable users of financial statements to understand the effect that offsetting and related arrangements have on an entity's financial position. ASU 2013-01 is effective for annual reporting periods beginning on or after January l, 2013, and interim periods within those annual periods, with required disclosures, presented/retrospectively, for all comparative periods presented.
|
|
|
O.
|
Indemnifications
|
|
|
The Partnership has entered into agreements, which provide for the indemnifications against losses, costs, claims and liabilities arising from the performance of their individual obligations under such agreements, except for gross negligence or bad faith. The Partnership has had no prior claims or payments pursuant to these agreements. The Partnership’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Partnership that have not yet occurred. However, based on previous experience, the Partnership expects the risk of loss to be remote.
|
13
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
|
4.
|
FAIR VALUE
|
|
|
Fair value of an investment is the amount that would be received to sell the investment in an orderly transaction between market participants at the measurement date (i.e. the exit price).
|
|
|
The fair value hierarchy, as more fully described in ASC Topic 820, Fair Value Measurements and Disclosures, prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
|
|
|
Investments measured and reported at fair value are classified and disclosed in one of the following categories:
|
|
|
Level 1 – Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level 1 are publicly traded investments. As required by ASC Topic 820, Fair Value Measurements and Disclosures, the Partnership does not adjust the quoted price for these investments even in situations where the Partnership holds a large position and a sale could reasonably impact the quoted price.
|
|
|
Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in this category are investments valued using market data.
|
|
|
Level 3 – Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. Fair value for these investments are determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed. Investments that are included in this category generally are privately held debt and equity securities.
|
|
|
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The General Partner’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The Partnership recognizes transfers, if any, between fair value hierarchy levels at the beginning of the reporting period. During the three months ended March 31, 2013 and the year ended December 31, 2012, there were no transfers into or out of the fair value hierarchy levels.
|
14
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
|
4.
|
FAIR VALUE (CONTINUED)
|
The following table summarizes the valuation of the Partnership’s investments by the above fair value hierarchy levels. Fair value is presented on a gross basis even though certain assets and liabilities qualify for net presentation in the Statements of Financial Condition.
| As of March 31, 2013 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
| Futures contracts | $ | 641,685 | $ | 641,685 | N/A | N/A | ||||||||||
| Money market mutual funds | 2,016,020 | 2,016,020 | N/A | N/A | ||||||||||||
| Total investment assets | $ | 2,657,705 | $ | 2,657,705 | ||||||||||||
| Liabilities | ||||||||||||||||
| Futures contracts | $ | (771,493 | ) | $ | (771,493 | ) | N/A | N/A | ||||||||
|
Total investment liabilities
|
$ | (771,493 | ) | $ | (771,493 | ) | ||||||||||
| As of December 31, 2012 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
| Futures contracts | $ | 531,209 | $ | 531,209 | N/A | N/A | ||||||||||
| Money market mutual funds | 2,965,547 | 2,965,547 | N/A | N/A | ||||||||||||
| Total investment assets | $ | 3,496,756 | $ | 3,496,756 | ||||||||||||
| Liabilities | ||||||||||||||||
| Futures contracts | $ | (714,138 | ) | $ | (714,138 | ) | N/A | N/A | ||||||||
| Total investment liabilities | $ | (714,138 | ) | $ | (714,138 | ) | ||||||||||
15
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
|
5.
|
DERIVATIVE INSTRUMENTS
|
|
|
The Partnership engages in the speculative trading of forward currency contracts and futures contracts in currencies, financials, stock indices and a wide range of commodities, among others, (collectively, “derivatives”) for the purpose of achieving capital appreciation. Since the derivatives held or sold by the Partnership are for speculative trading purposes, the derivative instruments are not designated as hedging instruments as defined in ASC Topic 815, Derivatives and Hedging.
The Partnership's derivative contracts held at March 31, 2013 and December 31, 2012 are subject to master netting agreements with the Partnership's brokers. Under provisions of ASC Topic 815, Derivatives and Hedging, entities are required to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial condition. Investments in futures contracts are reported in the Statements of Financial Condition as “Net unrealized (losses) on open futures contracts.”
|
|
|
The fair value of the Partnership’s derivative contracts is presented below on a gross basis as an asset if in a gain position and a liability if in a loss position.
|
|
As of March 31, 2013
|
||||||||||||
|
Futures Contracts
|
Assets
|
Liabilities
|
Net
|
|||||||||
|
Commodities
|
$ | 24,801 | $ | (31,124 | ) | $ | (6,323 | ) | ||||
|
Currencies
|
8,220 | (15,900 | ) | (7,680 | ) | |||||||
|
Energy
|
63,205 | (94,575 | ) | (31,370 | ) | |||||||
|
Financials
|
53,619 | (7,638 | ) | 45,981 | ||||||||
|
Metals
|
461,144 | (591,624 | ) | (130,480 | ) | |||||||
|
Stock indices
|
30,696 | (30,632 | ) | 64 | ||||||||
|
Total derivatives contracts
|
$ | 641,685 | $ | (771,493 | ) | $ | (129,808 | ) | ||||
|
As of December 31, 2012
|
||||||||||||
|
Futures Contracts
|
Assets
|
Liabilities
|
Net
|
|||||||||
|
Commodities
|
$ | 16,030 | $ | (23,993 | ) | $ | (7,963 | ) | ||||
|
Currencies
|
69,056 | (26,181 | ) | 42,875 | ||||||||
|
Energy
|
46,889 | (48,928 | ) | (2,039 | ) | |||||||
|
Financials
|
15,951 | (15,689 | ) | 262 | ||||||||
|
Metals
|
357,552 | (582,776 | ) | (225,224 | ) | |||||||
|
Stock indices
|
25,731 | (16,571 | ) | 9,160 | ||||||||
|
Total derivatives contracts
|
$ | 531,209 | $ | (714,138 | ) | $ | (182,929 | ) | ||||
The Partnership's derivative asset and liability balances as shown above before and after the effects of offsetting, are presented in the Statements of Financial Condition as net unrealized losses on open futures contracts of $(129,808) and $(182,929) at March 31, 2013 and December 31, 2012, respectively.
Realized gains and losses, as well as any change in net unrealized gains or losses on open contracts from the preceding period, are recognized as part of the Partnership’s trading profits and losses in the Statements of Income (Loss).
16
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
5. DERIVATIVE INSTRUMENTS (CONTINUED)
|
|
The Partnership’s trading results and information related to volume of the Partnership’s derivative activity by market sector were as follows:
|
|
For the Three Months Ended March 31, 2013
|
||||||||||||||||
|
Net Realized
|
Change in
|
Net
|
Number of
|
|||||||||||||
|
Gains
|
Net Unrealized
|
Trading
|
Closed
|
|||||||||||||
|
Futures Contracts
|
(Losses)
|
Gains (Losses)
|
Profits (Losses)
|
Positions
|
||||||||||||
|
Commodities
|
$ | 17,553 | $ | 1,640 | $ | 19,193 | 310 | |||||||||
|
Currencies
|
98,153 | (50,555 | ) | 47,598 | 202 | |||||||||||
|
Energy
|
53,243 | (29,331 | ) | 23,912 | 196 | |||||||||||
|
Financials
|
(90,730 | ) | 45,719 | (45,011 | ) | 580 | ||||||||||
|
Metals
|
(87,981 | ) | 94,744 | 6,763 | 202 | |||||||||||
|
Stock indices
|
147,653 | (9,096 | ) | 138,557 | 574 | |||||||||||
|
Total gain from derivatives trading
|
$ | 137,891 | $ | 53,121 | $ | 191,012 | 2,064 | |||||||||
|
For the Three Months Ended March 31, 2012
|
||||||||||||||||
|
Net Realized
|
Change in
|
Net
|
Number of
|
|||||||||||||
|
Gains
|
Net Unrealized
|
Trading
|
Closed
|
|||||||||||||
|
Futures Contracts
|
(Losses)
|
Gains (Losses)
|
Profits (Losses)
|
Positions
|
||||||||||||
|
Commodities
|
$ | (56,378 | ) | $ | 109,829 | $ | 53,451 | 530 | ||||||||
|
Currencies
|
(61,293 | ) | (23,599 | ) | (84,892 | ) | 254 | |||||||||
|
Energy
|
416,349 | (30,401 | ) | 385,948 | 326 | |||||||||||
|
Financials
|
15,794 | (106,036 | ) | (90,242 | ) | 1,216 | ||||||||||
|
Metals
|
100,016 | (407,324 | ) | (307,308 | ) | 664 | ||||||||||
|
Stock indices
|
70,508 | (3,877 | ) | 66,631 | 506 | |||||||||||
|
Total futures contracts
|
484,996 | (461,408 | ) | 23,588 | 3,496 | |||||||||||
|
Notional Value
|
||||||||||||||||
|
of Positions
|
||||||||||||||||
|
Closed
|
||||||||||||||||
|
Forward currency contracts
|
(64,770 | ) | (13,433 | ) | (78,203 | ) | $ | 15,031,747 | ||||||||
|
Total gain (loss) from derivatives trading
|
$ | 420,226 | $ | (474,841 | ) | $ | (54,615 | ) | ||||||||
|
|
The number of contracts closed for futures contracts represents the number of contract half-turns during the three months ended March 31, 2013 and 2012. The notional value of contracts closed for forward currency contracts represents the U.S. dollar notional value of forward currency contracts closed during the three months ended March 31, 2012.
|
|
A.
|
Market Risk
|
|
|
The Partnership engages in the speculative trading of futures and forward currency contracts (“derivatives”). Derivative financial instruments involve varying degrees of off-balance sheet market risk whereby changes in the level of volatility of interest rates, foreign currency exchange rates or market values of the underlying financial instruments or commodities may result in cash settlements in excess of the amounts recognized in the Statements of Financial Condition. The Partnership’s exposure to market risk is directly influenced by a number of factors, including the volatility of the markets in which the financial instruments are traded and the liquidity of those markets.
|
17
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
5. DERIVATIVE INSTRUMENTS (CONTINUED)
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B.
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Fair Value
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The derivative instruments used in the Partnership’s trading activities are reported at fair value with the resulting unrealized gains (losses) recorded in the Statements of Financial Condition and the related trading profits (losses) reflected in “Trading Profits (Losses)” in the Statements of Income (Loss). Open contracts generally mature within 90 days; as of March 31, 2013 and December 31, 2012, the latest maturity dates for open contracts are June 2014 and March 2014, respectively.
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C.
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Credit Risk
Futures are contracts for delayed delivery of financial interests in which the seller agrees to make delivery at a specified future date of a specified financial instrument at a specified price or yield. Risk arises from changes in the fair value of the underlying instruments. The purchase and sale of futures contracts requires certain margin deposits with the brokers. Additional deposits may be necessary for any loss on contract fair value. The Commodity Exchange Act requires a broker to segregate all customer transactions and assets from such broker's proprietary activities. A customer's cash and other property (for example, U.S. Treasury bills) deposited with a broker are considered commingled with all other customer funds subject to the broker's segregation requirements. In the event of a broker's insolvency, recovery may be limited to a pro rata share of segregated funds available. It is possible that the recovered amount could be less than total cash and other property deposited with such brokers ('counterparties"). The Partnership’s counterparties with respect to the trading of futures contracts are major brokerage firms and banks located in the United States, or their foreign affiliates. Credit risk due to counterparty nonperformance associated with futures contracts is reflected in the cash on deposit with brokers and forward currency dealer and the unrealized gains on open contracts held by such counterparties, if any, included in Note 5. The Partnership also trades forward currency contracts in unregulated markets between principals and assumes the risk of loss from counterparty nonperformance.
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The Partnership has a substantial portion of its assets on deposit with brokers, forward currency dealers and other financial institutions in connection with its trading of derivative contracts and its cash management activities. Assets deposited with such brokers, dealers and other financial institutions in connection with the Partnership's trading of derivative contracts are partially restricted due to deposit or margin requirements. In the event of a financial institution's insolvency, recovery of the Partnership's assets on deposit may be limited to account insurance or other protection afforded such deposits.
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D.
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Risk Monitoring
Due to the speculative nature of the Partnership’s derivatives trading, the Partnership is subject to the risk of substantial losses from derivatives trading. The General Partner actively assesses, manages, and monitors risk exposure on derivatives on a contract basis, a market sector basis, and on an overall basis in accordance with established risk parameters. The Limited Partners bear the risk of loss only to the extent of the fair value of their respective investments and, in certain specific circumstances, distributions and redemptions received.
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18
BRIDGETON GLOBAL DIRECTIONAL FUND, LP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
_______________
6. FINANCIAL HIGLIGHTS
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The following information presents per unit operating performance data and other supplemental financial data for the three months ended March 31, 2013 and 2012. The information has been derived from information presented in the financial statements.
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Three Months Ended March 31, 2013
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||||||||||||
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Institutional
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Institutional
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|||||||||||
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Investor
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Class
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Class
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||||||||||
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Class
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Series - 1
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Series - 2
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Per Unit Operating Performance
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(for a Unit outstanding for the entire period)
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Net Asset Value, beginning of the period
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$ | 762.65 | $ | 951.73 | $ | 888.99 | ||||||
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Profit (loss) from operations
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Net investment (loss)
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(21.40 | ) | (19.38 | ) | (20.55 | ) | ||||||
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Net trading profit
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33.26 | 41.65 | 38.70 | |||||||||
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Net profit
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11.86 | 22.27 | 18.15 | |||||||||
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Net Asset Value, end of the period
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$ | 774.51 | $ | 974.00 | $ | 907.14 | ||||||
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Total Return(1)(3)
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1.56 | % | 2.34 | % | 2.04 | % | ||||||
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Supplemental Data
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Ratios to average net asset value
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Expenses(2)
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11.31 | % | 8.03 | % | 9.45 | % | ||||||
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Net investment (loss)(2)
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(11.26 | )% | (7.98 | )% | (9.40 | )% | ||||||
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Three Months Ended March 31, 2012
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||||||||||||
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Institutional
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Institutional
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|||||||||||
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Investor
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Class
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Class
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||||||||||
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Class
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Series - 1
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Series - 2
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||||||||||
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Per Unit Operating Performance
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||||||||||||
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(for a Unit outstanding for the entire period)
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||||||||||||
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Net Asset Value, beginning of the period
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$ | 922.52 | $ | 1,115.07 | $ | 1,052.84 | ||||||
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(Loss) from operations
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||||||||||||
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Net investment (loss)
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(26.32 | ) | (22.78 | ) | (24.23 | ) | ||||||
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Net trading (loss)
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(3.55 | ) | (3.96 | ) | (3.98 | ) | ||||||
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Net (loss)
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(29.87 | ) | (26.74 | ) | (28.21 | ) | ||||||
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Net Asset Value, end of the period
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$ | 892.65 | $ | 1,088.33 | $ | 1,024.63 | ||||||
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Total Return(1)(3)
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(3.24 | )% | (2.40 | )% | (2.68 | )% | ||||||
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Supplemental Data
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||||||||||||
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Ratios to average net asset value
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||||||||||||
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Expenses(2)
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12.85 | % | 8.40 | % | 9.74 | % | ||||||
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Net investment (loss)(2)
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(12.74 | )% | (8.31 | )% | (9.65 | )% | ||||||
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Total returns are calculated based on the change in value of a unit during the periods presented. An individual partner’s total returns and ratios may vary from the above total returns and ratios based on the timing of additions and redemptions.
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(1)
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Total return is derived as ending net asset value less beginning net asset value divided by beginning net asset value.
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(2)
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Annualized.
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(3)
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Not annualized.
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* * * * *
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Bridgeton Global Directional Fund, LP, (formerly RFMC Global Direction Fund, LP) (the “Partnership”) is a limited partnership organized under the Delaware Revised Uniform Limited Partnership Act. The Partnership’s business is to trade, buy, sell or otherwise acquire, hold or dispose of commodity futures contracts, options on physical commodities and on commodity futures contracts, forward contracts, and instruments that may be subject of a futures contract, including equities, indices and sectors ("Commodity Interests"), and any rights pertaining thereto and to engage in all activities incident thereto. The Partnership may also invest in entities (including without limitation other partnerships, separate managed accounts, exchange traded funds or other types of funds) that primarily trade in exchange traded securities, options on exchange traded securities, exchange traded funds, and Commodity Interests. The objective of the Partnership is the appreciation of its assets through speculative trading.
From the Partnership’s start until February 1, 2011, Ruvane Fund Management Corporation, a Delaware corporation (“Ruvane”, or the "General Partner" for periods prior to March 1, 2011), was the sole general partner of the Partnership. From that date until March 1, 2011, Bridgeton Fund Management, LLC (“Bridgeton”, or the "General Partner" for periods on or after March 1, 2011) was a co-general partner of the Partnership with Ruvane. Effective March 1, 2011, Bridgeton is the sole general partner of the Partnership. Welton Investment Corporation (“WIC” or the “Advisor”) is the Partnership’s trading advisor.
The success of the Partnership is dependent upon the ability of the Advisor to generate trading profits through the speculative trading of Commodity Interests sufficient to produce capital appreciation after payment of all fees and expenses. Future results will depend in large part upon the Commodity Interests markets in general, the performance of the Advisor, the amount of additions and redemptions and changes in interest rates. Although extensive leverage is available in futures markets, the General Partner will monitor WIC’s trading so that leverage remains within levels acceptable to the General Partner, in its sole discretion. Currently, the leverage that WIC will employ on behalf of the Partnership is 1.0, (such amount is referred to herein as the “Trading Level”). In general, margin commitments for the Partnership will range between 15% and 20% of capital. Margin commitments represent that portion of the capital of the Partnership which is committed as margin for futures contracts. Margins are good faith deposits which must be made with a commodity broker in order to initiate or maintain an open position in a futures contract. Because of the nature of these factors and their interaction, past performance is not indicative of future results. As a result, any recent increases in net realized or unrealized gains may have no bearing on any results that may be obtained in the future.
The Partnership incurs substantial charges from the payment of brokerage commissions to the General Partner, payment of management fees to the Advisor, payment of management fees and incentive allocations to the General Partner and administrative expenses. The Partnership is required to make trading profits to avoid depleting and exhausting its assets from the payment of such fees, allocations and expenses.
The markets in which the Commodity Interests trade are constantly changing in character and in degree of volatility. All of the Partnership’s assets currently are allocated to WIC’s Global Directional Portfolio, which is a proprietary quantitative trading strategy, and will be traded at a leverage ratio of 1.0. The General Partner, in the future, may allocate the Partnership’s assets to other trading strategies and investment programs.
The Partnership pays to the General Partner a flat-rate monthly brokerage commission of up to approximately 0.416% of the net asset value of the limited partnership interests of the Partnership as of the beginning of each month (a 5.0% annual rate) for the Investor Class. Prior to July 1, 2012, Investor Class interests had paid brokerage commissions at an annual rate of 6.0%. The General Partner will pay from this amount up to 3% to properly registered selling agents as compensation for their ongoing services to the Partnership. Institutional Class interests will pay the General Partner a monthly flat-rate brokerage commission of 0.25% of the net asset value of such interests as of the beginning of each month (3.0% annual rate). Prior to July 1, 2012, Institutional Class interests had paid brokerage commissions at an annual rate of 4.0%. In addition to payments to properly registered selling agents, the General Partner pays from this amount all commission charges and fees with respect to the Partner’s trading in Commodity Interests. The flat-rate monthly commission is common among programs such as the Partnership.
20
Summary of Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the Partnership’s financial statements. The critical accounting estimates and related judgments underlying the Partnership’s financial statements are summarized below. In applying these policies, management makes judgments that frequently require estimates about matters that are inherently uncertain. The Partnership’s significant accounting policies are described in detail in Note 3 of the Notes to the Financial Statements.
Investments in commodity futures, options and forward contracts are recorded on the trade date and open contracts are recorded in the financial statements at their fair value on the last business day of the reporting period. The difference between the original cost basis of the contract and fair value is recorded in income as a net unrealized gain or loss on open contracts in the Statements of Financial Condition. Realized gains and losses on closed contracts are recorded on a first-in-first-out basis. Interest income is recognized on an accrual basis. All Commodity Interests and financial instruments are recorded at fair value in the financial statements. Fair value is based on quoted market prices or estimates of fair value.
The Partnership records all investments at fair value in its financial statements, with changes in fair value reported as a component of Trading Profits (Losses) in the Statements of Income (Loss). Generally, fair values are based on quoted market prices; however, in certain circumstances, significant judgments and estimates are involved in determining fair value in the absence of an active market closing price.
Results of Operations
Comparison of the Three Months Ended March 31, 2013 and 2012
For the quarter ended March 31, 2013, the Partnership had total net trading gains comprised of $137,891 in net realized gains on closed contracts, $53,121 in change in net unrealized gains on open contracts and interest income of $440. For the same quarter in 2012, the Partnership had total net trading gains comprised of $420,226 in net realized gains on closed contracts, and $(474,841) in change in net unrealized (losses) on open contracts and interest income of $2,369.
In January 2013, the Partnership was profitable. The Partnership generated gains on its positions in gasoline, Japanese yen and global stock indices; the Partnership had losses in global interest rates, live cattle and aluminum. The Partnership recorded a net gain of $149,542. In February 2013, trading was unprofitable as the Partnership had losses in metals and Euro currency; the Partnership had gains in gold, wheat and live cattle. The Partnership recorded a net loss of $(47,684). In March 2013, trading was unprofitable. The Partnership had losses in energies and grains; the Partnership had offsetting gains in global interest rates and equity indices. The Partnership recorded a net loss of $(9,826).
In January 2012, the Partnership was unprofitable. The Partnership generated losses on its positions in base metals, gold, and global stock indices; the Partnership had gains in the energies, Euribor and silver. The Partnership recorded a net loss of $(235,356). In February 2012, trading was profitable as the Partnership had gains in the energies and coffee; the Partnership had losses in base metals, gold and US fixed income markets. The Partnership recorded a net gain of $90,237. In March 2012, trading was unprofitable. The Partnership had losses in gold, Japanese government bonds and sugar; the Partnership had offsetting gains in natural gas, coffee and soybeans. The Partnership recorded a net loss of $(176,280).
For the quarter ended March 31, 2013, the Partnership had expenses comprised of $40,352 in brokerage commissions (including clearing and exchange fees), $28,971 in management fees, $19,563 in professional fees, and $10,534 in accounting, administrative fees and other expenses. For the same quarter ended March 31, 2012, the Partnership had expenses comprised of $132,002 in brokerage commissions (including clearing and exchange fees), $78,879 in management fees, $26,142 in professional fees, and $32,130 in accounting, administrative fees and other expenses. Brokerage commissions and management fees vary primarily as a result of change in assets under management, which are affected by net income, and capital subscriptions and redemptions. Accounting and administrative expenses consist primarily of accounting fees and other expenses relating to the Partnership’s reporting requirements under the Securities Exchange Act of 1934, as amended.
21
As a result of the above, the Partnership recorded a net gain of $92,032 for the quarter ended March 31, 2013 compared to a net loss of $(321,399) for the same quarter in 2012.
At March 31, 2013, the net asset value of the Partnership was $3,758,336, compared to its net asset value of $4,395,062 at December 31, 2012.
During the quarter ended March 31, 2013, the Partnership had no credit exposure to counterparties that are participants of foreign commodities exchanges or to counterparties dealing in over the counter contracts which is considered to be material. In the case of forward contracts, which are traded on the interbank market rather than on exchanges, the counterparty is generally a single financial institution, rather than a group of institutions; thus, there may be a greater counterparty risk. The Advisor trades for the Partnership only with counterparties which it believes to be credit worthy.
Liquidity and Capital Resources
In general, the Advisor trades only those Commodity Interests that have sufficient liquidity to enable it to enter and close out positions without causing major price movements. Notwithstanding the foregoing, most United States commodity exchanges limit the amount by which certain commodities may move during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.” Pursuant to such regulations, no trades may be executed on any given day at prices beyond daily limits the price of a futures contract occasionally has exceeded the daily limit for several consecutive days, with little or no trading, thereby effectively preventing a party from liquidating its position. While the occurrence of such an event may reduce or eliminate the liquidity of a particular market, it will not eliminate losses and may, in fact, substantially increase losses because of the inability to liquidate unfavorable positions. In addition, if there is little or no trading in a particular futures or forward contract that the Partnership is trading, whether such liquidity is caused by any of the above reasons or otherwise, the Partnership may be unable to liquidate its position prior to its expiration date, of thereby requiring the Partnership to make or take delivery of the underlying interests of the Commodity Interests.
The Partnership’s capital resources are dependent upon three factors: (a) the income or losses generated by the Advisor; (b) the capital invested or redeemed by the limited partners; and (c) the capital invested or redeemed by the General Partner. The Partnership sells limited partnership units to investors from time to time in private placements pursuant to Regulation D of the Securities Act of 1933, as amended. As of the last day of any month, a limited partner may redeem all of its limited partnership units on 10 days’ prior written notice to the General Partner.
The General Partner is required to contribute $1,000 to the Partnership. All capital contributions by the General Partner necessary to maintain such capital account balance are evidenced by units of general partnership interest, each of which has an initial value equal to the net asset value per unit at the time of such contribution. The General Partner may withdraw any excess above its required capital contribution without notice to the limited partners and may also contribute any greater amount to the Partnership.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures
The President of the General Partner (who serves as the principal executive officer and financial officer of the Partnership) evaluated the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures, which are designed to ensure that the Partnership records, processes, summarizes and reports in a timely and effective manner the information required to be disclosed in the reports filed with or submitted to the Securities and Exchange Commission. Based upon this evaluation, the General Partner concluded that, as of March 31, 2013 the Partnership’s disclosure controls are effective and ensure that information required to be disclosed in the reports filed under the Securities Exchange Act of 1934 are accumulated and communicated to management of the General Partner (which consists of the principals of the General Partner) to allow timely decisions regarding required disclosure. During the first quarter of 2013, there were no changes in the Partnership’s internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially effect, the Partnership's internal control over financial reporting.
22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors
Not required.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There currently is no established public trading market for the Limited Partnership Units. As of March 31, 2013, 4,414.5244 Partnership Units were held by 111 Limited Partners and the General Partner. All of the Limited Partnership Units are “restricted securities” within the meaning of Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and may not be sold unless registered under the Securities Act or sold in accordance with an exemption therefrom, such as Rule 144. The Partnership has no plans to register any of the Limited Partnership Units for resale. In addition, the Partnership Agreement contains certain restrictions on the transfer of Limited Partnership Units. Pursuant to the Partnership Agreement, the General Partner has the sole discretion to determine whether distributions (other than on redemption of Limited Partnership Units), if any, will be made to partners. The Partnership has never paid any distributions and does not anticipate paying any distributions to partners in the foreseeable future. From January 1, 2013 through March 31, 2013, a total of 3.7390 Partnership Units were subscribed for the aggregate subscription amount of $3,637. The monthly subscriptions of these Partnership Units are as follows:
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Date of Subscription
|
Amount of
Subscriptions
|
|||
|
January 2013
|
$ | 1,155 | ||
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February 2013
|
$ | 1,227 | ||
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March 2013
|
$ | 1,255 | ||
Investors in the Partnership who subscribed through a selling agent may have been charged a sales commission at a rate negotiated between such selling agent and the investor. Such sales commission in no event exceeded 3% of the subscription amount. All of the sales of Partnership Units were exempt from registration pursuant to Section 4(2) of the Securities Act and Regulation D promulgated thereunder.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
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|
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Rule 13a - 14(a)/15d-14(a) Certification
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Section 1350 Certification
|
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| EX-101.INS |
XBRL Instance Document
|
| EX-101.SCH |
XBRL Taxonomy Extension Schema
|
| EX-101.CAL |
XBRL Taxonomy Extension Calculation Linkbase
|
| EX-101.DEF |
XBRL Taxonomy Extension Definition Linkbase
|
| EX-101.LAB |
XBRL Taxonomy Extension Label Linkbase
|
| EX-101.PRE |
XBRL Taxonomy Extension Linkbase
|
23
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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BRIDGETON GLOBAL DIRECTIONAL FUND, LP
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||
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Date: May 15, 2013
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By: Bridgeton Fund Management LLC
Its: General Partner
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By: /s/ Stephen J. Roseme
Stephen J. Roseme, Chief Executive, Principal Executive Officer and Principal Financial Officer
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24