Briarwood Capital Management Inc.

Briarwood Fund L.P. 2XL Series

BCM's trading program is built around the strategies that Fred Schutzman and Paul DeMarco, Jr. have developed since 1991. These trading strategies are technical in origin and primarily trend-following in character, and are designed to identify intermediate and long-term market moves. BCM simultaneously trades multiple trading systems independently. Each system serves a unique purpose and is applied to a diversified portfolio of commodities in a predominantly quantitative or mechanical fashion. Occasionally, discretion and judgment may be used if deemed necessary for risk management purposes. A primary focus is on controlling drawdowns. Our portfolio management begins with multiple levels of diversification … we trade 3 different trading systems across 20 different markets. The 20 markets were chosen because of their low correlation to one another. Each position taken will risk 0.20% (1/5 of 1%). The systems employ exits techniques that attempt to let profits run, but which will cut losses quickly when a market changes direction. Of our 3 trading systems, two are intermediate-term and one is long-term. One of the intermediate-term systems involves pattern recognition and is different from anything we have ever seen. The other intermediate-term system uses what we call "selective trend-following." That means it attempts to take the high probability entry signals, but filter out the low probability ones. The logic of the longer-term trend-following system guarantees participation in every major market move. Daily trading signals are systematically generated by BCM’s computerized models. Each model must have a valid concept behind its trading logic and, prior to introduction, is tested in real-time using proprietary money. The key determinants of a model's suitability are its impact on our overall equity curve and its risk-adjusted returns. Research is a crucial component of our trading enterprise. This is an area where we feel that we excel. Our approach is quite different than that of most other firms, with the bottom line being hypothetical results on paper that we feel are honest and have a fair chance of being achieved in real-time. Thus far, our actual performance is matching our hypothetical test results.