Item 5: Fees and Compensation
Baymount’s compensation for the investment advisory services is comprised of an asset-based
management fee and a performance based fee or allocation, or “carry,” that is based on the
performance achieved subject to a high water mark. The fees, expenses, and withdrawal terms
applicable to each Client are set forth in detail in each applicable Client’s Fund Governing
Documents or Investment Management Agreement as applicable. A brief summary of fees and
expenses is provided below. The below descriptions relate to the Private Funds and Managed
Form ADV Part 2A Firm Brochure | Baymount Management LP
Account currently in wind down, and future Private Funds and Managed Accounts may have
different terms relating to Management Fees, Performance Fees, and/or Expenses.
Management Fee
Private Funds. Fund Investors typically pay Baymount or an affiliate a monthly fee in arrears equal
to .125% (1.50% on an annualized basis) of the net asset value of each Fund Investor’s capital
account. A portion of such charge will be paid to Baymount as a fee for its services (the “Asset
Based Charge”), and a portion of such amounts will be paid to the Strategic Investor.
Baymount or the General Partner may elect, in its sole discretion, to reduce, waive or calculate
differently the Asset Based Charge in respect of any Fund Investor, including Fund Investors that
have strategic relationships with Baymount, without offering the same opportunity to other Fund
Investors and will waive the Asset Based Charge for the General Partner and its affiliates and any
of their respective owners, directors, officers or employees.
Managed Accounts. A Managed Account typically will pay Baymount a monthly fee in arrears
reflecting a percentage of the trading level of the Managed Account’s portfolio (the “Management
Fee”). We do not have a standard “fee schedule” and rates are individually negotiated with each
Managed Account. The Strategic Investor will receive a portion of the Management Fees paid to
Baymount.
Performance Fees
Private Funds. Baymount or affiliates are entitled to share in the appreciation in value of each Fund
Investor’s capital account balance, including profits subject to loss carry forward provisions.
Baymount expects that for most periods and as to most sources of profit, this will be effected
through incentive allocations (“Incentive Allocation”) the Private Funds make to the General
Partner.
As of each fiscal year end Fund Investors will reallocate from each Fund Investor’s capital account
to the General Partner and the Strategic Investor an amount equal to 17.5% of the Adjusted Net
Capital Appreciation, as defined in the applicable Fund Governing Documents, for the relevant
performance period (also defined in the Fund Governing Documents). The Incentive Allocation
will be determined separately with respect to each Fund Investor’s capital account corresponding
to each sub-series of fund interests. Notwithstanding the foregoing, the Adjusted Net Capital
Appreciation upon which the calculation of the Incentive Allocation is based will be reduced to the
extent of any unrecovered balance remaining in the Loss Recovery Account (as defined in the Fund
Governing Documents). The sum of the General Partner’s portion of the Incentive Allocation and
the Strategic Investor’s portion of the Incentive Allocation will constitute the Incentive Allocation.
A Loss Recovery Account, as defined in the applicable Fund Governing Documents, will also be
established for each capital account in order to track any losses allocable to such capital account.
Form ADV Part 2A Firm Brochure | Baymount Management LP
Any balance that remains in a Loss Recovery Account as of the end of a fiscal period will be carried
forward to the next fiscal period. Any profits allocable in respect of such capital account will be
applied first to reduce the balance (but not below zero) of any such Loss Recovery Account before
any Incentive Allocation may be made. This mechanism for the recovery of prior losses before an
Incentive Allocation may be made is commonly referred to as a “high water mark.” Upon any
withdrawal from a Fund Investor’s capital account, the corresponding Loss Recovery Account for
its remaining capital account will be reduced pro rata based on the amount of the withdrawal relative
to the balance of such capital account immediately prior to such withdrawal.
The General Partner’s capital account is not subject to any Incentive Allocation. The General
Partner may elect, in its sole discretion, to reduce, waive, rebate or calculate differently the Incentive
Allocation with respect to any Fund Investor, including Fund Investors that have strategic
relationships with Baymount, without offering the same opportunity to other Fund Investors and
may waive such Incentive Allocation for any employee or affiliate of Baymount. In consideration
of certain Fund Investors’ initial participation and certain strategic benefits we believe certain Fund
Investors may bring to the Private Funds and Baymount, certain Fund Investors will be entitled to
a reduced Incentive Allocation and/or Asset Based Charge at our sole discretion.
Withdrawals of capital by a Fund Investor from a Private Fund are subject to a redemption fee,
payable to the affected private fund, for redemptions made in less than the term the investor agreed
to, as described in the relevant Fund Governing Documents. The redemption fee will be retained
by the Private Fund although the General Partner may waive the redemption fee in what we believe
to be appropriate circumstances.
Managed Accounts. Baymount is entitled to share in the appreciation in value of each Managed
Account’s account balance, including profits subject to loss carry forward provisions. Baymount
expects that for most periods and as to most sources of profit, this will be effected through incentive
fees (“Incentive Fee”) the Managed Accounts pay to Baymount.
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