8/3/2019 Corsair Capital Q4 2011

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January 23, 2012

Dear Limited Partner:

For the fourth quarter ended December 31, 2011, Corsair Capital was up an estimated

6.3%* net, after all fees and expenses, bringing our 2011 performance to -3.7%. Since

inception in January 1991, Corsair  compounded net annual return is 14.4%.

* Returns are based on i nvestments made at fund inception and are calculated using the highest possible fee schedule. Returns for investors in these or any of the Corsair funds are most accurately provided in the monthly capital statements.

The markets rallied as fear subsided in the fourth quarter. This is not to say that there is

now significantly less uncertainty in the world nor are there far less things to be fearful

about. Rather, it is an indication of how, at the end of the third quarter, prices in the

equity markets had over-discounted for the worst of possible outcomes, while things

seemed to be bad at the time. In fact, the markets rallied literally from the daywe sent out our third quarter letter about investor fear and the possible over-discounting

of bad news, recording most of the gain in just the following three weeks. This

relationship between stock market valuations and the macro-environment was perhaps

more succinctly summed up by veteran investment strategist, Joe Rosenberg, in an early

December  interview -- have both good news and cheap stock 

 prices.

In any case, the equity markets moved up sharply in the fourth quarter and we are glad to

have at least participated in the rally. Overall, however, 2011 was a very frustrating year for individual stock pickers like ourselves. Correlations between stocks and most asset

classes were near record highs, seemingly subject to the whims of investors choosing

either to put or to take   off. For the year, Corsair fell somewhere

 between our two benchmark indices of the Standard and 500 and the Russell 2000

(while our more fully concentrated/invested Select Fund declined somewhat more.)

Interestingly, despite our significant outperformance of these two indices since our 

This letter is not a research report or recommendation to buy or sell the securities mentioned herein. The examples herein are illustrations 

of ways in which Corsair Capital Management, LLC and its affiliates have examined or may examine opportunities. Corsair Capital 

Management, LLC and its affiliates may, at any time, buy or sell any of the securities mentioned in this letter and may change its long or 

short position at any time without providing any notification of such changes. It should not be assumed that any trading activities pursued 

in the future will be profitable and may in fact result in losses.

Corsair Capital (net) S&P 500 Russell 2000

4Q11 return 6.3% 11.8% 15.5%

YTD return -3.7% 2.1% -4.2%

Annualized since inception (1991) 14.4% 8.8% 10.1%Total return since inception (1991) 1576% 487% 650%

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8/3/2019 Corsair Capital Q4 2011

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inception 21 years ago, we have only outperformed both in a single year one-third of the

time. Thus, some years favor large capitalization corporations and some years favor 

smaller ones. Meanwhile, Corsair continues to focus on companies going throughstrategic change regardless of their size.

The current investing environment continues to be dominated by Europe and the

decisions by European leaders regarding refinancing their debt, getting their deficits

under control, properly capitalizing their banks and figuring how to bailout their 

weakest member nations. None of these problems have easy answers and despite the

recent agreement calling for more specific solutions seem

lacking. Of course, at the end of the day, convincing the Germans that they should work 

harder and longer to pay for Greek retirements is a definite hard sell. Thus, the

European Central Bank (the seems to have kicked the can down the road with

their Long Term Refinancing Operation which gives European banks access to financing

  by pledging formerly non-acceptable collateral (what the Financial Times calls

quantitative easing ECB style). Not exactly a -  solution (and some analysts

think actually risks making the ultimate problems worse), but seemingly buys the

financial system some more time for now.

In the context of  perceived problems, the United States is a relative safe haven

and investors have flown to the safety of U.S bonds. In turn, U.S. interest rates are near 

record lows (including sub 2.0% rates on the 10-year bond and sub 3.0% on the 30-year  bond) which is helping to keep mortgage rates low (buoying the moribund housing

market) and driving investors to dividend paying stocks. Meanwhile, the U.S. has also

seen a couple of signs of improvement in our economy. In late December, weekly first-

time unemployment claims dropped to 264,000 the lowest level since April 2008 and

existing home sales increased for the third month in a row. Additionally, per 

CEO, Vikram Pandit, banks are finally starting to see a pickup in loan demand, thus

giving some optimistic sign posts to investors.

Portfolio Update

 Not too surprisingly, most of our biggest gainers in the quarter were some of our largest

losers in the third quarter. Lyondell Basell Industries made good on its promise

to maximize its capital structure by paying a special dividend of $4.50 per share and

once again reported better than expected earnings. Insiders, led by their lead leveraged

 buyout sponsor, Apollo Group, took advantage of the dip by buying over 

This letter is not a research report or recommendation to buy or sell the securities mentioned herein. The examples herein are illustrations 

of ways in which Corsair Capital Management, LLC and its affiliates have examined or may examine opportunities. Corsair Capital 

Management, LLC and its affiliates may, at any time, buy or sell any of the securities mentioned in this letter and may change its long or 

short position at any time without providing any notification of such changes. It should not be assumed that any trading activities pursued 

in the future will be profitable and may in fact result in losses.

8/3/2019 Corsair Capital Q4 2011

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4,000,000 shares in the past few months. Lastly, the company highlighted new growth

 projects of over $500MM in EDBITDA.

 Neo-Material Technologies announced record third quarter net income (in

fact, more than it had reported in any previous full year) and was recently re-awarded

its full share of the 2012 rare earth quotas by the Chinese Ministry of Commerce. We

continue to believe the company has normalized earnings power of at least $1.00/share

(they are over-earning now), has at least $1.00/share of net cash and has at least a

couple of high potential mining projects in the works. At 12x normalized earnings plus

its cash and the potential from the mining projects, we think the company is worth

$15+. NEM also bought back stock during the quarter.

Six Flags the amusement park operator again found favor with investors. Thecompany reported solid earnings despite the poor weather in a couple of its key

markets and is on track to achieve its goal of $350MM of EDBITDA this year. SIX

announced a new earnings/EBITDA target of $450MM by 2015, refinanced its debt on

very attractive terms and announced a new $250MM stock buyback plan.

Innophos Holdings rallied nicely as it reported a solid quarter of earnings and

announced an accretive tuck-in acquisition. We believe the company continues to be

on track to achieve cash earnings of $5.00 per share in 2012, while ending the year 

with no debt. The company currently pays a quarterly dividend at an annualized rate of $1.00 per share and has indicated it will increase this as it continues to execute on its

earnings targets. The company trades at under 10x our cash estimate for 2012 and we

continue to believe it is worth 15x given the quality of its business model and clean

 balance sheet.

Annual Investor Meeting

We look forward to seeing you at our annual meeting on March 6th at the Harvard Club.

Thank you for your continued support and confidence. As usual, please see the attached

Appendix for a write-up of a core investment. Please feel free to call us with anyquestions you may have at (212) 389-8240.

Sincerely,

Corsair Capital Management

This letter is not a research report or recommendation to buy or sell the securities mentioned herein. The examples herein are illustrations 

of ways in which Corsair Capital Management, LLC and its affiliates have examined or may examine opportunities. Corsair Capital 

Management, LLC and its affiliates may, at any time, buy or sell any of the securities mentioned in this letter and may change its long or 

short position at any time without providing any notification of such changes. It should not be assumed that any trading activities pursued 

in the future will be profitable and may in fact result in losses.

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