575 Madison Avenue, 7th Floor New York, NY 10022 Tel: 212.792.9148 Fax: 212.531.

6153

Report for Quarter Ended March 31, 2011 Dear Partners, This is the quarterly letter for Kerrisdale Partners LP for the quarter ended March 31, 2011. Kerrisdale Partners LP Gross of Fees 89.1% 81.6% 47.2% 405.6% Kerrisdale Partners LP Net of Fees 73.2% 66.3% 38.7% 299.5% S&P 500 5.9% 15.1% 22.6% 49.4%

Q1 2011 2010 2009* Since Inception

* 2009 performance only includes 7/1/09 to 12/31/09, due to fund launch date of July 1, 2009.

450.00 400.00 350.00 300.00 250.00 200.00 150.00 100.00 50.00

Ju n09

Indexed (6/30/09 = 100)

Fund Perform ance

Se p09 D ec -0 9

M ar -

Se p10 D ec -1 0

Kerrisdale Partners LP - Net

The fund was up 73.2% in the quarter ended 3/31/11 net of fees, comprised of monthly returns of 5.3%, 23.7% and 33.0% for January, February and March. Gross of fees, the fund was up 89.1%, comprised of monthly returns of 6.3%, 28.0%, and 39.0%. In comparison, the S&P 500 was up 5.9% over the quarter, comprised of monthly returns of 2.4%, 3.4% and 0.0%. Since inception, the fund is up 299.5% net of fees and 405.6% gross of fees. In comparison, the S&P 500 is up 49.4%. In this quarter, we benefited from equity declines in U.S.-listed Chinese companies that in our opinion are falsifying their SEC financial statements. We wrote in our prior letter: Already in the first three weeks of 2011, more than half a dozen U.S.-listed Chinese companies have been the subject of published fraud allegations, and this trend is likely to intensify in the coming months. Our guess is that 2011 will produce abysmal returns for investors in U.S.-listed Chinese frauds, and bearish positions on such frauds constitute a large portion of our short book. The Chinese fraudcap space imploded this quarter. Chinese reverse merger stock scams were down anywhere from 10% to 80%, with many stocks down 50%+. On average, 1-2 frauds were exposed per week, with long, detailed reports put out by a wide variety of research firms, including Muddy Waters LLC, Glaucus Research, Citron Research, etc. As one of the first funds to expose scams within the U.S.-listed Chinese reverse merger universe, we benefited from our intimate knowledge of the sector. Most of the frauds exposed this quarter contributed to our returns in some shape or form, as did equity declines in many Chinese fraudcaps that were not exposed.

M ar -

S&P 500

11 Ju n11

10 Ju n10

Aside from fraudulent U.S.-listed Chinese companies, our portfolio roughly tracked the market, contributing approximately 5 percentage points of gains during the quarter. Our two payday lenders, Cash Store Financial and Cash Store Australia, were our biggest losing positions, but each contributed less than 100bps of negative P&L. Other non-Chinese losing positions included James River Coal and MTN Group. PriceSmart was our largest positively contributing long position, followed by E&P firms Energy XXI (Bermuda) Ltd. (EXXI) and Platinum Energy Resources Inc. (PGRI). All of these non-Chinese positive contributors each contributed less than 100 bps of positive P&L during the quarter. Our top five positive contributors were all shorts in U.S.-listed Chinese reverse merger frauds. Our top five negative contributors were Cash Store Australia, Cash Store Financial, James River Coal, and two of our U.S.-listed Chinese reverse merger frauds. China MediaExpress Holdings, Inc. (CCME) China MediaExpress is a Chinese stock scam that operates a television advertising network on inter-city express buses in China. The company installs televisions on buses, and generates revenue from selling advertising time on those TVs. It went public via a Special Purpose Acquisition Company (SPAC) in 2009 and grew to a market capitalization of more than $600 million prior to being exposed in February as a fraud and having its stock halted in March. CCME occupied a critically important role within the Chinese fraudcap universe for several reasons. First, it was a far better executed fraud than many other Chinese stock scams. Whereas frauds like China Sky One Medical or China Education Alliance feature fairly absurd business claims, CCME had fabricated a relatively more believable story for investors. Its SEC filings were somewhat error-free and the company was exceptionally responsive to investor inquiries. Because it went public through a SPAC, as opposed to a more traditional reverse takeover (RTO) of a publicly trading shell, CCME did not fit the same model as many other Chinese fraudcaps. Its investor base did not include many of the PIPE funds typically associated with U.S.-listed Chinese frauds. CCME also was able to dupe a top-4 auditor, Deloitte Touche Tohmatsu, to audit its 2010 financial statements, and similarly tricked an outsider to the Chinese fraudcap universe, CV Starr & Co., the private equity firm run by former AIG chairman Hank Greenberg, to purchase a large stake in the company. Starr is now suing CCME. For the above reasons, China MediaExpress had the most ardent supporters of any U.S.-listed Chinese stock scam. Its shares were widely touted on Yahoo message boards, Seeking Alpha, thelion.com, and various other sites that cater to retail investors. The company even had its own Facebook page, Friends of China MediaExpress Holdings, which provided weekly updates on the companys every move. CCME also had active followers in the short community. With a high market capitalization and a stock price above $10, it was an attractive candidate to expose. It also had certain features that rendered the fraud relatively obvious. Its local Chinese filings were available in their original photocopies and featured the CEOs signature and photo, in contrast to the electronic filings available for other Chinese companies. The company had several publicly traded competitors, such as VisionChina Media and Focus Media, who rarely saw CCME in their competitive landscape, and argued with conviction that the company was much smaller than SEC filings indicated. Last but not least, CCME had margins, revenue growth and return on capital that defied common sense and were far too good to be true. The debate came to a head in late January when the stock rallied above $20, with the final surge triggered by Purdue college student Glen Bradfords article CCME: The Biggest Short Squeeze of 2011, which sent the stock up 17% on January 27th. By then, just about every short seller that published on Chinese frauds was frothing at the opportunity to expose CCME. On January 30, Andrew Lefts Citron Research first wrote on the stock, and throughout February and March, a litany of investors including Carson Blocks Muddy Waters LLC, began releasing volumes of evidence that CCME was far smaller than it claimed to be in its SEC filings.

Kerrisdale Capital Management, LLC

575 Madison Avenue, 7th Floor | New York, NY 10022

| Tel: 212.792.9148

| Fax: 212.531.6153

When Deloitte resigned and the stock was subsequently halted, the Chinese fraudcap space began to implode. Given that CCME was the gold standard of U.S.-listed Chinese frauds, its downfall was ominous for the fraudcap sector as a whole. More than any other stock, CCME occupied a symbolic position within the general debate between longs and shorts about SAIC filings, the reliability of audited SEC financial statements, the reliability of analyst research coverage on these companies, etc. Shorts like us have long argued that SAIC filings provide meaningful data points on whether certain Chinese companies are scams, and that SEC financial statements are not worth the paper theyre printed on. Rather, investors need to conduct independent diligence on these companies to verify whether their business claims are accurate. In the wake of the CCME debacle, investor interest in owning Chinese stock scams has steadily evaporated, and the sector has suffered a steep decline since. February and March were terrible months for U.S.-listed Chinese reverse merger frauds. We aggressively increased our short exposure in the sector as the CCME debate progressed. How to Solve the Problem of Chinese Fraudcaps The central problem with Chinese stock scams is that U.S. investors have no legal recourse to the Chinese management teams committing fraud. Shareholders own stock in a U.S. legal entity which owns a Chinese subsidiary run by China-based management. The U.S. legal entity is publicly traded in the United States and is regulated by U.S. regulators. Yet the fraud is being committed by Chinese management teams that dont need to obey U.S. laws any more than U.S. management teams need to obey Chinese laws. Because China and the United States dont have an extradition treaty, no one is technically breaking any laws in massive frauds like CCME or RINO. The only real way to prevent fraud among U.S.-listed Chinese companies is for China and the United States to form the appropriate extradition treaties to allow U.S. regulators to apprehend and punish guilty Chinese management teams. Given that this is unlikely to happen, fraud is likely to persist in foreign companies that list in the United States but do not list in their own countries. If foreign management teams can dupe U.S. investors into giving them $20m+ in equity raises without any fear of legal recourse if their deceit is uncovered, then resourceful scam artists will continue fabricating financial statements and filing them with the SEC. We suspect that securities regulators are working to apprehend the investment banks and/or auditors that are servicing these frauds, because forming an extradition treaty with the Chinese government is a prohibitively difficult task. Unfortunately, we are not quite sure that these fraudcaps underwriters and auditors are actually committing any wrongdoing, aside from negligence. If management teams in China are intent on forging invoices and staging Potemkin villages when investment bankers visit their facilities, were not sure that the auditors and bankers can be held liable for aiding and abetting fraud. Its a thorny situation, and regulators certainly have their work cut out for them. From our knowledge of the sector, we dont think there are any easy solutions to this unusually complex problem of foreign stock scams, aside from the diplomatically unfeasible remedy of forming extradition treaties. Future Returns Our future investment returns will likely be far more mediocre than our first 21 months of results. Since inception, our portfolio has returned 299.5% net to investors, compared with 49.4% for the S&P 500. This pace of outperformance is highly unlikely to continue. We have made some good investments and gravitated towards some unusually profitable market dislocations (ie. stock scams with market caps of $400 million that are fundamentally worth less than $20 million). In the future, we are less likely to find such profitable dislocations, and we will likely make more mistakes.

Kerrisdale Capital Management, LLC

575 Madison Avenue, 7th Floor | New York, NY 10022

| Tel: 212.792.9148

| Fax: 212.531.6153

Portfolio at Quarter-End Throughout much of the quarter, our net exposure fluctuated between 60% and 100%. Our lower market exposure when compared to prior quarters was driven by increased bearish positions in U.S.-listed Chinese stock scams. We expect to maintain net exposure of 60% to 100% throughout much of the second quarter.

Disclosure: This is not an offering or the solicitation of an offer to purchase an interest in Kerrisdale Partners LP (the Fund). Any such offer or solicitation will only be made to qualified investors by means of a confidential private placement memorandum and only in those jurisdictions where permitted by law. An investment in the fund is speculative and involves a high degree of risk. Opportunities for withdrawal, redemption and transferability of interests are restricted, so investors may not have access to capital when it is needed. There is no secondary market for the interests and none are expected to develop. The fees and expenses charged in connection with this investment may be higher than the fees and expenses of other investment alternatives and may offset profits. No assurance can be given that the investment objective will be achieved or that an investor will receive a return of all or part of his or her investment. Investment results may vary substantially over any given time period. The performance data represents the performance of the Fund. The results labeled net of fees reflect the deduction of: (i) an annual asset management fee of 1.0%, charged quarterly; (ii) a performance allocation of 15%, taken annually, subject to a high water mark; and (iii) other expenses incurred by the Fund. Results are compared to the performance of the S&P 500 Index for informational purposes only. The Funds investment program does not mirror the S&P 500 Index and the volatility of the Funds investment program may be materially different. The performance figures include the reinvestment of any dividends and other earnings, as appropriate. Past performance is not necessarily indicative of future results. The holdings identified in this letter do not represent all of the securities purchased or sold in the Fund. Performance results in separately managed accounts will be different from the performance results of Kerrisdale Partners LP. Kerrisdale Capital Management, LLC or affiliated entities (Kerrisdale) is not responsible for any liabilities resulting from errors contained in this communication. Kerrisdale will not notify you of any errors that it identifies at a later date.

Kerrisdale Capital Management, LLC

575 Madison Avenue, 7th Floor | New York, NY 10022

| Tel: 212.792.9148

| Fax: 212.531.6153