Brenner West Capital Partners 110 East 42nd Street, Suite 1419 New York, NY 10017 Tel: 212-801-1250

Fax: 212-599-2300 February 7th, 2011 Dear Brenner West Investor: Our performance 1 net of all fees for the fourth quarter of 2010, the full year 2010, and the inception-to-date period are as follows:

2010 Q4 Brenner West Capital Partners Brenner West Capital Qualified Partners Brenner West Capital Offshore Fund Russell 2000 (dividends reinvested) S&P 500 (dividends reinvested)
10.06% 10.04% 10.05% 16.25% 10.76%

Year 2010
24.85% 25.08% 25.10% 26.86% 15.06%

Since Inception
103.27% 97.53% 97.43% 24.06% 14.20%

Inception Date 8/1/05 11/3/05 11/3/05 8/1/05 8/1/05

1 Past performance cannot assure any level of future results. The performance information contained herein has been prepared by us or on our behalf, has not been independently audited or verified and is subject to year-end adjustments. The performance information is shown after deducting management fees (1.5% per annum) and performance allocations/fees (20% per annum). Fund performance results and market index returns reflect reinvestment of dividends and other earnings. Discussion of specific positions herein are for informational purposes and are not intended to be indicative of the overall composition or performance of our funds portfolio. Such positions may be increased, reduced or eliminated without further notice. Market index information shown herein is included to show the performance of our funds relative to well known market indices for the periods indicated and not as standards of comparison, since these are unmanaged, broadly based indices which differ in numerous respects from the portfolio composition of our funds. Market index information was compiled from sources that we believe to be reliable. No representation or guarantee is made hereby with respect to the accuracy or completeness of such data. The information contained herein is provided for informational purposes only, is not complete, and does not contain certain material information about our funds, including important disclosures and risk factors associated with an investment in our funds, and is subject to change without notice. This document is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy, interests in our funds. No offer or solicitation may be made prior to the delivery of a definitive offering memorandum.

Overview We are pleased to report that the funds posted another year of strong performance in 2010. As we begin 2011, we are heartened that many of our core long positions remain attractive despite recent price appreciation. In many cases, this is a testament to the nature of the inefficiencies that we have indentified since the financial crisis began. As for our view of the economy going forward, we continue to be skeptical of an imminent return to meaningful growth. Perhaps this is conservative, but we believe that our opportunistic, concentrated approach allows us to generate investment ideas that can work without a macroeconomic tailwind. We had many winners in 2010. Our position in Liberty Media Capital (Nasdaq: LCAPA), net of associated hedges, produced approximately one third of our total gains for the year. Our investment in LCAPA, in many ways represents an ideal full position in our view given the large discount to intrinsic value, an owner-oriented management team with a great track record, assets which can be valued objectively and hedged where necessary, additional areas of value beneath the surface, multiple embedded catalysts, and ample trading liquidity. It has thus far also represented the rare case where virtually everything has gone right both inside and outside the company. As often is the case when investments appreciate, we have sold more than 65% of our original investment, though we remain bullish on the company and retain a sizeable net position today. In addition to the contribution from gains in our LCAPA position, the funds benefited from gains in many other positions, though none represented more than ten percent of our total performance for 2010. On the flip side, we had only one investment, a long position in Maxim Power (Toronto: MXG.TO), which cost us more than one percentage point of performance during the year. Broadly speaking, the extraordinary discounts that were priced into many of our core long positions following the financial crisis began to narrow. We remain enthusiastic about the opportunity set, however, as the turmoil of the last few years has created many bargains of the nature that we attempt to seek out. Not surprisingly, many are in companies that lack broad institutional support and are not well understood. Further, the environment is ripe for potential buyouts or other valueunlocking catalysts of our companies given the easy credit conditions and high levels of cash currently held at larger corporations. In order to best capitalize on such an environment, we are carefully pruning the portfolio to ensure that our capital remains concentrated in positions where significant inefficiencies remain. As such, we have trimmed or eliminated several successful investments in recent weeks and replaced them with a few select opportunities where we believe that both a large margin of safety and meaningful upside potential exists. In the case of certain other investments, the improved market environment has caused us to conservatively recalibrate our view of intrinsic value and we are excited about many of these positions. One example is our position in Tetragon Financial Group (Amsterdam: TFG.AS), which is described below.

The information contained herein is provided for informational purposes only, is not complete, and does not contain certain material information about our funds, including important disclosures and risk factors associated with an investment in our funds, and is subject to change without notice. This document is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy, interests in our funds. No offer or solicitation may be made prior to the delivery of a definitive offering memorandum.

One additional note on our 2010 performance is that it was achieved in a highly tax efficient manner. Approximately 98% percent of our realized gains represented long-term capital gains for tax purposes. As we have evolved as a fund over the five plus years that we have been in business, we have tended to hold positions a bit longer than we had during our first few years. This slight evolution in tactics relates to the nature of the opportunities we have found in the last few years, our increasingly high quality threshold (when we find something that we feel is truly undervalued and compelling we want to own it for a longer period of time), as well as our desire to be tax efficient.

Tetragon Financial Group We initiated an investment in Tetragon Financial Group in February 2010 and today it ranks as one of our largest positions. At $7.20 per share, Tetragon has a market capitalization of $865 million and trades at only 76% of stated NAV of $9.47 per share. We believe NAV to be significantly understated because it is based on what very conservative valuation assumptions that are little changed from those adopted by the company in the depths of the financial crisis. We see a clear path to a significantly increased NAV by the end of year and also anticipate continued growth thereafter. Tetragon is emblematic of the type of investments we have targeted over the past few years in that it is a superficially complicated company that was discarded by investors during the financial crisis. Even as the global markets have recovered, investors have been slow to recognize the true asset value of the firms portfolio. We believe that this is the case in part because, while management is based in New York, the company trades in Amsterdam, lacks analyst coverage and has only one partially relevant public comparable. Tetragon owns equity tranches from 70 collateralized loan obligations, or CLOs. These were the primary financing vehicles behind the leveraged buyout frenzy from 2005 2007. A typical CLO raised financing from pension funds and insurance companies at low rates that were locked in for fifteen years and then invested those funds in the senior loans of companies undergoing a leveraged buyout. Annual cash returns to the equity holders were projected to be in the mid-teens. Despite the difficult macroeconomic environment of the last few years, most CLOs have performed largely as anticipated and are currently generating record levels of cash flow to their equity holders. In addition, catalysts abound for shareholders during 2011: the potential reversal of a large, off-balance sheet asset into NAV, a substantial ongoing repurchase program, the possibility of rising dividend payouts, potential analyst coverage and the greater recognition of CLO equity as an attractive asset class should all help to close the vast discount to intrinsic value over the course of the year. One other note is that we have a small, partial hedge in the form of a short position in KKR Financial Corp (NYSE: KFN) which has similar assets and trades at a premium to its stated NAV.

The information contained herein is provided for informational purposes only, is not complete, and does not contain certain material information about our funds, including important disclosures and risk factors associated with an investment in our funds, and is subject to change without notice. This document is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy, interests in our funds. No offer or solicitation may be made prior to the delivery of a definitive offering memorandum.

Outlook As discussed, we remain cautious about the macroeconomic environment. In addition to our usual careful monitoring of all of our investments, we have added an additional feature to our portfolio to provide us a measure of partial insurance against a large market decline. While we believe that the quality of our ideas and the structure of the portfolio are such that we do not need to worry much about moderate declines in the market indexes, we do want to have some protection to cushion ourselves against the type of market decline experienced in 2008. After much consideration, we have decided to opportunistically allocate a small portion -typically less than 1% -- of our capital annually to tail-risk hedges. Our current approach is to own call options on VIX futures as they offer several advantages versus the alternatives: they are highly liquid, offer capped costs, and performance tends to accelerate as the market declines steepen. As for the current portfolio excluding the VIX options mentioned above, we have total net exposure of 65%, including equity long exposure of 78%, and short exposure of 13%. This includes sixteen equity long positions and eight short positions. In addition, we continue to maintain hedges to address currency risk on both the long and short side of our portfolio. We look forward to speaking with our partners in 2011. Please do not hesitate to contact us.

Sincerely,

Joshua Kaufman

Craig Nerenberg

The information contained herein is provided for informational purposes only, is not complete, and does not contain certain material information about our funds, including important disclosures and risk factors associated with an investment in our funds, and is subject to change without notice. This document is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy, interests in our funds. No offer or solicitation may be made prior to the delivery of a definitive offering memorandum.