Intrinsic Value Asset Management LLC

Transcription

1 Item 1 Cover Page Intrinsic Value Asset Management LLC 118 Live Oak Lane, Largo, Florida December 31, 2015 This Brochure provides information about the qualifications and business practices of Intrinsic Value Asset Management LLC If you have any questions about the contents of this Brochure, please contact us at Intrinsic Value Asset Management LLC. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Intrinsic Value Asset Management LLC is a registered investment adviser. Registration of an Investment Adviser does not imply any level of skill or training. The oral and written communications of an Adviser provide you with information about which you determine to hire or retain an Adviser. Additional information about Intrinsic Value Asset Management LLC also is available on the SEC s website at i

2 Item 2 Material Changes On July 28, 2010, the United State Securities and Exchange Commission published Amendments to Form ADV which amends the disclosure document that we provide to clients as required by SEC Rules. This Brochure dated Intrinsic Value Asset Management LLC is a new document prepared according to the SEC s new requirements and rules. As such, this Document is materially different in structure and requires certain new information that our previous brochure did not require. In the future, this Item will discuss only specific material changes that are made to the Brochure and provide clients with a summary of such changes. We will also reference the date of our last annual update of our brochure. Intrinsic Value Asset Management LLC In the past we have offered or delivered information about our qualifications and business practices to clients on at least an annual basis. Pursuant to new SEC Rules, we will ensure that you receive a summary of any material changes to this and subsequent Brochures within 120 days of the close of our business fiscal year. We may further provide other ongoing disclosure information about material changes as necessary. We will further provide you with a new Brochure as necessary based on changes or new information, at any time, without charge. Currently, our Brochure may be requested by contacting Gerald W. Bollman, CFA at or Our Brochure is also available on our web site: also free of charge. Additional information about Intrinsic Value Asset Management LLC is also available via the SEC s web site The SEC s web site also provides information about any persons affiliated with Intrinsic Value Asset Management LLC who are registered, or are required to be registered, as investment adviser representatives of Intrinsic Value Asset Management LLC ii

3 Item 3 -Table of Contents Item 1 Cover Page... i Item 2 Material Changes... ii Item 3 -Table of Contents... iii Item 4 Advisory Business... 1 Item 5 Fees and Compensation... 2 Item 6 Performance-Based Fees and Side-By-Side Management... 3 Item 7 Types of Clients... 3 Item 8 Methods of Analysis, Investment Strategies and Risk of Loss... 3 Item 9 Disciplinary Information... 4 Item 10 Other Financial Industry Activities and Affiliations... 4 tem 11 Code of Ethics... 4 Item 12 Brokerage Practices... 6 Item 13 Review of Accounts... 6 Item 14 Client Referrals and Other Compensation... 6 Item 15 Custody... 7 Item 16 Investment Discretion... 7 Item 17 Voting Client Securities... 7 Item 18 Financial Information... 8 Item 19 Requirements for State-Registered Advisers... 8 Brochure Supplement(s) iii

4 Item 4 Advisory Business Intrinsic Value Asset Management LLC was established in August 2006 and registered as an investment adviser in Florida January 2, Intrinsic Value Asset Management LLC is a Limited Liability Company owned 50% each by Gerald W. Bollman CFA, Chairman and Managing Member and Judith J. Bollman, Member. Ms. Bollman is not a registered person. Private Client Account Management Intrinsic Value Asset Management, LLC provides investment advisory services to private clients, including but not limited to individuals, corporations, pension and profit sharing plans, and other entities on a discretionary basis. The minimum account size for private account management is generally $250,000, though on occasion exceptions may be made to this minimum account size. When accounts are managed on a discretionary basis, Intrinsic Value Asset Management, LLC has the authority to invest the assets under management on behalf of clients without prior consultation with the client, subject to such limitations and restrictions as the client may impose. Intrinsic Value Asset Management, LLC generally invests the assets of its private clients in exchange-listed common stocks of companies. Several factors will influence differences in the composition of client portfolios, including but not limited to the size of the account under management, a particular client's investment objective, and the time period during which the investments are made. The firm has in place written policies and procedures to ensure clients' interest are placed ahead of its own. Investment Consulting Intrinsic Value Asset Management LLC provides advice to clients and other Registered Investment Advisers on Portfolio Construction, Equity Valuation and Investment Strategies in return for an hourly charge or a monthly or quarterly retainer. Assets Under Management Total Assets Under Management as of December 31, 2015 are: Discretionary $2,712,442 Non-Discretionary $ 0 Total $2,712,442 The calculation of Assets Under Management is different than that used for "Regulatory Assets Under Management" in the ADV Part 1A Item 5.F in that it includes assets which are included in advice provided under consulting agreements rather than investment management contracts. 1

5 Item 5 Fees and Compensation Private account clients generally compensate Intrinsic Value Asset Management, LLC based upon the following standard fee schedule as a percentage of assets under management: (standard fees are subject to negotiation) Asset Value Quarterly Fee Annual Fee On first $1,000, % 0.75% On next $1,000, % 0.65% On next $3,000, % 0.50% On next $5,000, % 0.35% Over $10,000,000 Negotiable Negotiable Fees are payable quarterly in advance and are assessed on the total market value of a client's account(s) as of the last business day of the most recent calendar quarter. Fees are generally invoiced or debited directly from the client's account by Intrinsic Value Asset Management, LLC, unless a particular client's investment advisory agreement with Intrinsic Value Asset Management, LLC provides otherwise. A number of fee-paying clients pay less than our published fee schedule. The firm manages a number of accounts on behalf of firm principals, family members, or associates and no fee is charged to manage those assets. Clients will not be charged a management fee until 80% of the clients' assets arc fully invested by the firm. If a private client account agreement is terminated for any reason, a refund of any unearned prepaid fees, pro-rated from the date of termination through the end of the billing period, will be made. Financial Planning Intrinsic Value Asset Management, LLC provides limited financial planning services to clients upon request. Hourly charges of $150 per hour will be assessed with payment due on a a thirty day billed basis. A maximum of $1500 will be charged for this service. The adviser does not purvey any products or manage any assets beyond its equity management services. All fees are subject to negotiation. The specific manner in which fees are charged by Intrinsic Value Asset Management LLC is established in a client s written agreement with Intrinsic Value Asset Management LLC. Intrinsic Value Asset Management LLC will generally bill its fees on a quarterly basis. Clients may elect to be billed in advance or arrears each calendar quarter. Clients may also elect to be billed directly for fees or to authorize [ ADVISER ] to directly debit fees from client accounts. Management fees shall [or shall not] be prorated for each capital contribution and withdrawal made during the applicable calendar quarter (with the exception of de minimis contributions and withdrawals). Accounts initiated or terminated during a calendar quarter will be charged a prorated fee. Upon termination of any account, any prepaid, unearned fees will be promptly refunded, and any earned, unpaid fees will be due and payable. 2

6 Intrinsic Value Asset Management LLC s fees are exclusive of brokerage commissions, transaction fees, and other related costs and expenses which shall be incurred by the client. Clients may incur certain charges imposed by custodians, brokers, third party investment and other third parties such as fees charged by managers, custodial fees, deferred sales charges, oddlot differentials, transfer taxes, wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securities transactions. Mutual funds and exchange traded funds also charge internal management fees, which are disclosed in a fund s prospectus. Such charges, fees and commissions are exclusive of and in addition to Intrinsic Value Asset Management LLC s fee, and Intrinsic Value Asset Management LLC shall not receive any portion of these commissions, fees, and costs. Item 12 further describes the factors that Intrinsic Value Asset Management LLC considers in selecting or recommending broker-dealers for client transactions and determining the reasonableness of their compensation (e.g., commissions). Item 6 Performance-Based Fees and Side-By-Side Management Intrinsic Value Asset Management LLC does not charge any performance-based fees (fees based on a share of capital gains on or capital appreciation of the assets of a client). Item 7 Types of Clients Intrinsic Value Asset Management LLC currently provides portfolio management services to individuals, trusts and high net worth individuals. Item 8 Methods of Analysis, Investment Strategies and Risk of Loss Intrinsic Value Intrinsic Value Asset Management, LLC uses estimates of intrinsic value to rebalance its percentage of holdings in a company to possibly enhance shareholder return. Intrinsic value is a measure that is used to estimate the per share value of a company's common stock. Intrinsic value is defined by Intrinsic Value Asset Management LLC as the discounted present value of the future free cash flow of a company. Free cash flow is defined as the excess cash generated by a company's operations, cash that is not required to operate the business on a day-to-day basis. Changes in intrinsic value result from a number of factors, including: Changes in interest rate and inflation expectations Changes in tax rates on dividends, corporate income, and capital gains A company's ability to increase its return on invested capital A company's ability to sustain growth in its revenue over time The ability of a company's management to maintain a high level of employee and customer satisfaction 3

7 The quality of a company's reputation and integrity Intrinsic Value is not: Affected by the current market price of its stock A precise measure A naive mechanical computation, a "black box". The sensitivity of intrinsic value to key fundamental factors such as capital intensity, profit margins, growth rates of revenue and returns on capital vary by company and by industry. Intrinsic Value is used to: Decide whether a share holding should be added to a portfolio. A low share price relative to estimated intrinsic value, providing a significant margin of safety, is an important means by which Intrinsic Value Asset Management, LLC controls portfolio risk. Decide the weighting of equity positions in a company; a low price relative to intrinsic value would encourage an increase in a share holding. A high market price relative to intrinsic value for a share holding would suggest, after considering tax consequences, a reduction or sale of a share holding. The Adviser uses Intrinsic Value as an important factor to allocate the portfolio's assets. If the adviser's determination of a company's intrinsic value is incorrect (or is subsequently revised) portfolio performance may be lower than expected. Intrinsic Value is an estimate rather than a precise figure and will change when interest rates move or forecasts of future cash flows arc revised. Investing in securities involves risk of loss that clients should be prepared to bear. Item 9 Disciplinary Information Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of Intrinsic Value Asset Management LLC or the integrity of Intrinsic Value Asset Management LLC s management. Intrinsic Value Asset Management LLC has no information applicable to this Item. Item 10 Other Financial Industry Activities and Affiliations Intrinsic Value Asset Management LLC has from time to time provided consulting services to Pattison Wealth LLC and Belleair Wealth Management LLC in return for cash compensation. Intrinsic Value Asset Management LLC does not currently have a paid consulting relationship with either Pattison Wealth LLC or Belleair Wealth Management LLC Item 11 Code of Ethics Intrinsic Value Asset Management LLC has adopted a Code of Ethics for all supervised persons of the firm describing its high standard of business conduct, and fiduciary duty to its clients. The Code of Ethics includes provisions relating to the confidentiality of client information, a 4

8 prohibition on insider trading, a prohibition of rumor mongering, restrictions on the acceptance of significant gifts and the reporting of certain gifts and business entertainment items, and personal securities trading procedures, among other things. All supervised persons at Intrinsic Value Asset Management LLC must acknowledge the terms of the Code of Ethics annually, or as amended. Intrinsic Value Asset Management LLC anticipates that, in appropriate circumstances, consistent with clients investment objectives, it will cause accounts over which Intrinsic Value Asset Management LLC has management authority to effect, and will recommend to investment advisory clients or prospective clients, the purchase or sale of securities in which Intrinsic Value Asset Management LLC, its affiliates and/or clients, directly or indirectly, have a position of interest. Intrinsic Value Asset Management LLC s employees and persons associated with Intrinsic Value Asset Management LLC are required to follow Intrinsic Value Asset Management LLC s Code of Ethics. Subject to satisfying this policy and applicable laws, officers, directors and employees of Intrinsic Value Asset Management LLC and its affiliates may trade for their own accounts in securities which are recommended to and/or purchased for Intrinsic Value Asset Management LLC s clients. The Code of Ethics is designed to assure that the personal securities transactions, activities and interests of the employees of Intrinsic Value Asset Management LLC will not interfere with (i) making decisions in the best interest of advisory clients and (ii) implementing such decisions while, at the same time, allowing employees to invest for their own accounts. Under the Code certain classes of securities have been designated as exempt transactions, based upon a determination that these would materially not interfere with the best interest of Intrinsic Value Asset Management LLC s clients. In addition, the Code requires pre-clearance of many transactions, and restricts trading in close proximity to client trading activity. Nonetheless, because the Code of Ethics in some circumstances would permit employees to invest in the same securities as clients, there is a possibility that employees might benefit from market activity by a client in a security held by an employee. Employee trading is continually monitored under the Code of Ethics, and to reasonably prevent conflicts of interest between Intrinsic Value Asset Management LLC and its clients. Certain affiliated accounts may trade in the same securities with client accounts on an aggregated basis when consistent with Intrinsic Value Asset Management LLC 's obligation of best execution. In such circumstances, the affiliated and client accounts will share commission costs equally and receive securities at a total average price. Intrinsic Value Asset Management LLC will retain records of the trade order (specifying each participating account) and its allocation, which will be completed prior to the entry of the aggregated order. Completed orders will be allocated as specified in the initial trade order. Partially filled orders will be allocated on a pro rata basis. Any exceptions will be explained on the Order. Intrinsic Value Asset Management LLC's clients or prospective clients may request a copy of the firm's Code of Ethics by contacting Gerald W. Bollman, CFA. It is Intrinsic Value Asset Management LLC s policy that the firm will not affect any principal or agency cross securities transactions for client accounts. Intrinsic Value Asset Management LLC will also not cross trades between client accounts. Principal transactions are generally defined as 5

9 transactions where an adviser, acting as principal for its own account or the account of an affiliated broker-dealer, buys from or sells any security to any advisory client. A principal transaction may also be deemed to have occurred if a security is crossed between an affiliated hedge fund and another client account. An agency cross transaction is defined as a transaction where a person acts as an investment adviser in relation to a transaction in which the investment adviser, or any person controlled by or under common control with the investment adviser, acts as broker for both the advisory client and for another person on the other side of the transaction. Agency cross transactions may arise where an adviser is dually registered as a broker-dealer or has an affiliated broker-dealer. Item 12 Brokerage Practices Intrinsic Value Asset Management LLC does not receive research or other products or services from any broker or any other third party in connection with execution of client transactions, otherwise known as "Soft Dollars". All client transactions are executed only with most favorable execution in mind. Item 13 Review of Accounts The Portfolio Manager conduct periodic reviews of all accounts to ensure performance and transactions are consistent with clients' objectives. Each account is reviewed to determine asset allocation, investment performance, security weighting and other relevant portfolio management issues each quarter for all clients. Internal reports are also monitored frequently to ensure asset valuations are consistent with market conditions. Investment Advisory Agreements may require specific account review timetables in addition to Intrinsic Value account review policy. Market conditions at the time of review may be a determinant in reducing or selling a position in any one portfolio. The Portfolio Manager reviews all accounts quarterly but may from time to time review accounts on a monthly or biweekly basis depending on the level of activity in the account and also the frequency in which a client may specify in communication with the portfolio manager. Portfolio Manager may review accounts for the following issues including but not limited to: Portfolio price verification analysis to determine if market value of the account is accurate and reflects the actual price of securities held. Client transactions are consistent with established guidelines set forth in the adviser's agreement. Client accounts on the firm's books and records are reconciled to the custodian. Quarterly billing statements are consistent with fee provisions of the advisory agreement. Suitability, Account Determination, and Asset Allocation review conducted for new client accounts. Item 14 Client Referrals and Other Compensation Intrinsic Value Asset Management LLC receives no economic benefit of any kind from anyone not a client who may provide advice to clients of Intrinsic Value Asset Management LLC. 6

10 Intrinsic Value Asset Management LLC does not pay anyone for client referrals to Intrinsic Value Asset Management LLC. Item 15 Custody Intrinsic Value Asset Management LLC does not have custody of clients' funds or securities and does not have the power to debit clients' accounts for advisory fees. However, clients should receive at least quarterly statements from the broker dealer, bank or other qualified custodian that holds and maintains client s investment assets. Intrinsic Value Asset Management LLC urges you to carefully review such statements and compare such official custodial records to the account statements that we may provide to you. Our statements may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities. Item 16 Investment Discretion Intrinsic Value Asset Management LLC usually receives discretionary authority from the client at the outset of an advisory relationship to select the identity and amount of securities to be bought of sold. In all cases, however, such discretion is to be exercised in a manner consistent with the stated investment objectives for the particular client account. Discretionary authority is usually explicitly granted to Intrinsic Value Asset Management LLC in the client's custodial agreement with a bank or brokerage firm. When selecting securities and determining amounts, Intrinsic Value Asset Management LLC observes the investment policies, limitations and restrictions of the clients for which it advises. Investment guidelines and restrictions must be provided to Intrinsic Value Asset Management LLC in writing. Item 17 Voting Client Securities Pursuant to SEC adopted rule amendment rule 206(4)-6 under the Advisers Act which requires mutual funds, advisers, and other SEC registered management companies to adopt and implement written policies and procedures reasonable designed to ensure that the adviser votes proxies in the best interests of its clients, Intrinsic Value Asset Management, LLC has in place written policies and procedures for Proxy Voting that outlines the firm s philosophy and practices of voting on fully discretional assets under management pursuant to guidelines under the Employee Retirement Income Security Act of 1974 (ERISA) and guidance provided by other regulatory bodies for non ERISA clients. The firm s Investment Adviser Service Agreement expressly authorized the firm to vote proxies on behalf of clients unless notified in writing by the client that such services shall be the responsibility of the client. Decisions on voting of proxies will be made by the Adviser unless the client specifically directs otherwise in 7

11 writing. If the Client instructs Adviser that it or another party shall vote proxies, then the Adviser will have no liability or responsibility whatsoever in connection with the voting of such proxies. If the Adviser retains the responsibility to vote proxies, the Client acknowledges that the Adviser may exercise such vote. The Client also acknowledges that the Adviser may retain an independent third party proxy voting service to facilitate the voting of proxies. Clients may obtain a copy of Intrinsic Value Asset Management LLC s complete proxy voting policies and procedures upon request. Clients may also obtain information from Intrinsic Value Asset Management LLC about how Intrinsic Value Asset Management LLC voted any proxies on behalf of their account(s). Item 18 Financial Information Registered investment advisers are required in this Item to provide you with certain financial information or disclosures about Intrinsic Value Asset Management LLC s financial condition. Intrinsic Value Asset Management LLC has no financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients, and has not been the subject of a bankruptcy proceeding. Item 19 Requirements for State-Registered Advisers A. Gerald W. Bollman, CFA is the Chairman, Managing Member and Portfolio Manager for Intrinsic Value Asset Management LLC. Detailed educational and business experience is detailed in ADV Part 2B B. Gerald W. Bollman, CFA is engaged in bookkeeping services under the name GWB Bookkeeping. No client of Intrinsic Value Asset Management LLC is currently provided services through this business. See ADV Part 2B for additional information. No conflicts of interest arise from this activity. No more than eight hours per month (approximately five percent of monthly work time) are spent on this business. 8

12 Form ADV Part 2B Item 1- Cover Page Gerald W. Bollman, CFA Intrinsic Value Asset Management, LLC 118 Live Oak Lane Largo, Florida December 31, 2015 This Brochure Supplement provides information about Gerald W. Bollman, CFA that supplements the Intrinsic Value Asset Management LLC Brochure. You should have received a copy of that Brochure. Please contact Gerald W. Bollman, CFA if you did not receive Intrinsic Value Asset Management LLC s Brochure or if you have any questions about the contents of this supplement. Additional information about Gerald W. Bollman, CFA is available on the SEC s website at Item 2- Educational Background and Business Experience Gerald W. Bollman, CFA, Born June 23, 1943, Inglewood, California University of Oregon, 1967, Master of Science (Bachelor of Business Administration) Harvard University, School of Business Administration, 1978, Program for Management Development Trust Department, US National Bank of Oregon, Trust Department, Pacific National Bank of Washington, Investment Department, Industrial Indemnity Company, Investment Department, Crum & Forster Insurance Companies, Vice President, A. B. Laffer Associates, Vice President, Gardner and Preston Moss, Executive Vice President, Continental Asset Management, Chairman and Managing Member, Intrinsic Value Associates LLC, Executive Vice President, Great Companies LLC, Chairman and Managing Member, Intrinsic Value Asset Management LLC present

13 Form ADV Part 2B Item 3- Disciplinary Information Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of each supervised person providing investment advice. No information is applicable to this Item. Item 4- Other Business Activities Gerald W. Bollman, CFA is engaged in the business of bookkeeping under the name GWB Bookkeeping. Bookkeeping clients' accounts are maintained in Intuit "Quicken" software and monthly reports of income, spending, net worth, asset allocation and investment returns are sent to clients in Adobe Portable Document File format via . A monthly fee is charged for this service and is negotiated with clients at account inception. No current investment management client is also a GWB Bookkeeping client. Item 5- Additional Compensation No information is applicable to this Item. Item 6 - Supervision Gerald W. Bollman, CFA is the only advisor in Intrinsic Value Asset Management LLC. Item 7- Requirements for State-Registered Advisers No information is applicable to this Item.