Waterstone Advisors, LLC

Transcription

1 ITEM 1 COVER PAGE Firm Brochure (Form ADV Part 2A) 10 Brook Street Walpole, MA vha@waterstoneadvisors.net March 18, 2014 This brochure provides information about the qualifications and business practices of Waterstone Advisors LLC ( Waterstone ). If you have any questions about the contents of this brochure, please contact V. Henry Astarjian at or by at vha@waterstoneadvisors.net. 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. Registration with securities authorities does not imply a certain level of skill or training.

2 ITEM 2 MATERIAL CHANGES The Firm has not made any material changes since the filing of its last ADV Part 2 of February 28, The Firm will review and update its brochure annually, or more frequently, if there is a material change, in order to keep it current. This brochure may be requested by calling V. Henry Astarjian at or by , vha@waterstoneadvisors.net. Page 2

3 ITEM 3 TABLE OF CONTENTS Item 1 Cover Page (p. 1) Item 2 Material Changes (p. 2) Item 3 Table of Contents (p. 3) Item 4 Advisory Business (p. 4) Item 5 Fees and Compensation (p. 5) Item 6 Performance-Based Fees and Side-by-Side Management (p. 6) Item 7 Types of Clients (p. 6) Item 8 Methods of Analysis, Investment Strategies and Risk of Loss (p. 6) Item 9 Disciplinary Information (p. 8) Item 10 Other Financial Industry Activities and Affiliations (p. 8) Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading (p. 8) Item 12 Brokerage Practices (p. 9) Item 13 Review of Accounts (p. 10) Item 14 Client Referrals and Other Compensation (p. 10) Item 15 Custody (p. 10) Item 16 Investment Discretion (p. 11) Item 17 Voting Client Securities (p. 11) Item 18 Financial Information (p. 11) Item 19 Requirements for State-Registered Advisers (p. 11) Brochure Supplement Cover Page (p. 12) Supplement Item 2 Educational Background and Business Experience (p. 13) Page 3

4 ITEM 4 ADVISORY BUSINESS ( Waterstone, We, Our, Us ) was formed by V. Henry Astarjian, to offer investment management services to individuals, families, and businesses. In addition, Waterstone offers investment research and portfolio consulting services. The firm became a Massachusetts registered investment advisor in V. Henry Astarjian is currently the company s sole managing member and employee. Our objective is to grow the value of your account ( portfolio ) over time in accordance with your investment goals. When you engage us to be your investment advisor, we will meet with you to formulate an investment plan that will act as our guide in making investment decisions for your portfolio. This investment plan, also known as an investment policy statement (IPS), will take into consideration your particular needs and goals and will be mindful of the appropriate level of risk for your portfolio. We will review and update your investment policy statement with you at least once a year, or more frequently if needed, to adjust for changes in your tax status, life circumstances, or investment objectives. We manage portfolios on a discretionary basis. This means that after we have agreed on an investment strategy that is suitable for you, we will buy or sell securities without asking your approval for each trade, prior to, or at the time it takes place. Such an arrangement allows us to act in a timely manner in making investment decisions that comply with your IPS. Waterstone will not assign your account to other parties without your consent. You may make additions to, or request withdrawals from your investment account at any time during normal business hours, and you may terminate your relationship with Waterstone Advisors LLC for any reason at any time. Page 4

5 ITEM 5 FEES AND COMPENSATION Our portfolio management fees are based on a percentage of assets managed and our fee structure offers tiered discounts for progressively larger accounts. Our fee schedule for portfolio management is: 1.25% of the value of the account, up to the first $1,000,000, plus 1.00% of the value of the account, from $1,000,001 to $2,000,000, plus 0.75% of the value of the account, from $2,000,001 to $3,000,000, plus 0.50% of the value of the account over $3,000,001. The following is an example of an annual fee calculation for an account with an average balance of $5,000,000: 1.25% of the first $1,000,000 = $12, % of the next $ 999,999 = $ 9, % of the next $ 999,999 = $ 7, % of the next $1,999,999 = $10, Total Fee $39, The overall effective annual fee rate is 0.80% in this example. Our fees are negotiable for related accounts, large accounts, or for accounts which anticipate substantially increased asset inflows. Our management fees are based on the market value of your account at the end of each calendar quarter and are debited directly from your account by your custodian on our behalf quarterly, in arrears. We do not require advance payment for any of our services. All fees and authorizations are agreed upon in advance and are detailed in our engagement letter with you. Our investment management fees exclude, and are in addition to, commissions paid to brokers from your account. Exchange-traded funds and mutual funds also carry fees that are exclusive of and are in addition to our fees. You have the option to purchase investment products or services through brokers other than the ones we use or recommend. Our minimum account size requirement for our portfolio management service is $200,000. We Page 5

6 may waive this requirement at our sole discretion, particularly if we anticipate future inflows of assets, or if we manage related accounts. If you wish to engage us only for investment research on individual stocks, mutual funds, exchange traded funds (ETFs), or other investment vehicles or topics, we charge a fee of $250 per hour with a one hour minimum charge. If you wish to engage us only for consulting services related to your current or future portfolio, we charge a fee of $250 per hour with a one hour minimum charge. We do not currently participate in any wrap fee programs. ITEM 6 PERFORMANCE-BASED FEES AND SIDE BY SIDE MANAGEMENT Waterstone does not charge performance-based fees for any of its services and does not manage any accounts that charge such fees. Performance-based fees are those that are charged on a percentage of capital appreciation or capital gains. ITEM 7 TYPES OF CLIENTS Waterstone provides portfolio management, investment research, and portfolio consulting services to individuals, families, and businesses. Clients can engage us to manage either all or a portion of their investment assets on a discretionary basis. We do not manage nondiscretionary accounts. ITEM 8 METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS Methods of Analysis Waterstone s proprietary research process is based on fundamental analysis that focuses on a company s long-term prospects for growth and profitability. We believe that share prices are driven over time by earnings expectations that, in turn, are shaped by company-specific factors and influenced by economic, political, legislative, and industry trends. Our research objective is to understand relevant factors on multiple levels and to help our clients benefit from them. There may be times when we may not achieve this objective. Page 6

7 In selecting individual stocks, we favor companies that are leaders in their industries, are run by capable management teams, have clear-cut growth strategies, promising prospects for increased profitability, strong or improving balance sheets, and competitive advantages that allow for pricing power. We pay particular attention to share valuations as a barometer of investors interest in a company and of their expectations for the company s future prospects. We select stocks that we believe are valued sensibly relative to their companies fundamental prospects. We favor dividend paying stocks. We do not have a market capitalization or industry bias in our selections, but seek the most attractive investment opportunities which our research process identifies. We utilize numerous sources of information which act as the raw materials for our investment decisions. These sources include, but are not limited to, corporate regulatory filings, press releases, earnings conference calls, industry conferences, news articles, proprietary screens, and online financial news and data sites. While we make every reasonable effort to verify the reliability of the data we use in our fundamental analyses, we cannot guarantee the accuracy of such data in all cases. We draw our investment ideas from a wide range of U.S.-listed stocks, mutual funds, exchangetraded funds (ETFs), American Depository Receipts (ADRs), and cash instruments. Investment Strategies Waterstone generally manages portfolios of up to 50 investment positions which may include stocks, bonds, mutual funds, and exchange-traded funds (ETFs). We believe that this range of investment positions is generally sufficient to achieve our clients investment objectives while simultaneously reducing company-specific or issuer-specific risk in their portfolios. This number of positions, however, may not completely eliminate broad market (systematic) risk. Our research process is designed to identify attractive stocks and investments without regard to sector classification. Therefore, at times we may overweight or underweight certain sectors of the economy depending on the outcome of our research. Such an approach may outperform or underperform the S&P 500 or other broad market indices during certain time periods. Such an approach may also increase sector-specific or industry-specific risk. Page 7

8 We deploy cash methodically and with regard to market conditions rather than solely on its availability in our clients accounts. Therefore, there may be times when cash levels are high as we anticipate future investment opportunities or as we protect portfolios from an expected decline in asset values. We regard this approach as part of our asset allocation responsibilities for our clients portfolios. Waterstone does not participate in IPOs, initial public offerings, of securities. Risk of Loss Our investment process places considerable emphasis on risk management as we work to meet your objectives. To mitigate risk, we conduct in-depth research and analysis on each security; monitor and manage portfolios on an ongoing basis; maintain small position sizes; pay significant attention to valuations; hedge portfolios with index ETFs, if necessary; maintain appropriate cash levels; buy securities which are liquid under normal market conditions; and generally maintain upwards of 50 securities to offer what we believe is sufficient diversification against companyspecific or issuer-specific risks. While we employ a variety of risk reduction measures, investing in securities carries a risk of loss which you should be prepared to bear. The value of your account can decrease. ITEM 9 DISCIPLINARY INFORMATION Neither Waterstone Advisors LLC, nor its principal, has been the subject of legal or disciplinary action by the Commonwealth of Massachusetts or any other governing body. ITEM 10 OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS Waterstone Advisors LLC does not engage in any additional financial industry activities beyond those discussed in this Firm Brochure. Page 8

9 ITEM 11 CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS AND PERSONAL TRADING We have adopted a Code of Ethics which is designed to ensure that we maintain ethical practices at all times, with paramount emphasis on our fiduciary duties to you, our client. Each principal and employee of Waterstone Advisors LLC is required to annually review and sign the Code of Ethics affirming that they understand and agree to its provisions. You may obtain a copy of our Code of Ethics by contacting V. Henry Astarjian at or vha@waterstoneadvisors.net. At times, Waterstone Advisors, its principals or its employees may buy or sell in the open market, for their own accounts, the same investments that we place in your portfolio. Our Code of Ethics ensures that the interests of our clients are placed ahead of our own interests when making such transactions. All personal trading is subject to the provisions of our Code of Ethics and is monitored by V. Henry Astarjian. As part of our focus on ethical practices, we are committed to maintaining the confidentiality of the personal information you have entrusted to us. We use such information to determine the suitability of certain investments for you and to help us to formulate an investment plan and objectives for your account. We do not sell or otherwise share your personal and confidential information with third party marketers. With your permission, we may disclose limited amounts of your information to your attorneys, financial planners, accountants, or brokerage firms when your objectives require it, or when it is required by law. We maintain a secure office where your information is kept, and we utilize electronic firewall and password protected brokerage links. ITEM 12 BROKERAGE PRACTICES Waterstone Advisors does not maintain custody of the assets in your account. Clients are encouraged to open investment accounts at our preferred broker-dealer, Scottrade Advisor Services ( Scottrade ). Scottrade provides institutional level trading services for independent investment advisors and is a qualified custodian, able to maintain custody of your investment assets. If you wish to keep your current brokerage and custodial relationship, we will endeavor to work with your current broker-dealer and custodian to manage your account. However, we cannot Page 9

10 guarantee that we will be able to do so, or that you will receive better pricing or lower fees than might be available to our other clients who use Scottrade Advisor Services. Waterstone does not engage in soft dollar arrangements by which we receive research, goods or other services from Scottrade or any other broker-dealer. ITEM 13 REVIEW OF ACCOUNTS We review and monitor your portfolio on an ongoing basis to ensure that it conforms to your investment plan and meets your investment goals. We recommend that we meet personally with you at least once each year to review and update your investment goals and to discuss your portfolio. If you choose to open an account with Scottrade Advisor Services, they will send an account statement to you each month or each quarter, depending on the level of activity in your account. Whether you choose to custody with Scottrade or with another custodian, we suggest that you carefully review each of your brokerage statements as you receive them and direct any questions you may have to us. ITEM 14 CLIENT REFERRALS AND OTHER COMPENSATION Waterstone Advisors LLC does not have any compensation arrangements beyond the ones which have been previously detailed in this Firm Brochure. We do not receive compensation for referring you to other service providers such as lawyers, accountants, and insurance agents. While we welcome all client referrals to us, and our practice relies on word-of-mouth introductions, we do not pay compensation to any third parties for their referrals. ITEM 15 CUSTODY Waterstone Advisors does not maintain custody of the assets in your account. We currently use our preferred qualified broker-dealer and custodian Scottrade Advisor Services to custody our clients investment assets. Some clients may choose to have their own custodians. We will endeavor to work with your custodian to manage your account. Scottrade will send account Page 10

11 statements to you monthly or quarterly, depending on the level of activity in your account. As part of our attempt to maintain the integrity and transparency of your account, we recommend that you review your statements thoroughly and direct any questions that you may have to us. ITEM 16 INVESTMENT DISCRETION Waterstone Advisors LLC accepts only discretionary accounts. After we agree to an investment policy statement with you for your portfolio, our normal practice is to transact purchases and sales in your portfolio without further prior approval from you. Our discretion over your portfolio extends to the type of securities and specific names to be transacted, as well as their quantities and the general timing of those transactions. ITEM 17 VOTING CLIENT SECURITIES Waterstone Advisors LLC does not request proxy voting authority from its clients for securities held in their portfolios. Clients retain that responsibility and will receive proxies directly from their custodian. Clients may contact us with questions they may have about voting, although we cannot be considered to have voting authority as a result of the clarifications we may provide to them for their questions. ITEM 18 FINANCIAL INFORMATION Waterstone Advisors LLC has no financial commitments that impair our ability to meet our contractual and fiduciary commitments to you or other clients. We have not been the subject of bankruptcy proceedings. ITEM 19 REQUIREMENT FOR STATE-REGISTERED ADVISERS Waterstone Advisors LLC is a Massachusetts registered investment advisor. Please see the Brochure Supplement for further details about its Managing Director. Page 11

12 ITEM 1 COVER PAGE Firm Brochure (Form ADV Part 2B) Supplement 10 Brook Street Walpole, MA vha@waterstoneadvisors.net March 18, 2014 This brochure supplement provides information about V. Henry Astarjian that supplements the Brochure for ( Waterstone ). You should have received a copy of that brochure. Please direct your questions to V. Henry Astarjian at or by at vha@waterstoneadvisors.net. 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. Registration with securities authorities does not imply a certain level of skill or training. Page 12

13 ITEM 2 EDUCATIONAL BACKGROUND AND BUSINESS EXPERIENCE V. Henry Astarjian is the Managing Director of. Prior to founding Waterstone Advisors, Mr. Astarjian held a number of securities analyst and portfolio management roles at several companies including Fidelity Investments, Gannett Welsh & Kotler, MFM International, Detwiler Mitchell Fenton and Graves, American International Group, the New York Stock Exchange, and most recently, Choate Investment Advisors. While at Choate, Mr. Astarjian managed diversified portfolios for a number of Choate s clients while contributing equity recommendations to Choate s model portfolio. Before Choate, he was a medical device analyst at Detwiler Mitchell Fenton and Graves, and prior to that, a senior analyst at MFM International, a major U.K.-based fund manager. At MFM he headed a team of U.S. equity analysts and contributed investment recommendations to the firm s portfolio managers in London, Dublin, and Boston. At Gannett, Welsh & Kotler, Mr. Astarjian was responsible for contributing recommendations on healthcare stocks for two of the Bostonbased firm s equity strategies. As a healthcare sector analyst at Fidelity, he followed and analyzed high level developments in the healthcare field related to economic, legislative, and sector-specific trends. Mr. Astarjian started his investment career in 1986 as a research associate for the Options and Index Products Division of the New York Stock Exchange, where he worked with senior managers at the Exchange to help design derivative products intended for both institutional and retail markets. He subsequently joined American International Group s Overseas Finance division as a European equity analyst where he also co-managed equity and derivatives portfolios. During his investment career, he has had extensive experience helping to manage diversified portfolios over many market cycles for a wide range of clients including individuals, families and institutions. Mr. Astarjian was born in He holds a bachelor s degree in philosophy from Boston College and an M.B.A. in finance from Pace University in New York. Page 13