Item 7. Types of Clients
WRCMS provides investment advisory services solely to the Funds and does not impose any account
restrictions at this time.
Item 8. Method of Analysis, Investment Strategies and Risk of
Loss
Methods of Analysis and Investment Strategies
Investment Objective
WRCMS’s investment objective is to seek positive risk-adjusted returns on capital primarily through the
purchase of Securitized Pools (including the junior-most tranches) of such securities and trust preferred
securities, subordinated debt securities or other securities, including equity securities, issued by banks,
thrifts, insurance companies or other similar financial institutions or holding companies of real estate
investment trusts, and such other investments including without limitation common and preferred stocks,
convertible stocks and bonds, mutual funds, exchange traded funds, options, option futures, foreign
securities, American Depositary Receipts, unit investment trusts, money market funds, corporate and
government bonds, notes, evidences of indebtedness, general and limited partnership interests, units,
joint venture interests, warrants, certificates of deposits, and any and all securities whatsoever, public or
private, foreign or domestic, that the Firm may from time to time deem to be in the best interests of clients
(collectively, “Portfolio Securities”).
Investment Strategy
WRCMS seeks to identify selected Portfolio Securities that are undervalued and, accordingly, present
opportunities for attractive, risk-adjusted returns. WRCMS believes that stress in the financial sector and
the global recession have caused many securities to be deeply discounted and that the difficulty of
analyzing the underlying collateral and structures of Securitized Pools in the current environment has led
to discounted pricing of the securities.
Combined, WRCMS’s eight (8) professionals have extensive experience on the equity and debt sides of
the financial markets, as well as operational and investment experience within the banking, insurance,
and investment banking industries. Additionally, prior to associating with WRCMS, seven of WRCMS’s
eight professionals underwrote, structured and placed many of the Securitized Pools in which the Funds
invest. The targeted asset classes and investment strategies of the Funds include, but are not limited to,
the following:
Securitized Pools – The primary focus of the Funds will be investment in securities from
Securitized Pools of trust preferred securities and subordinated debt issued by bank holding
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Wolf River Capital Mississippi, LLC Disclosure Brochure
companies, banks, insurance companies and real estate investment trusts. These Securitized
Pools were largely originally issued between 2000 and 2007. Generally, the underlying collateral
of the pools originally consisted of 50 to 100 obligors. The transactions have different interest and
principal waterfalls. The Funds may purchase bonds from various tranches of the Securitized
Pools.
Trust Preferred Securities – WRCMS expects that the Funds’ investments will also include trust
preferred securities issued by bank holding companies and insurance companies. Generally, trust
preferred securities have a 30-year maturity period from the date of issuance, with an initial non-
call period of five (5) years. The securities have a five (5) year deferral option, where the issuer
can defer its interest for a period of five (5) years without having such deferral result in an event of
default. If the issuer exercises its deferral option, it is prohibited from paying interest and
dividends on or redeeming forms of debt or equity that are pari passu, or subordinate to the trust
preferred securities, including senior preferred stock issued via the Treasury Department’s Capital
Purchase Program, non-cumulative preferred stock, and common stock.
The Funds may also invest in other debt and equity of financial services companies, or any other
investment.
Description of Investment Process
Investment Analysis – WRCMS has developed and maintains proprietary databases and models
that facilitate tracking the performance of Securitized Pools as well as the individual obligors
underlying the Securitized Pools. WRCMS will utilize its databases and general market knowledge
to determine investment opportunities within the context of the current market and its expectation
of the future market for individual securities and Securitized Pools.
Portfolio Evaluation – Once an investment opportunity is determined to be attractive as a stand-
alone investment, WRCMS will evaluate the effect of adding that investment to the Fund portfolio.
Investment and Portfolio Monitoring – WRCMS will continually monitor the clients’ positions to
ensure that the investment thesis behind each position remains intact. WRCMS will also monitor
market prices and spreads so that portfolio adjustments can be made as trading and intrinsic
values converge or losses can be minimized in the event of a significant shift in an investment’s
...