client summary 031309 ppt
TRANSCRIPT
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
municipal bond specialists
products and services
A broker/dealer focusing on institutional
level service for our clients.
An alternative investment opportunity
providing high tax-exempt income.
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
value trustopportunity
• Complimentary portfolio review
• Institutional access = better
• Competent, attentive service
• Fair and modest markups
bonds at better prices • Transparent fee structure
• Client-focused philosophy
• Clear and concise reporting
bond market experience• 70 years combined municipal• Diversification of credit
• Risk management
• Principal protection
• Tax/income considerations
• Unique duration/maturity
• Preferential bond selection
institutional level access for investors
broker/dealer services:
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
institutional level access for investors
broker/dealer services:
municipal bond issuers
investment bank / underwritersSell bonds on behalf of issuer to MainLine West & Institutional Investors
mainline west clients$1 million par purchase
Total cost to acquire: $990,000
- Purchase bonds from investment bank @ 98.5- Sell bonds to MainLine client @99.0 (0.5 mark-up)
mainline westmunicipal securities
$1 million par purchase @ 101.5Total cost to acquire: $1,015,000
institutional brokers- Purchase bonds from investment bank @ 98.5
- Offer bonds to retail brokerage @ 99.5
UP-FRONT COST SAVINGS FOR MAINLINE CLIENTS = $ 25,000
Our mark-up is modest compared to retail, and based on a price lessthan available from retail.
MainLine bond selections are notavailable to all retail brokerages.We have access to the best bondsavailable.
Bonds we select are desirable.
They are attractive to retail brokerage as well as our clients.
MainLine selects bonds fromamong those offered by 50 underwriters with whom we have relationships for the mostattractive credit quality and price.
retail clients
retail brokerage- Sell bonds to retail client @101.5
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
helping optimize the client’s portfolio - example
broker/dealer services:
Portfolio and Investor Profile: National investor, state of residency has no income tax, a portion of the portfolio is invested in tax-exempt mutual funds . Portfolio value = $10MM
Yield
Increase
% of
Portfolio
Portfolio
Pick-up
Credit Quality &
Comments
Issue: Bonds are from high income tax states, which make good investment sense for a resident of
that state. This national investor does not enjoy the after tax advantage, and lose income as these
states provide lower yields due to high in state demand.
Enhancement Opportunity: Substitute specialty state bonds for like quality national trading states.
0.20% 15.65% 0.02%Some improved
from A to AA
Issue: Not taking advantage of bonds good for non-AMT eligible investors.
Enhancement Opportunity: Introduce AMT GNMA backed housing bonds. These bonds are AAA
rated, and work well for those investors not eligible for AMT. Credit quality is highest quality, and
housing programs have not suffered from the sub-prim
1.25% 10.00% 0.14%
All credits AAA
and GNMA
backed
Issue: Mutual Funds charge an annual expense fee, that hurts investor’s returns. This investor was
paying roughly 45 bps on 25% of his portfolio for mutual fund services.
Enhancement opportunity: Replace mutual funds with direct owned bonds. Mainline believes an
investor should only pay to buy bonds, and not hold them.
0.45% 26.05% 0.14%Fees to hold
portfolio avoided
TOTAL FOR ALL ENHANCEMENTS 51.7%30 bps = $30,000
ANNUALLY
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
municipal bond borrowers
General
Obligation
Bonds
State Governments/Agencies
Local Governments
Not-For-Profit Corps
Hospitals Universities
For-Profit Corps
Developers Solid WasteAirlines
Highest Credit Quality &
Financial Flexibility
Less Credit
Quality
Revenue
Bonds
Public Enterprise
Water & Sewer
AirportsElectric Utilities
Mass Transit
Cities SchoolsCounties
GNMA/GSE
*
**
*MainLine focus
The MainLine West
focus is on high quality
credits from state and
local government GO
credits, and high
quality, essential service
revenue bonds issued
by the public sector,
including unique
opportunities in GNMA
/GSE bonds.
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
tax equivalent yield examples
bond offering examples
Massachusetts Water Pollution
$408,665,000.00
Ratings Maturity Amount (mm) Coupon Yield
Federal Taxable Equivalent
Yields*
MA Taxable Equivalent
Yields*
Moody's: Aaae 5 years 7,140 5.000 2.460% 3.78% 4.12%
S&P: AAAe 10 years 11,515 5.000 3.470% 5.34% 5.87%
Fitch: AAAe 15 years 17,630 5.000 4.330% 6.66% 7.25%
Typical GNMA Housing Authority Example
Maturity Amount (mm) Avg Life YieldMaturity
to AVLTaxable Equiv Yield to AVL
5 years 1,000,000 5.0 yrs 5.0% 4/1/2014 7.77%
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
client-focused communication
keeping our clients informed
The MainLine West team works
in the municipal bond market all
day, every day. We understand
it, and we are experts. Activity
in U.S. and world markets affect
municipal bonds, and we are
busy interpreting and adjusting
our strategies and
recommendations for our
clients. We share our thoughts
and commentary throughout
the day on our blog. Join us
and share your comments on
our thoughts and opinions.
The MainLiner Blog
Advisory NotesSM are a series of
free client documents providing
important information to clients
regarding investment strategies
and tax considerations.
Muni AlertsSM provide an overview and
detailed yield and credit quality
information for municipal bond credits
recommended by the MainLine investment
team for inclusion in a client portfolio.
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
complimentary portfolio review
Our complimentary portfolio
review provides a comprehensive
analysis of current holdings:
• Cost for executing trades
• Diversification elements
• Credit quality
• Tax efficiency
• Investment strategy
• The MainLine Advantage:
Take advantage of our
expert advice and
recommendations to
optimize value, tax
advantage, and minimize
risk exposure.
understanding our client’s needs
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
personalized pro forma
This is a personalized proposal
based on our expertise and your
specific investment objectives
and specifications:
• Investment horizon
• Tax status
• Risk tolerance
• Liquidity preferences
• The MainLine Advantage:
Take advantage of our
expert recommendations
using investment themes
that are aligned with your
needs and constraints.
helping optimize the client’s portfolio
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
introduction to mainline fund investments
tax advantaged opportunity fund
An alternative investment opportunity providing high tax-exempt income.
A consolidated vehicle to take advantage of:
• Current relative value of municipal bonds
• Structural imbalances in the municipal market
Efficient use of low leverage = 8 – 10% federal tax-exempt income*
• Illiquid long term commitment
• 30% reserve deleveraging capital
Unique private equity capital structure
*Investment of capital in our Tax-Advantaged Opportunity Fund includes risk. When evaluating the fund as a part of your investment strategy, you should understand the
potential risks that could lead to a loss of some, or all, of your capital investment. There is no assurance that the fund will achieve its objective. Past performance does not
guarantee future results. A prudent investor always considers the potential risks as well as the rewards before proceeding. There are interest and management fees
associated with participation in the fund which will be fully disclosed to you prior to your commitment.
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
your partner for the journey
what mainline can do for you
• Top selection of bonds
A broker/dealer focusing on institutional
level service for our clients:• The best price
An alternative investment opportunity
providing high tax-exempt income.• Higher income per $ invested
let the mainline advantage enhance your investment portfolio:
Prudent monitoring and proactive response in today’s volatile marketplace
A team of professionals with over 70 years of combined experience
Focus on the long-term, not reacting to short-term market uncertainty
Clear, concise, client-focused thinking
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
Brad kreidle, founder and president
Mike maciolek, cfa, senior vice president
•20 years as municipal professional, including head trader at George K. Baum
•Leader in establishing municipal arbitrage strategies
•Leading market maker in tax exempt GNMA municipal bonds
•Instrumental in developing and maintaining the leading database for prepayment analysis
•16 years experience as municipal professional, including First Data Corporation
• Managed $12 billion muni bonds, $7 billion fixed income swaps; orderly liquidation
•Analyst at Oppenheimer Funds; assisted in portfolio management of $2 billion
tax-exempt money market funds
the mainline west team
70 years municipal bond investment experience
MainLine Wests pec ia l i s t s i n m un i c i pa l bond i nves t m en ts
Roger dalen, senior vice president
Dennis kortman, cpa, cfo, senior vice president
• Over 30 years experience in investment banking
• Specialist in quantitative municipal finance
• Vice President and Trustee at Capmark Finance; responsibilities included hedging$1.5 billion portfolio of non-rated multi-family housing revenue bonds
• 13 years as CFO of Kirchner, Moore & Company
• Served on AICPA’s subcommittee on Stockbrokerage Accounting and Auditing
• Managing Director and CFO of investment banking firm Hanifen, Imhoff, Inc.
• Consultant to brokerage clients regarding FINRA and SEC rules and reporting compliance
• 30 years partner at national CPA firms; in charge of investment banking and
accounting auditing practice
70 years municipal bond investment experience
the mainline west team