LAKEVIEW CAPITAL ADVISORS

LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
LAKEVIEW CAPITAL ADVISORS
17900 Crestline Dr.
Lake Oswego, OR 97034
(203) 644-0273
Fax: (503) 636-0436
www.lvcadvisors.com
March 1, 2014
This Brochure provides information about the qualifications and business practices of Lakeview
Capital Advisors. If you have any questions about the contents of this Brochure, you may contact us
at (203) 644-0273, or email [email protected] to obtain answers and additional information.
Lakeview Capital Advisors is a registered investment advisor in the State of Oregon. Registration of
an investment adviser does not imply any level of skill or training. The information in this Brochure
has not been approved or verified by the United States Securities and Exchange Commission (SEC),
the State of Oregon or by any other state securities authority.
Additional information about Lakeview Capital Advisors is available on the SEC’s website at
www.Adviserinfo.sec.gov.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 2 – Material Changes
Lakeview Capital Advisors is a newly formed registered investment advisor and this Brochure is its
first Brochure filed with the IARD. As such, there are no material changes.
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 and 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 James Patricelli at (203) 644-0273, or by
email to [email protected].
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 3 – Table of Contents
Page
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 ................................................. 4
Item 7
Types of Clients ...................................................................................................................... 5
Item 8
Methods of Analysis, Investment Strategies and Risk of Loss ........................................ 6
Item 9
Disciplinary Information ....................................................................................................... 8
Item 10
Other Financial Industry Activities and Affiliations ......................................................... 9
Item 11
Standard of Care Owed to Clients, Participation or Interest in Client
Transactions and Personal Trading.................................................................................... 10
Item 12
Brokerage Practices .............................................................................................................. 11
Item 13
Review of Accounts ............................................................................................................. 12
Item 14
Client Referrals and Other Compensation ....................................................................... 13
Item 15
Custody .................................................................................................................................. 14
Item 16
Investment Discretion ......................................................................................................... 15
Item 17
Voting Client Securities ....................................................................................................... 16
Item 18
Financial Information .......................................................................................................... 17
Item 19
Requirements for State-Registered Advisors .................................................................... 18
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 4 – Advisory Business
A
Lakeview Capital Advisors, LLC, dba Lakeview Capital Advisors (“Lakeview” “firm” “we”),
is an Oregon limited liability company registered as an investment advisory firm with the
State of Oregon. Its principal place of business is located in Lake Oswego, Oregon. James
Patricelli is the Owner and Managing Partner of the firm, which he founded in 2013.
B, C We provide investment advisory services to individuals who are able to invest $1 million or
more with Lakeview, or who have a total net worth of $2 million or more (excluding primary
residence). We manage Client assets through a single investment strategy using separately
managed accounts. Generally, we have the authority to determine, without obtaining specific
Client consent, the securities bought or sold and the amount of securities bought or sold and
commission rates paid. The only restrictions on the above discretionary authority are those
set by Clients on a case-by-case basis. We make it a practice to question our Clients to
determine if there are any limitations to our discretionary authority on the above matters.
D
We do not participate in any wrap fee programs.
E
We manage $0 of Client assets on a discretionary basis and $0 of Client assets on a nondiscretionary basis. This amount was calculated as of March 1, 2014.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 5 – Fees and Compensation
A
Lakeview is a fee-only advisory firm, meaning we are compensated only by our Clients and
do not receive compensation or commissions from any other parties. We believe this method
of compensation minimizes conflicts of interest.
Compensation to us for our services will be calculated in accordance with Schedule A of the
Investment Advisory Agreement entered into with each Client, and may be amended from
time to time upon 30-days written notice to our Clients.
In consideration of our services, Clients pay us a fee monthly in arrears, based on assets
under management (“AUM”). This fee will be paid directly to us from Client’s account by the
custodian holding Client’s assets. The AUM fee, charged on all assets under management,
will be 1.00% annualized. Fees will be calculated by taking the account value at the close of
the market on the previous trading day multiplied by 1.00% then divided by the number of
business days in the year.
Advisor will also charge a fee based on the performance of Client’s account, in addition to
the 1.00% AUM fee. The performance fee will be determined on an annual basis, at the end
of each calendar year (December 31 or last business day of the year). For the initial year,
performance fees will be based on the rate of return from engagement date to December 31
(or last business day of the year). For the termination year, the performance fee will be
calculated based on the annualized rate of return from January 1 (or account inception,
whichever comes later) to the date the relationship is terminated. At the end of each calendar
year, Advisor will calculate the return on Client’s account. The rate of return will be
calculated on the proceeds of the account, less daily management fees. If Client’s account has
an annualized rate of return between 0% and 14.99%, Advisor will charge a 10%
performance fee on the proceeds of the account. If the annualized rate of return on Client’s
account is equal to or greater than 15.0%, Advisor will charge a 20% performance fee on the
proceeds of the account.
For purposes of determining value, securities and other instruments traded on a market for
which actual transaction prices are publicly reported shall be valued at the last reported sale
price on the principal market in which they are traded. All other assets shall be valued at fair
value by us, and our determination shall be conclusive.
B
Our fees will be paid directly to us from the account by the custodian holding a Client’s
assets. Custodian will automatically withdraw the AUM from the Client’s account on a
monthly basis. Advisor will send Client an invoice at the end of each quarter. Payment of fees
may result in the liquidation of Client’s securities, if there is insufficient cash in the account.
Clients bear the responsibility for verifying the accuracy of fee calculations.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
C
Our fees are exclusive of transaction fees, custodial fees, and direct investment manager fees
for all Client investments, including for example brokerage commissions, margin interest,
custodial fees, management fees or costs of mutual funds, exchange traded funds, managed
accounts, investment partnerships or similar.
While our fees include the time and activities necessary for the firm to coordinate and
communicate with third party advisors (such as lawyers, accountants, insurance specialist and
similar professionals), our fees are exclusive of the fees and costs of any third party advisors
engaged by the Client.
D
The market value will be construed to equal the sum of the values of all assets in the account,
not adjusted by any margin debit. Fees for partial quarters at the commencement or
termination of the Agreement will be billed or refunded on a pro-rated basis, contingent on
the number of days the account was open during the quarter. Monthly fee adjustments for
additional assets received into the account during a quarter or for partial withdrawals will also
be provided on the above pro rata basis.
E
We are a fee-only investment advisory firm paid on a percentage of Client assets managed.
This means that no supervised person associated with us receives or accepts any
compensation for the sale of securities or investment products.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 6 – Performance-Based Fees and Side-By-Side Management
As disclosed above in Item 5, Lakeview does charge a performance fee. Fees based on performance
are only charged on proceeds of the account. Additionally, as disclosed in Item 5, all accounts will be
charged a 1% fee based on the total amount of assets managed by advisor.
Clients should be aware that performance-based fee arrangements can and do create conflicts of
interests. However, because Lakeview charges a fee based on assets under management and a
performance based fee (where applicable) on all accounts, they do not have any incentive to favor
one account over another.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 7 – Types of Clients
We provide investment advice to the following types of Clients:
Individuals
Trusts and Estates
Institutional Investors
Family Offices
Because each Client is unique, they must be willing to be involved in the ongoing processes. Such
involvement does not have to be time consuming, however we want our Clients to remain informed
and have a sense of security about their investments.
Generally, Client must invest at least $100,000 with Lakeview to open an account.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
A
We offer advice on investments primarily including (but not limited to) the following:
•
•
•
•
Equity securities, both long & short, such as:
o Exchange-listed securities
o Securities traded over-the-counter
Options contracts on:
o Securities
Futures contracts on:
o Securities
Use of leverage:
We primarily research and analyze securities using traditional fundamental and behavioral
methods. The primary investment strategies used to implement investment advice given to
Clients include disciplined long-term purchases, active trading, frequent rebalancing and
portfolio reallocations as necessary.
The main sources of information we rely upon when researching and analyzing securities
include traditional research materials such as financial newspapers and magazines, research
materials prepared by others, annual reports, prospectuses, filings with the Securities and
Exchange Commission, and company press releases.
Our investing philosophy is based on a broad fact base. We believe the dominate determinant
of long term real investment outcome is investor behavior. Many studies have demonstrated
that, over the long term:
B
•
Portfolio Structure (asset allocation and diversification) is the primary determinant of
a portfolio’s return and variability.
•
Risk and return are often related; investors are best served by spending units of risk
in areas where they are compensated in the form of greater return.
We will use our best judgment and good faith efforts in rendering services to our Clients.
However, we cannot warrant or guarantee any particular level of account performance, or
that an account will be profitable over time. Not every investment decision or
recommendation made by us will be profitable. Clients assume all market risk involved in the
investment of account assets under the Investment Advisory Agreement and understand that
investment decisions made for this account are subject to various market, currency,
economic, political and business risks.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Except as may otherwise be provided by law, we are not liable to Client for any loss arising
from our adherence to Client’s instructions. Nothing in this brochure shall relieve us from
any responsibility or liability we may have under state or federal statutes.
Except as may otherwise be provided by law, we are not liable to Clients for:
Any loss that a Client may suffer by reason of any investment decision made, or
other action taken or omitted in good faith by us with that degree of care, skill,
prudence and diligence under the circumstances that a prudent person acting in a
fiduciary capacity would use;
Any loss arising from our adherence to a Client’s instructions; or
Any act or failure to act by a custodian of a Client’s account.
It is the responsibility of each Client to give us complete information, and to notify us of any
changes in financial circumstances or goals.
C
Our advisory services generally do not recommend a particular type of security.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 9 – Disciplinary Information
We are required to disclose all material facts regarding any legal or disciplinary event that would be
material to your evaluation of our firm, or the integrity of our management. We have no information
to disclose applicable to this Item.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 10 – Other Financial Industry Activities and Affiliations
James Patricelli, owner, and sole investment advisor representative (“IAR”) of Lakeview, is a limited
partner of an independent broker dealer, G-2 Trading. The work Mr. Patricelli does for G-2 Trading
is basically identical to the work he provides Lakeview, as he is implementing a similar investment
strategy for both firms. Accordingly, generally any investment research and analysis conducted for
one firm benefits the other. Any rebalancing of client accounts is conducted simultaneously with
both firms, meaning, Mr. Patricelli essentially spends equal amounts of time servicing clients from
each firm. This scenario creates a conflict of interest. This conflict is mitigated by disclosing the
affiliation and advising Clients that they are free to seek similar services from any broker dealer they
wish.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 11 – Standard of Care Owed to Clients, Participation or Interest in Client
Transactions and Personal Trading
A
We subscribe to an ethical and high standard of conduct in all our business conduct in order
to fulfill the fiduciary duty we owe to our Clients. Included in these ethical obligations is the
duty to put our Client’s interests ahead of our own, along with duties of loyalty, fairness, and
good faith towards our Clients.
B-D Lakeview, or individuals associated with us, may buy and sell some of the same securities for
our own account that we buy and sell for our Clients. Additionally, individuals associated
with Lakeview may be invested in the same investment strategy used for Lakeview clients.
Trades for all separately managed accounts, including any account of individuals associated
with Lakeview, are aggregated by the custodian. By aggregating trades, no account will be
affected as if it was traded before or after another. In all other instances, where appropriate,
we will purchase a security for all of our existing accounts for which the investment is
appropriate before purchasing any of the securities for our own account and, likewise, when
we determine that securities should be sold, where appropriate will cause these securities to
be sold from all of our advisory accounts prior to permitting the selling of the securities from
our accounts. In some cases, we may buy or sell securities for our own account for reasons
not related to the strategies adopted by our Clients.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 12 – Brokerage Practices
A
Clients will open brokerage accounts with Interactive Brokers. In selecting the brokerdealers, we seek to obtain “best execution,” meaning that we seek to execute securities
transactions for Clients so that the total costs or proceeds in each transaction are the most
favorable under the circumstances. The factors we consider when evaluating for best
execution include:
Execution capability;
Commission rate;
Financial responsibility;
Responsiveness;
Custodian capabilities;
The value of any research services/brokerage services provided; and
Any other factors that we consider relevant.
Selecting a broker-dealer can create a conflict of interest. Accordingly, Lakeview has
established the following restrictions in order to ensure its fiduciary responsibilities:
1. A director, officer, associated person, or employee of Advisor shall not buy or sell
securities for his personal portfolio where his decision is substantially derived, in
whole or in part, by reason of his employment, unless the information is also available
to the investing public or reasonable inquiry. No person of Advisor shall prefer his or
her own interest to that of the advisory Client.
2. Advisor maintains a list of all securities holdings for itself and anyone associated with
its advisory practice with access to advisory recommendations. These holdings are
reviewed on a regular basis by an appropriate officer of Advisor.
3. Advisor requires that all individuals must act in accordance with all applicable federal
and state regulations governing registered investment advisory practices.
4. Any individual not in observance of the above may be subject to termination.
B
We do aggregate trades. Client trades in the same security will be bunched in a single order (a
“block”) in an effort to obtain best execution at the best security price available. When
employing a block trade:
•
If a block order is filled (full or partial fill) at several prices through multiple trades,
an average price and commission will be used for all trades executed;
•
All participants receiving securities from the block trade will receive the average price.
•
Only trades executed within the block on the single day may be combined for
purposes of calculating the average price.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 13 – Review of Accounts
A
Accounts are periodically reviewed by Jim Patricelli. The frequency of reviews is determined
by the Client’s investment objectives and account activity, but occurs at least annually and
could occur more frequently if circumstances warrant.
B
More frequent reviews may also be triggered by a change in Client’s investment objectives,
needs or situation.
C
All of our Clients have ready access to account statements and reports, and receive standard
account statements from the custodian of their accounts on at least a monthly basis.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 14 – Client Referrals and Other Compensation
The vast majority of our new Clients come from introductions made by existing Clients. However,
we may pay a fee to individuals or entities which refer Clients to our firm. These persons are
commonly called “Solicitors.”
Any Solicitor referral arrangement between us and a third-party will be in writing. The writing will
set forth the following:
(a) The scope of the Solicitor’s activities;
(b) A covenant that the Solicitor will perform its activities consistent with our instructions
and in compliance with the Act and associated rules; and
(c) A covenant that the Solicitor will provide the Client with:
• A copy of our Form ADV Part 2 and
• A separate written solicitor disclosure.
The separate written Solicitor disclosure must include the following information:
• The name of the Solicitor;
• The nature of the relationship between the Solicitor and us;
• A statement that the Solicitor will be compensated by us for the referral;
• The terms of the compensation arrangement including a description of the fees
paid or to be paid to the Solicitor; and
• The amount the Client will be charged in addition to the Wealth Management
Retainer fee (if any).
We will not engage any Solicitors who are disqualified from acting as a Solicitor under Section 203
of the Act. For example, we will not pay a Solicitor referral fee to any person who has been barred
or prohibited from acting as an investment adviser or broker-dealer, or convicted within the past ten
years of certain felonies or misdemeanors.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 15 – Custody
Except for the ability to directly deduct our fees, we do not have custody of the assets in any Client
accounts. Accordingly, we have no liability to Clients for any loss or other harm to any property in
the account, including any harm to any property in the account resulting from the insolvency of the
custodian or any acts of the agents or employees of the custodian, whether or not the full amount or
such loss is covered by the Securities Investor Protection Corporation (“SIPC”) or any other
insurance which may be carried by the custodian. Clients understand that SIPC provides only limited
protection for the loss of property held by a broker-dealer.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 16 – Investment Discretion
Except as otherwise instructed, Clients grant us ongoing and continuous discretionary authority to
execute investment recommendations in accordance with our Statement of Investment Policy (or
similar document used to establish Client’s objectives and suitability), without the Client’s prior
approval of each specific transaction. Under this discretionary authority, Clients allow us to purchase
and sell securities and instruments in their account(s), arrange for delivery and payment in
connection with the foregoing, select and retain sub-advisors, and otherwise act on their behalf in
most matters necessary or incidental to the handling of the account, including monitoring certain
assets.
The only restrictions on the above discretionary authority are those set by the Client on a case by
case basis.
All transactions in the account are made in accordance with the directions and preferences provided
to us by each Client. Clients execute instructions regarding our trading authority as required by the
custodian.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 17 – Voting Client Securities
Unless specifically directed otherwise in writing by a Client, we are not authorized to receive and
vote proxies on issues held in the account, or receive annual reports.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 18 – Financial Information
A
Under no circumstances will Lakeview solicit or require prepayment of more than $500, six
months or more in advance, from any Client for advisory services.
B
We do not have custody of Client’s funds or securities, and we have no financial
commitments which would impair our ability to meet the contractual and fiduciary
commitments to our Clients.
C
Lakeview has not been the subject of any bankruptcy proceedings.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
Item 19 – Requirements for State-Registered Advisers
A
EDUCATION AND BUSINESS BACKGROUND
JAMES PATRICELLI
Born in 1967
Educational Background
Bachelors of Science, Finance & Marketing, University of Oregon, (Eugene, Oregon) 1990
Business Background
2013 – Present, Owner/Investment Advisor Representative, Lakeview Capital Advisors
2012 – Present, Limited Partner, G-2 Trading
2007 – 2011, Senior PM, Lombard Odier Asset Management
2001 – 2007, General Partner, Pequot Capital Management
1999 – 2001, Director, Deutsche Bank Securities
1996 – 1999, Principal, Wessels Arnold & Henderson
1996, Senior Analyst, Adams, Harkness & Hill
1992 – 1995, Senior Associate, Volpe, Welty & Company
1991 – 1992, Associate, Fisher Investments
1990 – 1991, Performance Analyst, Wilshire Associates
B
OTHER BUSINESS ACTIVITIES
James Patricelli, owner and sole investment advisor representative (“IAR”) of Lakeview, is a
limited partner of an independent broker dealer, G-2 Trading. The work Mr. Patricelli does
for G-2 Trading is almost identical to the work his does for Lakeview, as he is implementing
a similar investment strategy for both firms. Accordingly, generally any investment research
and analysis conducted for one firm benefits the other. Any implementation of changes to
client accounts is conducted simultaneously with both firms, meaning, Mr. Patricelli
essentially spends an equal amount of time servicing clients from each firm. This scenario
creates a conflict of interest because there is an incentive to recommend the affiliated G-2
for additional investment related services. This conflict is mitigated by disclosing the
affiliation and advising Clients that they are free to seek similar services from any broker
dealer they wish.
C
Mr. Patricelli does receive performance-based fees. Performance fees are calculated as
described above in Item 5. Performance based compensation may create an incentive to
recommend an investment that may carry a high degree of risk.
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LAKEVIEW CAPITAL ADVISORS
Part 2A of Form ADV – Firm Brochure
D
Neither Mr. Patricelli, nor anyone associated with Lakeview, has been the subject of any
arbitration claims or any other proceedings (civil, self-regulatory organization or
administrative).
E
Mr. Patricelli has no relationship or any arrangements with any securities issuers.
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