Concentrated Stock Management Workshop

 

Agenda

  

Thursday, 4 September 2008

 

Day One sessions jointly led by: 

Thomas J. Boczar, CFA Co-Managing Partner Hallmark Capital

Mark Fichtenbaum Tax Manager Citigroup

Thomas A. Humphreys Partner Morrison & Foerster LLP

 

7:30 a.m.         
Registration and Continental Breakfast

 

8:00 a.m.         
Overview of Concentrated Risks and Behavioral Concepts
Scott D. Welch
Senior Managing Director
Fortigent, LLC

• Defining and assessing specific company risk
• Possible investor objectives
• Complexity and constraints
• Understanding, identifying and overcoming certain investor biases

 

9:10 a.m.         
Overview of Tax Concepts

 

• Taxation of financial instruments: Three layers of law
• Three layers are not internally consistent
• Implications of put/call parity theorem
• Introduction to key tax concepts and rules
• Introduction to estate, gift and generation skipping tax
• Introduction to fiduciary income tax (income taxation of trusts and estates)

   

10:10 a.m.       
Break

 

10:30 a.m.              
Objective #1 – Enhancing Yield

 

• Sell ‘covered’ calls
• Psychologically prepare investor to sell (must set ‘liquidation value’)
• Enhance structured selling program
• Economics and mechanics
• Tax considerations
• Tax implications of unwinding calls

                       

11:15 a.m.       
Objective #2 – Hedging by Purchasing Puts

 

• Economics and mechanics
• Tax considerations
• Tax implications of unwinding puts

 

12:00 p.m.       
Lunch

 

1:15 p.m.         
Cashless (Zero-Premium) Collars    

    

• Economics and mechanics
• Tax considerations
• Tax planning opportunities
• Tax implications of unwinding cashless collars

 

2:15 p.m.         
Objective #3 – Monetization

 

• Short Against the Box (SAB)
• The Financial Tools – Mechanics and Economics

 

3:15 p.m.         
Break

 

3:45 p.m.         
Comparative Analysis of the Five Alternative Strategies

 

• After-tax comparison of strategies for stock acquired on or after 3/01/84
• After-tax comparison of strategies for stock acquired before 3/01/84
• Comparison of non-tax advantages and disadvantages of each strategy

 

4:45 p.m.         
IRS Memorandums and Rulings on Prepaid Variable Forwards

 

5:30 p.m.         
Social and Dinner

Group reading of comprehensive case study for day two over dinner 

 

 

Friday, 5 September 2008

 

7:30 a.m.
Continental Breakfast

 

8:00 a.m.         
Other Strategies
Thomas J. Boczar, CFA
Co-Managing Partner
Hallmark Capital

 

• Exchange Funds
• Tax-managed index proxy – Completion Fund
• Proxy Hedging
• Borrowing against unhedged shares with recourse debt
• Alternatives to outright sale

 

9:00 a.m.         
Mitigating the Legal Duties of Professional Advisors
Thomas J. Boczar, CFA
Co-Managing Partner
Hallmark Capital

• Conceptualizing and implementing a ‘best practices’ protocol
• Legal duties under the Uniform Prudent Investors Act and Uniform Trust Code
• Additional duties under the Uniform Principal and Income Act
• Results of survey of current ‘best practices’ in industry
• ‘Best practices protocol’- a six step process designed to assist professional advisors to satisfy their legal duties under the UPIA

 

10:30 a.m.       
Break

 

 

• Overview
• The ’33 Act
• The ’34 Act
• Rule 10b5-1 Plans

                       

12:00 p.m.       
Lunch

 

1:00 p.m.       
How Recent Changes in U.S. Margin Rules Will Impact Strategies for Hedging / Monetizing Concentrated Stock Positions
Doug Engmann
Senior Advisor
Hallmark Capital

 

• Background
• ‘Purpose’ loans versus ‘non-purpose’ loans
• Prepaid variable forwards are not subject to the margin rules
• Structuring around the margin rules-how to effectively monetize up to 100% of a concentrated position hedged through an options-based collar
• Tax implications

                       

 

2:00 p.m.       
Break

 

2:15 p.m.       
Comprehensive Case Study

A case study based on typical, ‘real life’ fact patterns will tie together all of the previously discussed topics. This will enable workshop participants to see and hear how these various issues are addressed in ‘real life’ by cutting-edge organizations.

                       

3:15 p.m.       
Workshop Close