ALEXANDER
CAPITAL ADVISORS, LLC
ALEXANDER CAPITAL ADVISORS, LLC
125 Elm Street
New Canaan, CT 06840
(203) 966-7707
Firm Brochure (Part 2A of Form ADV)
Dated September11, 2017
This brochure provides information about the qualification and business practices of Alexander Capital Advisors, LLC. If you have any questions about the contents of this brochure, please contact us at (203) 966-7707, or email Thomas F. Paolozzi III, Managing Member and President at . 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.
Alexander Capital Advisors, LLC is a registered investment adviser. Registration of an investment adviser does not imply any level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser.
Additional information about Alexander Capital Advisers, LLC is available on the SEC’s website at
Item 2 – Summary of Material Changes
The company has changed custodians for its assets under management that are not part of the Plato Fund. Please see Items 12 and 15 below.
Item 3 – Table of Contents
Page
Item 1: Cover Page...... 1
Item 2: Material Changes ...... 2
Item 3: Table of Contents...... 3
Item 4: Advisory Business...... 4
Item 5: Fees and Compensation...... 5
Item 6: Performance-Based Fees and Side-By-side Management...... 6
Item 7: Types of Clients...... 8
Item 8: Methods of Analysis, Investment Strategies and Risk of Loss...... 8
Item 9: Disciplinary Information...... 11
Item 10: Other Financial Industry Activities and Affiliations...... 12
Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading...... 12
Item 12: Brokerage Practices ...... 13
Item 13: Review of Accounts...... 15
Item 14: Client Referrals and Other Compensation...... 16
Item 15: Custody...... 16
Item 16: Investment Discretion...... 16
Item 17: Voting Client Securities...... 17
Item 18: Financial Information...... 17
Item 19: State Registered Adviser Information...... 17
Appendix 1 – Wrap Fee Program Brochure
Part 2B – Brochure Supplement
Item 4 – Advisory Business
A.Alexander Capital Advisors, LLC, founded in March, 2006 by Thomas F. Paolozzi III, the firm’s sole owner, is a state registered investment advisor located in New Canaan, Connecticut.
B.Alexander Capital Advisors, LLC provides its Clients (i.e. individuals, pension and profit sharing plans, trusts, and business entities) with discretionary investment management services on a wrap-fee basis pursuant to the terms and conditions of its wrap-fee program. We do not provide financial planning or insurance planning services. To the extent specifically requested by a Client, we may provide limited consultation services to our investment management Clients on investment and non-investment related matters. Any such consultation services, to the extent rendered, shall be rendered exclusively on an unsolicited basis, for which we shall not receive any separate or additional fee. Alexander Capital Advisors, LLC also serves as the General Partner to a private fund, The Plato Fund L.P. (the “Fund”) and provides investment advice to the Fund.
C.Other than with respect to its investment advice to the Fund,Alexander Capital Advisors, LLC provides continuous advice to a Client regarding investment of Client funds based on the individual needs of the Client. Through personal discussions in which goals and objectives based on a Client's particular circumstances are established, we develop a Client's suitability and risk tolerance levels, and create and manage a portfolio based on such. We will manage advisory accounts on a discretionary basis only. Account supervision is guided by the stated objectives of the Client (i.e., conservative total return, moderate total return, or aggressive total return).
Alexander Capital Advisors, LLC will create a portfolio consisting of one or all of the following: individual equities, bonds, other investment products, and no-load or load-waived mutual funds. Alexander Capital Advisors, LLC will allocate the Client's assets among various investments taking into consideration the financial objectives of the Client. The mutual funds will be selected on the basis of any or all of the following criteria: the fund's performance history; the industry sector in which the fund invests; the track record of the fund's manager; the fund's investment objectives; the fund's management style and philosophy; and the fund's management fee structure. Portfolio weighting between funds and market sectors will be determined by each client's individual needs and circumstances as well as market conditions. Clients will have the opportunity to place reasonable restrictions on the types of investments which will be made on the client's behalf. Clients will retain individual ownership of all securities.
When appropriate to the needs of the Client, Alexander Capital Advisors, LLC may recommend the use of trading (securities sold within 30 days), short sales, margin transactions or option writing. Because these investment strategies involve certain additional degrees of risk, they will only be recommended when consistent with the Client's stated tolerance for risk.
D.Alexander Capital Advisors, LLC is the sponsor and investment manager of the Alexander Capital Advisors, LLC Wrap-Fee Program (hereinafter the "Program"). A "wrap-fee" program is one that provides the Client with advisory and brokerage execution services for one all-inclusive fee (also called the “advisory fee”). Except as described below, a Program Client is not charged separate fees for the respective components of the total service. All of our Clients other than the Fund participate in this Program.
To participate in the Program, all of our Clients must direct the use of TD Ameritrade Institutional (“TD Ameritrade”) to act as broker and custodian for Program account securities transactions. Participants in the program are directed to Appendix 1 to this document, Alexander Capital Advisors, LLC Wrap-Fee Brochure for additional information regarding the Program.
E.Alexander Capital Advisors, LLC manages all Client accounts on a discretionary basis. As of 12/31/2016 the Firm had a total of $70,500,000 assets under management on a discretionary basis.
Item 5 – Fees and Compensation
A.Alexander Capital Advisors is a fee based advisor, with fees based upon a percentage of the dollar value of the assets under management. In certain circumstances, all fees and account minimums may be negotiable.
The annual fee for Alexander Capital Advisor's Investment Supervisory Services is 1.50% of assets under management, with the exception of those accounts described in Item 6.
B.The client’s written agreement with Alexander Capital Advisors, LLC establishes that Client accounts will be debited by the custodian in advance for the advisor's fee on a quarterly basis. These dates may vary at the discretion of the advisor. The amount of the advisory fee will be based upon the value (market value or fair market value in the absence of market value) of the client's account on the month end prior to the payable date.
Advisory fees are clearly shown as a separate line item on each client’s monthly statement from the custodian, TD Ameritrade. Clients also receive a letter from us on or about the invoicing date showing how the fee is calculated for the upcoming quarter.
The fee charged is calculated as described above and is not charged on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of an advisory client, with the exception of those accounts described in Item 6.
C.The fee includes all advisory and brokerage execution services. The fee does not include miscellaneous exchange fees, interest charges, electronic fund and wire transfer fees, The American Depository Receipt agency processing fees, and any charges, taxes or other fees mandated by any federal, state or other applicable law.
D.An advisory client has a right to terminate the agreement without penalty within five (5) business days after entering into the agreement. Furthermore, a Client agreement may be canceled at any time, by either party, for any reason upon receipt of written notice. Since Alexander Capital Advisors, LLC’s fees must be paid in advance, upon termination of any account any prepaid, unearned fees will be refunded within 90 days, prorated as described below.
The prorated refund is determined by verifying the date of termination and is based upon the number of months remaining in the current billing quarter. The fraction of prepaid quarterly fees to be refunded is calculated with the following formula:
(1, 2, or 3) Number of months left in current quarter
------X $ Fees Paid = $ Refund
(3) Number of months in quarter
E.Alexander Capital Advisors, LLC and its employees do not receive any compensation for the sale of securities or other investment products, including mutual funds.
Item 6 – Performance Based Fees and Side-By-Side Management
Performance based fee arrangements may create an incentive for an advisor to recommend investments which may be riskier or more speculative than those which would be recommended under a different fee arrangement. Such fee arrangements also create an incentive to favor higher fee paying accounts over other accounts in the allocation of investment opportunities. As discussed below, Alexander Capital Advisors, LLC has procedures designed and implemented to ensure that all Clients are treated fairly and equally, and to prevent this conflict from influencing the allocation of investment opportunities among Clients.
Alexander Capital Advisors, LLC provides investment advice to a variety of clients. We may entertain requests by certain “qualified clients” (as amended and defined by Rule 205-3(d) under the Investment Advisers Act of 1940, below) to enter into an advisory agreement that provides for compensation on the basis of a share of the capital gains upon, or the capital appreciation of, the qualified client’s assets under management or account. This is referred to as a “performance fee”. As described below, this may present an incentive to favor one account over another, and thus a conflict of interest. At this time, Alexander Capital Advisors does not charge a performance fee to any client other the Fund, as described below.
The Plato Fund
Alexander Capital Advisors, LLC also provides investment advice to a private investment limited partnership known as The Plato Fund, L.P. (the “Fund”), in which Alexander Capital Advisors, LLC acts as the General Partner.
Alexander Capital Advisors, LLC also offers advice to its Clients on the advisability of investing in The Fund Interests in the Fund are privately offered only to qualified clients as defined below.
“Qualified Client” pursuant to SEC Investment Advisers Act regulations, Section 205-3, means:
(i) A natural person who or a company that immediately after entering into the contract has at least $1,000,000 under the management of the investment adviser;
(ii)A natural person who or a company that the investment adviser entering into the contract (and any person acting on his behalf) reasonably believes, immediately prior to entering into the contract, either
a.Has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than $2,100,000. For purposes of calculating a natural person’s net worth:
1.The person’s primary residence must not be included as an asset;
2.Indebtedness secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time the advisory contract is entered into may not be included as a liability (except that if the amount of such indebtedness outstanding at the time of calculation exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess must be included as a liability; and
3.Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the residence must be included as a liability, or
b.Is a qualified purchaser as defined in section 2(a)(51)(AA) of the Investment Company Act of 1940 (15U.S.C. 80a-2(51)(A)) at the time the contract is entered into; or
(iii)A natural person who immediately prior to entering into the contract is;
a.An executive officer, director, trustee, general partner or person serving in similar capacity, of the investment adviser; or
b.An employee of the investment adviser (other than an employee performing solely clerical, secretarial or administrative functions with regard to the investment adviser) who, in connection with his or her regular functions or duties, participates in the investment activities of such investment adviser, provided that such employee has been performing such functions and duties for or on behalf of the investment adviser, or substantially similar functions or duties for or on behalf of another company for at least 12 months.
The Fund also relies on an exemption from registration under The Investment Company Act of 1940.
Investment in the Fund involves a significant degree of risk. All relevant information, terms and conditions relative to the Fund, including the management fee to be paid to the general partner, suitability, investment strategy, risk factors, and potential conflicts of interest, are set forth in the Private Offering Memorandum, Limited Partnership Agreement, and Subscription Agreement, which each subscriber is required to receive and/or execute prior to being accepted as a limited partner of the Fund.
Since Alexander Capital Advisors, LLC has a financial interest in the Fund, an investment in the Fund presents a conflict of interest for the Firm.
Alexander Capital Advisors, LLC charges all Clients, other than as described in this section, a percentage of assets under management. Clients who are invested in the Fund also pay a management fee to the General Partner and an incentive fee, which is also a performance based fee. Given that we manage both types of accounts, and there is an incentive to favor the Fund (and performance based fee accounts), this conflict of interest is addressed in the Firm’s Policies and Procedures/Code of Ethics. Specifically, limitations are placed upon the timing of trades in the Fund relative to those in other Client accounts, and all trades are reviewed monthly to ensure adherence to these procedures.
Allocation of investment opportunities is not typically an issue. Investment opportunities are available to all Clients depending upon their risk tolerance.
Item 7 –Types of Clients
Alexander Capital Advisors, LLC provides portfolio management services to individuals, high net worth individuals, pension and profit-sharing plans, trusts, estates, corporations or business entities, and a private investment fund (The Plato Fund, L.P.).
Alexander Capital Advisors, LLC requires a minimum of $1,000,000 of assets under management, calculated by household for investment supervisory services, although this may be negotiable under certain circumstances (i.e. anticipated future earning capacity, anticipated future additional assets, related accounts, account composition, etc.). We group related Client accounts (households) for the purposes of achieving the minimum size requirement.
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
Alexander Capital Advisors, LLC was formed to provide superior portfolio management with a focus towards value.
A. Alexander Capital Advisors, LLC uses various security analysis methods as the basis for its investment strategies. This information is derived from financial newspapers and magazines, inspections of corporate activities, research materials prepared by others, corporate rating services, annual reports, prospectuses, filings with the SEC, company press releases and Thomson FirstCall, as well as other various independent analyses.
The investment strategies used to implement any investment advice given to Clients include, but are not limited to, long term purchases (securities held at least a year), short term purchases (securities sold within a year), and when appropriate to the needs of the Client, we may recommend the use of trading (securities sold within 30 days), margin transactions or option writing. Because these investment strategies involve certain additional degrees of risk, they will only be recommended when consistent with the Client’s stated tolerance for risk. Through our association with TD Ameritrade, Clients can and sometimes do receive institutional class mutual funds as part of their portfolio construction.
Comprehensive research, disciplined value-based strategy, absolute return focus and low portfolio volatility frame every investment decision at Alexander Capital Advisors, LLC. We search for well-managed companies and securities that are temporarily priced below their true longer-term value. Securities in our portfolio share many of the following attributes:
Increasing cash flow and operating margins
Attractive price to book value
Increasing insider and management ownership
Unique balance sheet characteristics
Leadership changes among business lines within the company
Known company board or management
Business plans and strategies that consider equity and profitability
Alexander Capital Advisors, LLC concentrates on companies and securities with market capitalizations between $100 million and $2 billion. Only about half of the companies or securities within this market sector are followed by investment firms.
Investing in securities involves risk of loss that Clients should be prepared to bear.
B.All Clients have well diversified portfolios constructed to their individual risk tolerance. The investment strategies used on behalf of our Clients’ accounts may cover a wide range of investment types. Certain risks applicable to our management of our Clients’ assets are described below.
Risks Associated with Securities Investments Generally. Investing in securities involves a variety of risks, including the loss of capital. The value of any such investments will depend upon many factors beyond our control. The securities markets generally are affected by, among other things, the state of the economy, inflation rates and unemployment, trade, fiscal and monetary policies and national and international political and economic events. All securities investments risk the loss of capital. The nature of the securities to be purchased and traded and the investment techniques and strategies we employ may increase this risk.
Investing Generally. Our investment strategies are designed for investors seeking potential long-term growth from investments, who do not require regular current income and who can accept a high degree of risk in their investments. In view of, among other things, our ability to invest in a wide range of securities and instruments on behalf of our Clients’ accounts and to use a broad variety of investment techniques, our investment management services may be deemed speculative in nature and are not intended to be a comprehensive investment program. No assurance can be given that our Clients will achieve their investment objectives or that our investment strategies will be successful.