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PORTFOLIO

Ultimately this PORTFOLIO page will be removed entirely.

 

This first section was moved to Overview / Opportunity Fund III page.

Where do you want to move the information that is shown below? is it still relevant? And if it is, and we move to the Opportunity Fund page, do you want to want to integrate it similar to how that page is currently formatted?

OPPORTUNITY FUND II

2013 return of 14.78 %

Annualized compound ROR of 14.9% since inception

Yearly distributions have averaged 5.62%

OPPORTUNITY FUND I

—2013 return of 20.43% 

—Annualized compound ROR of 12.83% since inception

—Yearly distributions have averaged 10.96%

INVESTMENTS

—Many of the trust preferred CDO secured bonds that The Fund would look to purchase are blended or “hybrid” deals in that they are backed by multiple asset classes, including collateral issued by Banks, Insurance Companies, REITs, Specialty Finance or Home Builders.

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—The asset classes supporting issuance have been confined to issues of banks, insurance companies and REITs. The majority of the underlying collateral in the CDO structures consists of TruPs. TruPs are typically issued at the bank holding company level by a special-purpose subsidiary of the holding company established solely for this purpose. TruPs residing in CDO structures generally have 30-year final maturities, with a 5-year par call feature, deferrable but cumulative coupons, and are junior subordinated obligations in the capital structure of the issuer. These features are largely a function of regulatory requirements for inclusion in Tier 1 capital for bank holding companies.

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—For insurance holding companies, these TruPs features are required to obtain favorable capital treatment from the rating agencies. Insurance holding companies have also issued senior or subordinated debt, and mutual insurance companies that lack a holding company have issued surplus notes, generally with maturity and call features similar to TruPs.

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For REITs, issuances have generally been TruPs or subordinated debt, although unlike banks and insurance companies, these instruments do not have a deferral feature and any missed payment constitutes a default. As issuers, REITs are generally interested in the capital-like nature of the instrument, including the 30-year final maturity. REIT growth has historically been constrained by the requirement in the tax code to distribute at least 90% of taxable income to shareholders to retain the REIT status. As a result, TruPs provide a welcome alternative source of capital for REITs that typically fund growth through equity capital offerings, diluting the existing ownership structure.

STRUCTURE

—The Manager will receive an annual management fee of 1.25% (payable monthly) on committed capital and a 20% incentive fee paid annually.

 

—Incoming cash flow in the form of interest are normally distributed to investors.  We reserve the right to reinvest original principal returns.

 

—Jackson Opportunity Fund III is currently accepting capital.  We are able to have closing dates on a quarterly basis.  We anticipate a seven year life for the fund with the possibility of four, two year extensions. 

 

—We identified the opportunity in 2008. We started Jackson Opportunity Fund, LLC in December, 2008 and funded it in January 2009.  Jackson Opportunity Fund II opened in January of  2010.  The two funds merged as of January 1, 2014.

 

—For accounts of $10 million and above we will consider individually managed portfolios. 

STRATEGY

—We intend to invest in a diverse portfolio of CDO backed bonds secured by TruPs. By purchasing product from multiple issuers we end up with our risk spread across banks, insurance companies, REITs, as well as across many geographical areas and lending structures. We intend to buy A1, A2 rated bonds in a variety of pools.  We will look at paying Mezzanine B paper, but will invest only after strict underwriting of the deal.

 

—We feel that this is a space that continues to be under followed and in return undervalued.  We continue to take advantage of this opportunity.

 

—Prices rose in 2016 and 2017 and we have benefitted from this increase, generating  solid gains within our portfolio.  But we feel that prices continue to be undervalued and as libor continues to increase the effective yields we earn are extremely attractive.

 

—Our strategy is to be a steady purchaser of the CDO backed bonds, secured by TruPs not mortgages over a time frame deemed suitable by Jackson.  Incoming cash flow in the form of interest as well as incoming cash flow in the form of stock gains in distributed back to investors.  We do reserve the right to reinvest original principal returns.