Private Investment Partnerships
MSCM, LLC is a registered investment advisor that formerly managed private investment partnerships (aka hedge funds) for qualified individuals and institutional investors. The firm was originally founded to deploy a specific options based absolute return investment strategy within an investment partnership structure. Having lead investors through a number of chaotic market periods, we were asked to offer expanded services beyond this core strategy. This growing demand also drove us to move from the private investment partnership structure to offering all of our strategies in separately managed accounts instead. We employ the same level of discipline and analysis to all of our strategies.
Separately Managed Accounts
Separately Managed Accounts (SMAs) allow us the ability to work with investors in a broader, non-strategy specific context, thus customized to their own personal situation. The structure allows us to leverage our investment expertise for a client’s entire portfolio, while also offering them the transparency and custodial security that they seek.
McElhenny Sheffield Partners
The McElhenny Sheffield Partners (MSP) strategy was originally offered as a private investment fund beginning in 2000. In order to enhance transparency and custodial security, MSCM now only offers MSP in separately managed accounts. While the structure has changed, the time tested strategy has not. MSP is managed as an absolute return approach – meaning that our goal is to achieve a steady positive return irrespective of the market environment. MSP has achieved this by deploying an option premium selling approach. The strategy is designed to capture the time value erosion of the options.
McElhenny Sheffield Dividend Trust
The goal of this strategy is to capture a steady total return through ownership of large multi-national companies paying 5%+ yields. Preferred stock & bond positions may be used in addition to common stock. MSCM monitors payout ratios to ensure that yields are sustainable. The firm also leverages its deep options expertise to enhance yields via selling covered calls, utilizing short puts to gain more beneficial entries, and for hedging purposes.
McElhenny Sheffield Preferred Income
MSCM understands that many investors are seeking to increase the income they are receiving on their assets. Bonds do not appear to be a good option currently because of their low yields. Since most outstanding bonds are currently trading at a premium to ‘par’, they are almost certain to lose money at expiration (bonds mature at par). Also, investors may not want the sort for fluctuation in value that can come with investing in dividend paying common stocks. Preferred Income thus focuses on capturing a stable income by utilizing only lower volatility ‘preferred stocks’. Preferred stock holders maintain a senior position to common stock holders.
While common stock dividends can frequently get cut, preferred stock dividends are cut much more rarely – and when preferred stock dividends are cut, those cuts often have to be made up in full in the future before any additional common stock dividends can be paid. MSCM targets preferred stocks paying dividends in the range of 5-7.5%.
McElhenny Sheffield Hedged Equity
MSHE is a growth oriented quantitative domestic equity model focusing on companies with high but stable growth rates. It utilizes a proprietary screening methodology to identify equities with the highest probability of near term gain and concentrates positions accordingly. Implementation of the model is based on short term trading with a one month holding period. Leverage and risk controls are adjusted based upon macro market environment. In order to reduce systemic risk, broad based correlated index options (e.g. SPX, OEX, NDX) may be utilized.
Concentrated Position Management
Many current or former public company executives end up with an over-weighting in one specific security due to option conversions, restricted stock units, etc. Often either due to an affinity for the company, sense of vested interest in success, or for tax considerations, the investor does not want to sell the stock to diversify. Measures can be taken to limit risk and increase returns without selling the underlying stock position. Our extensive experience in the options arena allows us to support sophisticated professional trading strategies and deliver them to our clients. MSCM maintains accounts with individual investors and institutions alike. We welcome sub-advisory roles to other Registered Investment Advisors (RIAs). We can provide sophisticated expert asset management capabilities that have the ability to have a material positive impact to returns, while honoring the relationship our partners (RIAs) maintain with their clients.
MSCM maintains multiple top tier custodial choices for our investors: