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EXAMPLES OF VISION, STRATEGY, TRUST AND SUCCESS
My life is defined by having an unusually rare combination of gifts not generally found in one individual. Acute perception and tireless curiosity fuels my keen vision and superior strategic skill; all attributed to having an IQ of 159. However, my greatest gift is my strong ethical value and moral conviction, combined with the “Emotional Intelligence” of Trust Building. This allows me to orchestrate teams in a superior manner, and execute simple innovative strategies. I have a high percentage of success implementing plans from start to finish, because the people I work with quickly learn to have a total faith in the concepts and strategies I create.
TAX FREE EXCHANGE: During the 1970’s I managed 10,000-acres of timberland for a wealthy individual who was conducting estate planning. He wanted to sell his timberland and minimize the taxable event, because of his 50% tax bracket. His professional advisors were a very bright Attorney and CPA, but they were stuck on the best way to handle his timberland because of the different interpretations of the tax law and legal restraints. It was obvious to me that his advisors needed someone to coordinate their efforts. Neither the Attorney nor the CPA was taking up where the other left off.
I asked for the job of coordinating the efforts of his team concerning the disposition of his timberland, and he agreed. After having the legal and tax ramifications explained to me by his professionals, I identified how our client could create a timber company corporation, fund it with his timberland, use an intermediary, and trade the stock in his timber company for publicly traded timber company stock and meet all tax and legal regulations concerning a “3-Way Tax Swap” in 1973. Consequently, our client was able to convert millions of dollars of timberland into registered securities and liquidate the securities portfolio at his basis, which ended up being the market value of his timberland. Through coordinating the efforts of these talented professionals, we were able to re-structure our client’s timberland and turn his registered securities into cash without creating a taxable event. And by the way, I received a 10% real estate commission for the sale.
OPTIONS ON BOND FUTURES: When Options on Bond Futures were slated for use in 1983 by the FDIC and The Comptroller of the Currency, I realized FASB (Federal Accounting Standards Board) was allowing certain Savings and Loans to take any Option Premium Income (from selling the Option) directly to the bottom line (net worth), and any loss in the Options Position could be amortized over the length of the underlying security; which could be a 30-year Treasury Bond.
This strategy would always book a profit, even when there were significant negative cash flows. However, this Portfolio Investment Strategy lay dormant at Union Planters Investment Banking Group before I got there. The President of the Investment Banking Group, the Sales Manager, the Senior Vice President of Marketing, the President of the Portfolio Strategies Department and the President of the Futures Corporation couldn’t figure out how to explain this very complicated strategy to the sales force in a way that would motivate them to learn how to sell it; …not to mention how to explain and sell it to prospective clients.
I made the decision to coordinate the resources of the Investment Banking Group and give each department credit for their significant contribution. The end result was a joint effort centered on a simple slide show that explained the concept. Consequently, within a year, our clients held over 80% of all the Open Interest for Options on Bond Futures at both the Chicago Board of Trade and the Mercantile Exchange.
My very simple sales presentation explained to prospective clients how to build net worth very quickly, “By the Book”. The “Book was Re-Written” within a year, because our clients held such a large percentage of all the Open Interest. Our Futures Corporation could actually create market fluctuations when we rolled the positions of my clients, when we changed “Strike Prices” or “Maturities” …all at one time. This caused FASB, the FDIC and Comptroller of the Currency to re-write the Regulations. However, my clients had made hundreds of millions of dollars in profit before the “Book was Re-Written”!
MONEY MANAGER: In 1985 and 1986, my biggest client, Independent American Savings of Dallas, assigned me the responsibility of managing their fixed income portfolio. The historical returns from this portfolio were an amazing 500 basis points over the yield of the 30-year Treasury Bond. This return of about 18%, outperformed all known peers concerning a fixed income portfolio.
- Managed a $500 million 30-year Treasury Bond Portfolio
- Managed a $ 50 million Zero Coupon Treasury Bond Portfolio
- Managed a $ 25 million Treasury Note Liquidity Portfolio
- Account Representative for a $500 million At-The-Money Call Option Portfolio
- Total client funds exceeded $1billion
LAND VALUATION INEFFICIENCY: At the current time (2010-2011) there is a remarkable inefficiency between the valuation method used by timber companies to appraise land, and the valuation method used by traditional real estate appraisers.
Forestry Schools, Continuing Education Instructors and Forest Industry Foresters teach the Theory that land is a necessary evil for growing timber, not a performing asset. Therefore, they have concocted an evaluation method that discounts the actual value of real estate land by 40%, or more. They use this one-sided evaluation method when making offers to individuals for land being used to grow timber; even though much of the land can be peeled off immediately and sold for a profit.
The inefficiency between the actual real estate land value and the discounted value of land by foresters to grow timber has created a short-term window for the wise investor to compete with timber company acquisitions, and use patient money for the purchase and re-sale of land. This strategy has been rewarding wise investors for the past few years. And it will continue to reward knowledgable investors that buy select offerings now, with extremely high profits in 8 to 16-years.
OTHER EXAMPLES:
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