{"id":13629,"date":"2024-01-05T17:10:00","date_gmt":"2024-01-05T17:10:00","guid":{"rendered":"http:\/\/develop.ancoraoak.com\/?page_id=13629"},"modified":"2024-01-05T17:26:12","modified_gmt":"2024-01-05T17:26:12","slug":"strategy-disclosures","status":"publish","type":"page","link":"http:\/\/develop.ancoraoak.com\/strategy-disclosures\/","title":{"rendered":"Strategy Disclosures"},"content":{"rendered":"

[vc_row kd_background_overlay=”default” kd_background_image_position=”vc_row-bg-position-top” css=”.vc_custom_1701896097631{margin-bottom: 50px !important;}”][vc_column][vc_column_text css=”.vc_custom_1704474727072{margin-top: 60px !important;}”]Information about AncoraOak strategies is provided for informational purposes only and does not constitute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities, or an offer, invitation or solicitation of any specific products or the investment management services of AncoraOak, or an offer or invitation to enter into any portfolio management mandate with AncoraOak. AncoraOak makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit, there is also the possibility of loss.<\/p>\n

The following key risk descriptions are not intended to be a complete or exhaustive list of all risks related to the investment activities of AncoraOak\u2019s strategies described herein and there may be other risks not reflected below that may be applicable to AncoraOak\u2019s strategies.<\/p>\n

While all AncoraOak strategies will generally be subject to the risks described in the \u201cGeneral\u201d section below, the applicability of the risks described under \u201cInvestment Activities\u201d will depend on the specific investments and activities of each individual strategy.[\/vc_column_text]

General <\/h2><\/header>[vc_column_text]<\/p>\n

Alternative investment strategies<\/strong><\/h4>\n

Each of the AncoraOak strategies referenced herein is speculative and involves a high degree of risk. The strategies will involve investing in securities and obligations that entail substantial risk. There can be no assurance that such investments will increase in value, that significant losses will not be incurred or that the objectives of the strategies will be achieved. Specific investment risks include, but are not limited to, those described under Investment Activities below.[\/vc_column_text][vc_column_text]<\/p>\n

Potential conflicts of interest <\/strong><\/h4>\n

AncoraOak manages a number of strategies that present the possibility of overlapping investments or investments in different parts of the capital structure. AncoraOak will seek to manage such conflicts in good faith.[\/vc_column_text][vc_column_text]<\/p>\n

Leveraged companies<\/strong><\/h4>\n

Investments in companies whose capital structures have significant leverage are inherently more sensitive than others to declines in revenues and to increases in expenses and interest rates, posing a greater possibility of bankruptcy or default.[\/vc_column_text][vc_column_text]<\/p>\n

Nature of bankruptcy proceedings<\/strong><\/h4>\n

Investing in companies involved or who may become involved in bankruptcy proceedings presents significant risks, foremost of which are the lack of control over certain events, the bankruptcy filing itself may have an adverse impact on the company, the duration of the proceedings are difficult to predict and may be further impacted by delays, the costs inherent in the process are frequently high, creditors can lose their priority and ranking in a variety of circumstances and representation on a creditors committee may subject the creditor to various trading and confidentiality restrictions.[\/vc_column_text][vc_column_text]<\/p>\n

Lack of diversification <\/strong><\/h4>\n

The strategies will not be diversified among a wide range of issuers or industries. Accordingly, returns may be subject to more rapid changes than would be the case if the strategy were required to maintain a wide diversification among companies, industries and types of securities.[\/vc_column_text][vc_column_text]<\/p>\n

Illiquid investments<\/strong><\/h4>\n

The strategies will involve investing in illiquid securities or securities which are restricted as to their transferability. Such restrictions may limit the ability to sell such securities at their fair market value.[\/vc_column_text]

Investment Activities<\/h2><\/header>[vc_column_text]<\/p>\n

Loans and other debt or debt-like instruments<\/strong><\/h4>\n

Loans or other debt instruments, including debt-like instruments like preferred equity, are subject to unique risks, including (a) the possible invalidation of an investment transaction as a fraudulent conveyance under relevant creditors\u2019 rights laws, (b) so-called lender liability claims by the issuer of the obligations and (c) environmental liabilities that may arise with respect to collateral securing the obligations.<\/p>\n

In addition, if an investment in a loan is structured as a participation, there may be limitations on the holder’s ability to directly enforce its rights against the borrower.[\/vc_column_text][vc_column_text]<\/p>\n

Convertible securities<\/strong><\/h4>\n

Many convertible securities are not rated investment grade. Securities in the lower-rated and non-rated categories are subject to greater risk of loss of principal and interest than higher-rated securities and are generally considered to be predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal. They are also generally considered to be subject to greater risk than securities with higher ratings in the case of deterioration of general economic conditions. Because investors generally perceive that there are greater risks associated with lower-rated and non-rated securities, the yields and prices of such securities may be more volatile than those for higher-rated securities. The market for lower-rated and non-rated securities is thinner, often less liquid, and less active than that for higher-rated securities, which can adversely affect the prices at which these securities can be sold and may even make it impractical to sell such securities. The limited liquidity of the market may also adversely affect the ability to arrive at a fair value for certain lower-rated and non-rated securities at certain times and could make it difficult to sell certain securities.<\/p>\n

The risk of the issuer of a convertible security that possess high income features undergoing a reorganization under U.S. federal bankruptcy laws or similar laws may be higher than an issuer of a traditional convertible security. As such, there are a number of significant risks associated with investing in companies involved in a bankruptcy proceeding, including, among others, possible adverse effects on the issuer, costs associated with delays in the bankruptcy proceeding, and loss of ranking and priority as a creditor.[\/vc_column_text][vc_column_text]<\/p>\n

High yield bonds<\/strong><\/h4>\n

Securities in the lower rated categories and comparable non-rated securities are subject to greater risk of loss of principal and interest than higher rated and comparable non-rated securities and are generally considered to be predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal. They are also generally considered to be subject to greater risk than securities with higher ratings or comparable non-rated securities in the case of deterioration of general economic conditions. Because investors generally perceive that there are greater risks associated with the lower rated and comparable non-rated securities, the yields and prices of such securities may be more volatile than those for higher rated and comparable non-rated securities. The market for lower rated and comparable non-rated securities is thinner, often less liquid, and less active than that for higher rated or comparable non-rated securities, which can adversely affect the prices at which these securities can be sold and may even make it impractical to sell such securities.[\/vc_column_text][vc_column_text]<\/p>\n

Direct lending<\/strong><\/h4>\n

Lending and investments in other debt instruments entail normal credit risks (i.e., the risk of non-payment of interest and principal) and market risks (i.e., the risk that certain market factors will cause the value of the instrument to decline). When originating a loan, a lender expects to rely significantly upon representations made by the borrower. There can be no assurance that such representations are accurate or complete, and any misrepresentation or omission may adversely affect the valuation of the collateral underlying the loan, or may adversely affect the ability of the lender to perfect or foreclose on a lien on the collateral securing the loan, or may result in liability of the lender to a subsequent purchaser of the loan. Finally, under certain circumstances, payments to the lender may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance or a preferential payment.[\/vc_column_text][vc_column_text]<\/p>\n

Derivative instruments<\/strong><\/h4>\n

Certain AncoraOak strategies may involve investments in derivative instruments. Derivatives are investment instruments that consist of a contract between parties in which the derivatives\u2019 value is derived from and depends on the value of an underlying financial instrument. Examples of derivatives include foreign currency contracts, options and credit default and total return swaps. Primary risks associated with trading in derivatives may include market, counterparty and liquidity risks. Additional risks associated with short sales and options and swaps are described below.[\/vc_column_text][vc_column_text]<\/p>\n

Short sales and options<\/strong><\/h4>\n

A short sale of a security involves the risk of a theoretically unlimited loss from a theoretically unlimited increase in the market price of the security that could result in an inability to cover the short position. The successful use of options depends principally on the price movements of the underlying securities, and if the price of the underlying security does not rise (in the case of a call) or fall (in the case of a put) to an extent sufficient to cover the option premium and transaction costs, the strategy will lose part or all of its investment in the option.[\/vc_column_text][vc_column_text]<\/p>\n

Swaps<\/strong><\/h4>\n

Certain strategies may engage in activities that involve the use of swaps, including total return swaps, interest rate swaps and credit default swaps, in which case there is usually a contractual relationship only with the counterparty of such swap, and not the issuer, As a result, there will be exposure to the credit risk of the counterparty. In addition, certain swaps may be required to be submitted to a central clearing counterparty, in which case there will be exposure to the credit risk of the central clearing counterparty and any Futures Commodity Merchant that may be used to access such central clearing counterparty. The regulation of derivatives transactions and portfolios that engage in such transactions is an evolving area of law and is subject to modification by governmental and judicial action. The effect of any future regulatory change on the strategies could be substantial and adverse.[\/vc_column_text][vc_column_text]<\/p>\n

Stressed credits<\/strong><\/h4>\n

Any deterioration of underlying market fundamentals could negatively impact the performance of investments in stressed companies. Changes in general economic conditions, tax rates, operating expenses, interest rates and the availability of debt financing may also adversely affect the performance of such investments. For these or other reasons, investments in stressed companies may become \u201cnon-performing\u201d after their acquisition, and during an economic downturn or recession, stressed investments are more likely to go into default than securities of other issuers not experiencing financial stress. Securities of stressed companies are also often less liquid and more volatile than securities of companies not experiencing financial difficulties, often involving a higher degree of credit and market risk.[\/vc_column_text][vc_column_text]<\/p>\n

Non-U.S. and emerging markets investments<\/strong><\/h4>\n

Investments in securities or obligations outside of the U.S. come with distinct risks, such as socio-political or economic instability, potential unfavorable actions by foreign governments, fluctuations in market prices, volatility, differences in auditing and financial reporting standards, unfavorable taxation, and divergent laws and traditions. These elements could heighten the risk of losses in these investments. Additionally, the likelihood of losses may be compounded due to these investments often being in multiple currencies, leading to performance impacts from currency exchange rate volatility. Investing in emerging markets brings additional risks not commonly found in more developed markets, including reliance on exports, high inflation rates that may be hard to control, restrictions on foreign investments and capital repatriation, government intervention in the economy, underdeveloped corporate laws, less dependable legal systems, limitations on foreign property ownership, and extended settlement periods for securities transactions.[\/vc_column_text][vc_column_text]<\/p>\n

Leverage<\/strong><\/h4>\n

Utilization Engaging in strategies that utilize leverage can amplify an account’s potential returns but also increase potential losses. Consequently, any negative impact on an investment’s value is intensified when leverage is employed.[\/vc_column_text][vc_column_text]<\/p>\n

Real Estate Investments<\/strong><\/h4>\n

Real estate-related securities’ values are prone to fluctuations due to multiple factors. These include changes in interest rates, global or local economic shifts, banking liquidity, financing availability, supply and demand dynamics, and government or regulatory actions such as zoning changes, tax increases, imposition of building limitations, requirements for accessibility, environmental impact assessments, costs for environmental remediation, or special fines. The revenue from income-generating real estate can be adversely influenced by overall economic conditions, local factors like oversupply or decreased demand in specific areas, competition from other properties, and the need for proper maintenance and insurance coverage. Investments in mortgages, real estate, or illiquid securities and private debt instruments are often limited in terms of potential buyers and sellers, which may restrict their purchase availability and may also limit the ability to sell such investments at fair market value during economic or financial market changes.<\/p>\n

Additionally, real estate markets in emerging market countries have historically experienced volatile price cycles. A decline in the underlying real estate fundamentals in these markets could negatively impact performance.[\/vc_column_text][vc_column_text]<\/p>\n

Infrastructure Sector<\/strong><\/h4>\n

Investments in infrastructure often have unique location and market characteristics that may render them highly illiquid or attractive to only a select group of investors. Such investments expose the strategy to a wide array of risks, often without recourse to a project sponsor’s general credit. These include risks related to construction, environmental factors, regulatory and permitting issues, commissioning, start-up, operational, economic, commercial, contractual, political, technological innovations, and financial aspects. Strategies might also invest in projects at an early developmental stage, facing risks like delays or failures in obtaining necessary regulatory, environmental approvals, or permits, securing financing, or finding suitable equipment supply, operating, and offtake contracts. Moreover, the strategy is subject to additional risks in the infrastructure sector, such as ineffective or inefficient technology, equipment failures, interruptions in fuel supply, loss of contracts, changes in power or fuel prices, bankruptcies or defaults by key parties, tort liabilities, fluctuations in the values of infrastructure sector companies, employment and labor union challenges, and political and regulatory shifts affecting the buying or selling terms of investments. Any occurrence related to these risks could have a significant adverse effect on a strategy and its investments, with no guarantee of profitability or sufficient cash flow to service debts or recover investments.[\/vc_column_text][vc_column_text]<\/p>\n

Power Sector<\/strong><\/h4>\n

Historically, the power sector, especially the utility industry, was known for its stability and predictable financial performance. However, deregulation, privatization, technological changes, and market volatility have significantly altered this landscape, leading to greater variability in company performance. There is no certainty that changes in the industry will align with expectations or benefit investments. Investment in power facilities and related assets carries numerous risks, some of which might be unforeseen or unquantifiable, including operational, economic, environmental, commercial, regulatory, political, and financial risks.[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n<\/section>","protected":false},"excerpt":{"rendered":"

[vc_row kd_background_overlay=”default” kd_background_image_position=”vc_row-bg-position-top” css=”.vc_custom_1701896097631{margin-bottom: 50px !important;}”][vc_column][vc_column_text css=”.vc_custom_1704474727072{margin-top: 60px !important;}”]Information about AncoraOak strategies is provided for informational purposes only and does […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"_links":{"self":[{"href":"http:\/\/develop.ancoraoak.com\/wp-json\/wp\/v2\/pages\/13629"}],"collection":[{"href":"http:\/\/develop.ancoraoak.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"http:\/\/develop.ancoraoak.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"http:\/\/develop.ancoraoak.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/develop.ancoraoak.com\/wp-json\/wp\/v2\/comments?post=13629"}],"version-history":[{"count":3,"href":"http:\/\/develop.ancoraoak.com\/wp-json\/wp\/v2\/pages\/13629\/revisions"}],"predecessor-version":[{"id":13632,"href":"http:\/\/develop.ancoraoak.com\/wp-json\/wp\/v2\/pages\/13629\/revisions\/13632"}],"wp:attachment":[{"href":"http:\/\/develop.ancoraoak.com\/wp-json\/wp\/v2\/media?parent=13629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}