Intelligent Alternatives - Leveraging Your Cash into a HedgeLoan Structure

Control Up to Six Times More Stocks Now – "Reverse" Your HedgeLoan!

What is the Intelligent Alternative?

It is the opportunity to leverage your existing cash assets by having the lender finance up to 85% of the total collateral stock portfolio with only 15% down, thereby giving you the power to control 100% of your stocks in a HedgeLoan® structure and allowing you to maximize leverage (buying power) by as much as 6 to 1.

Mike Casholder is considering investing in a stock he has been coveting for some time. He is sure that over the next couple of years demand will increase and the value of the stock will go up. It's price is good now, but it's been rather volatile lately; still, he wants as much of this stock as he can control. He has some cash, but in his view its not enough to buy an optimal quantity of stocks. Like many investors he likes HedgeLender's nonrecourse and no-margin-call loan programs. But he doesn't have enough to make it really worth his while.

Solution: A Reverse HedgeLoan's terms are identical to a normal HedgeLoan, but instead of delivering stocks, you will deliver cash. But not 100% of the value of the stocks you would have delivered; No, you need only deliver 15%-20% of the total value, and the lender will finance the rest.

With a Reverse HedgeLoan option, you can have prepay windows, low interest, or have the lender finance more or less of the remaining stocks. You can elect to pay interest, or have it accrue. You can utilize any of the features of our well-regarded HedgeLoans, and you can leverage your cash to the maximum.

Note: No stock buy-sell advice is provided in any manner for clients choosing a Reverse HedgeLoan. Neither HedgeLoan nor any of its representatives, unless properly licensed under applicable federal and/or state authority, is empowered or authorized to recommend any securities or to provide any form of tax, finance or investment advice pursuant to a Reverse HedgeLoan.

Behind the Numbers:

Borrowers who seek to leverage their cash into a HedgeLoan can avail of far greater stock purchasing power than would be the case in a conventional brokerage margin loan, all in a limited-recourse structure.

Example:

Mike would like to put up 100,000 shares of a coveted $10 stock for an 85% EZ HedgeLoan stock loan (he could have chosen a Flag or Cap too). He has enough cash to buy 15,000 shares, but that's all.
If he were to do so using a conventional margin loan at his brokerage, he would need $666K+ worth of stock to control $1M, and would be at risk of a margin call with even a minor drop in value
Mike applies for a Reverse EZ HedgeLoan. He sends his cash downpayment - 15% of the total 100K position he wants - and the lender finances the other 85%.
Result: Client is beneficial owner of 100,000 shares of his $10 stock for the duration of the loan. Since it is an EZ HedgeLoan, he will also have the opportunity to pay off the loan early, or wait until the loan goes to term and take full possession unencumbered of all 100,000 shares after he pays off the principal and any remaining interest owed.
He may also ask the lender to sell his beneficial shares, pay off the principal and interest, and remit the difference to him in the form of cash or stocks.
Or he may walk away from all repayment entirely and owe nothing, through the nonrecourse debt provision of the loan.

The Flag, Cap, and EZ HedgeLoans have a normal structure – where you use your stocks as collateral for a HedgeLoan – as well as a reverse structure – where you provide a downpayment of cash and control the remaining shares.

Please contact us here for your questions or to get a quick HedgeLoan stock-secured loan quote.

Looking for other solutions? Visit our other Intelligent Alternative presentations.

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