Summary
Our base original Flagship ("Flag") HedgeLoan is a 90% loan-to-value stock loan that for U. S. stocks is always fully hedged with investment grade counterparties and is available even for stocks without any publicly traded options.
It is nonrecourse, allowing the client to walk away by sacrificing only the collateral stocks, no matter how low the price drops, with no effect on borrower's credit rating.
It is non-callable, so the price can drop to zero and you will not be asked to cover the collateral stock with extra cash. It can do so because it is truly. fully hedged, and represents no loss to us even in the case of default normally. It allows many types of exits, and preserves the full-upside growth of the stock portfolio to the account of the borrower while we hold it as collateral.
But there are a number of variants on this base Flagship HedgeLoan that can be used depending on the goals and priorities, and eligibility, of the stocks in question. Check out our Cap, Flex, and EZ HedgeLoans to learn more, but here is an overview.
Your loan can be tailored to a very low or even zero effective interest rate, by reducing the loan-to-value. For stocks with very low volume or price that would normally not qualify for a HedgeLoan, a loan can be created by allowing the loan to be callable and/or sacrificing loan-to-value, as with our Flex program.
Your HedgeLoan can have a maturity date of anywhere from 2 to 20 years, but most HedgeLoans will come in between 3 and 5 years.
Your HedgeLoan exit can be through authorizing lender to sell and repay the loan; repayment of loan through out-of-pocket cash; or rolling over the loan into a new loan with a new loan term. These decisions are normally made when the loan maturity date approaches.
We offer Stock Options HedgeLoans where we will in essence lend the cost to the borrower to exercise the stock options. The resulting free trading stocks are then immediately rolled into a HedgeLoan. The cash already advanced is then deducted from the loan proceeds before they are wired to you as borrower. Please inquire by email if this if of interest to you.
We offer programs also to remove margins on margined stock, provided that the borrower has at least a small amount of eligible stock to begin with that is not margined. We will slowly move loan cash to the borrower, who will then unmargin blocks of margined stock and place the new stocks into HedgeLoans, allowing the entire portfolio to enjoy no-margin-call restructuring. Please also inquire if this if of interest to you.
Foreign stocks for most markets are all eligible for HedgeLoan. Quality and size standards are higher - we normally take only mid-caps to blue chips on these markets. But again, please inquire if this if of interest to you.
Note that we will provide a precise analysis when you apply, and there is never any no obligation in using our online request form to check, or calling us during business hours at 1-800-244-7616.
