Silverhawk Private Wealth Investments Archives

Alternative Investment Profile: Silverhawk Private Wealth

March 25, 2021

B Beyond Magazine recently featured Silverhawk Private Wealth founder, Paul Mershon, in their latest firm profile and review of alternative investments. Here is what they said:

Paul Mershon is the founder of Arizona-based Silverhawk Private Wealth, an SEC Registered Investment Advisory company with a difference.

Mershon advocates a truly diversified portfolio and an investment strategy based on a three-pronged (TRIA) approach. Rather than looking at the traditional formula of investing in stocks and bonds, Silverhawk takes a more nuanced, research-based approach, looking at different sectors that represent alternative investments with a historically solid return.

The TRIA Formula™ rests on a fairly conventional wisdom: spread your eggs across many different baskets, i.e. CORE investments, Opportunistic Investments, and Risk-Protected investments.

‘Core investments’ are, as the name suggests, investments in the publicly traded markets (equities).

The stock market has been on a roller coaster all of 2020 and there are, according to bears, some signs of a bubble. A ‘black swan’ event triggers a sell-off, even if savvy investors with deep pockets do buy in a down market.

This is one reason why Silverhawk looks for more ‘unique baskets’ that people can put their proverbial eggs in.

‘Opportunistic Investments’ are varied and fall broadly in the category of high performing assets. These can range from rare cars and rare coins, to industrial real estate, cloud storage facilities (“why invest just in Google shares”, say Mershon, “when you can invest in the logistical side of tech”), mineral rights and oil wells (as opposed to just oil shares), and others that deliver superior returns.

‘Risk protected investments’ are protected against downsides and offer a more conservative but committed return over a period of time when your capital is effectively tied up but secure.

The overarching goal is performance combined with broad exposure to different markets, and the objective is to insulate clients from loss and increase Alpha through diversification.

Warming to the subject of alternative and opportunistic investments, Mershon points out that demand for warehousing and onshore logistical hubs is not only trending but set to rise exponentially.

Spiraling online shopping is fueling demand for industrial and storage space and cross-dock facilities, which creates an opportunity for the investor prepared to consider alternatives to stocks and shares.

These investments benefit from low interest rates and are protected to some extent from equity market fluctuations, with no steep decline in sight, says Mershon.

Two of the most interesting alternative assets his company advocates are rare coins and rare cars.

Silverhawk works with Michael Contursi, CEO of Contursi Rare Coins, who advises on the former and with Russo and Steele Car Auctions who advise on the latter.

In fact, the interest in rare car investments came along opportunely – Silverhawk was a regular attendee of the car auctions and was briefed on the scarcity value of some specific vintage classic cars, of which there is a finite number. As is the case with the finest vintage wines, no more cars of a particular vintage will ever be made – or they wouldn’t be original. This makes them an excellent investment diversification asset with a demonstrable increase in value.

One only need to take a cursory look at the Hagerty Insurance company value tracker to ascertain that between 2010 and 2021 this blue-chip asset has appreciated by a staggering 108%.

Silverhawk interacts with clients, both existing collectors and investors, at car auctions.

The company suggests that a 3-6% of clients’ overall portfolio could be held in rare car assets.

Silverhawk works with a number of established experts to provide the research and data and it is then the client’s decision to determine which opportunities are the best fit for them; whether they want to create a fund and appoint someone to operate it.

“The social and entertainment aspect of investing in rare cars is an added bonus to what is, at its core, both a blue-chip asset, as well as a diversification tool.”

Silverhawk occupies a unique financial advisory space in an industry that is primarily restricted to publicly traded markets. They actively seek to identify opportunistic and non-conventional investments for their clients and rely on reliable third parties research, as well as on their own due diligence. They have been serving UHNW clients with an appetite for unique investment opportunities since 1992.

Read the profile here:

https://www.bbeyondmagazine.com/silverhawk-private-wealth-alternative-investments-cars-coins/

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Paul Mershon: “Where to Invest $1 Million Right Now”

March 10, 2021

Paul Mershon Was Featured in Bloomberg’s “Where to Invest $1 Million Right Now”

On March 5, Bloomberg updated their article, “Where to Invest $1 Million Right Now,” featuring six national experts offering investment ideas for a post-pandemic future, including Paul Mershon, CFP®, CLU, ChFC®, RHU and Founder & CEO of Silverhawk Private Wealth.

As Bloomberg put it, “the Covid-19 pandemic and its impact have dominated investment ideas over the past year, but with more than 270 million vaccine shots given and lockdowns easing, expectations are rising for a return to a new normal. With that in mind, our panel of experts recommend infrastructure stocks, mobile-home parks and equities to fulfill energy-storage needs. There are also more unusual and potentially fun-filled opportunities, for those fortunate to have the money to invest: vintage Mercedes, soccer jerseys and music royalties.”

Paul Mershon’s commentary was as follows:

We see a lot of attraction in real estate for manufactured housing — or what you might call mobile home parks. It’s an area many institutions are starting to wake up to. The returns are ridiculous. Over the last decade, investors have seen appreciation as high as 600% to 700%.

When you look at the demographics, there’s logic to it. Baby boomers have had a huge economic impact during each decade of their life. Over the next 12 years, the youngest of the boomers are turning 65, so 20% of the U.S. population will be over 65. That means a high percentage of people selling homes to capture liquidity and becoming renters, or seeking lower-cost housing. A mobile home is a third of the cost of a stick-built house. The average tenure in these parks is 15 years and occupancy rates are high nationwide. Renters tend to be older, fiscally conservative and capitalized adequately and you don’t see problems with rent abatement.

There are about 50,000 of these manufactured home parks in the U.S., but there’s only been about 10 developed in the past decade. Most city councils aren’t very excited about a brand new trailer park and there are zoning restrictions so it’s pretty hard to build a new park. Those that remain dominate the space. Large investors like Zell’s Equity LifeStyle Properties and Sun Communities still only control 5-6% of the market; 95% are mom and pop operators. It’s highly fragmented. That’s the definition of opportunity for the private-equity world.

Another way to play: Investors should consider the Mercedes Benz 300 SL. These models were manufactured between 1955 and 1961 and really represent the gold standard for classic car collectibles. If the car market migrates higher, they will be some of the first to rise in value. If the market declines, these models will typically experience only about 30% to 50% of the general market decline. And the Mercedes is recognized worldwide and followed by the global collectible market, not just limited to U.S. buyers, so that serves to increase demand.

Depending on condition, they tend to sell for about $800,000 to $1,500,000 most years. We’ve seen a drop in price in the last 24 months of about 15% to 20%, as we have across the spectrum of classic-car collectibles, so this may present a great entry point assuming you can find a willing seller.

Read the entire article here:

https://www.bloomberg.com/features/how-to-invest-a-million-dollars/

3 Tangible Asset Trends for 2021

January 5, 2021

Collectibles such as classic cars, fine wine, and rare coins are highly insulated from the seemingly insurmountable headwinds that investors face today.

By Paul Mershon

Something we have been saying to many of our private wealth clients for years is the importance of actual portfolio diversification into completely non-correlated asset classes. It’s not just about stocks and bonds anymore and hasn’t been for more than two decades, especially with the 10-year U.S. Treasury yield at an historically low rate of 0.84 percent.

I recently ran across this article published by Private Wealth Canada (privatewealthcanada.ca): “3 Tangible Asset Trends Emerging As Safe Havens Against Ominous Economic Outlook” which I believe summarizes some opportunities we have going forward for 2021.

Here is a short excerpt:

For many centuries, ultra-high end “blue chip” fine art pieces have been a store of value within the market, which has a long track record of price appreciation. However, after years of successfully institutionalizing this particular global sector and witnessing staggering price increases therein, trouble is brewing as demand from major art markets like London and Hong Kong falters due to geopolitics, trade wars and the global COVID-19 pandemic.

In other words, “Art Is Becoming Non-Starter.”

While fine art doesn’t paint a particularly pretty picture for investors, several other collectibles markets with significantly lower entry prices are emerging as asset classes worthy of serious consideration ‒ not only for investment but also offering many other non-financial benefits. Namely, the fine wine, rare coin and classic car markets.

Read the whole article here:

https://www.privatewealthcanada.ca/articles/1220-Kern3TangibleAssetTrends.pdf