Big River Report
BIG RIVER CAPITAL MANAGEMENT

Phone: 601.259.3731

Email: wtr3@bigriverfunds.com


INVESTMENT ADVISOR BROCHURE

Big River Capital Management, LLC

2470 Sand Ridge Drive, Jackson, MS 39211

Brochure issue date: September 30, 2017

This brochure provides information about the qualifications and business practices of Big River Capital Management, LLC. If you have any questions about the contents of this brochure, please contact us at (601)259-3731 or email us at address wtr3@bigriverfunds.com. The information in this brochure has not been approved or verified by the State of Mississippi Securities Division, the United States Securities and Exchange Commission or by any other state securities authority. Additional information about Big River Capital Management, LLC is available on the IARD website. You can search the site for registered investment advisors by an identifying number known as a CRD number. The CRD number for Big River Capital Management, LLC is 175134. Please recognize that anywhere you see Big River Capital Management, LLC. identified as a “registered investment advisor” or “registered”, that registration in this context does not imply a certain level of skill or training. 

Material Changes: This updated brochure contains material changes to the underlying investment strategies and investment format

TABLE OF CONTENTS

Advisory Business ………………………………………………………………………………………………………………………3 

Fees and Compensation ..................................................................................3-4 

Disputes ......................................................................................................4

Performance-Based Fees ……………………………………………………………………………………………………………4 

Types of Clients .............................................................................................4

Methods of Analysis, Investment Strategies and Risk of Loss …………………………………………………5-6 

Disciplinary Information ……………………………………………………………………………………………………………6 

Other Financial Industry Activities and Affiliations……………………………………….………………………….6 

Code of Ethics, participation or Interest in Client Transactions and Personal Trading …………..7 

Brokerage Practices …………………………………………………………………………………………………………………..7 

Review of Accounts ……………………………………………………………………………………………………………………7 

Client Referrals and Other Compensation ………………………………………………………………………………..7 

Custody ......................................................................................................8 

Investment Discretion .....................................................................................8 

Voting Client Securities …………………………………………………………………………………………………………….8 

Financial Information ……………………………………………………………………………………………………………….8

Educational Background and Business Experience …………………………………………………………………..9

Client Privacy Policy ………………………………………………………………………………………………………………….9

Advisory Business

Big River Capital Management, LLC (herein BRCM) was formed as a Mississippi Limited Liability Company in June of 2008 and approved by the Mississippi Securities Division as investment advisor on August 7, 2015. The owner of Big River Capital Management, LLC. is William Thomas Robertson, III (Bill Robertson). Big River Capital Management, LLC does not have a parent company or any subsidiaries. The principal place of business is located at 2470 Sand Ridge Drive Jackson, MS 39211. The purpose of the business is to manage separate accounts consisting of securities for clients who are typically affluent individuals, financial advisors, private investment advisors, institutions, hedge funds or funds of hedge funds (fund-of-funds). 

BRCM analyzes, constructs, and manages investment portfolios with a goal of capital appreciation. BRCM offers two strategies through a managed account format. 

Big River Long Only Equity (BRLO)

Big River Long Short Equity (BRLS)

The goal of both strategies is to outperform the benchmark S&P 500 over rolling five year periods. BRCM gives no assurance that the goal will be achieved.

BRLO’s objectives are to buy and hold relatively concentrated number of securities for long periods of time in order to achieve tax efficient capital appreciation. BRLO uses fundamental analysis and implements some trend following methodologies. BRLO may at times actively engage with management in order to protect or enhance our investments.

BRLS’s stated objectives are to "keep up" with the S&P 500 during bull markets and "lose less" than the S&P 500 during bear markets. No assurance can be given that these objectives will be met.

Big River Capital Management, LLC is a money manager and not a financial planner. BRCM does not provide tax or legal advice and encourages Prospective Clients to seek the advice of financial planners, accountants and attorneys regarding their investments. 

BRCM may utilize an array of investment vehicles including, but not limited to: equity securities, financial futures, debt securities, exchange-traded funds, and United States government securities. BRCM employs a variety of security analysis methods including fundamental and technical analysis. We also consult a wide range of information to analyze and execute investment strategies, such as: financial newspapers and magazines, third-party research materials, internet searches, annual reports, prospectuses, regulatory filings and press releases. 

The minimum account size is $50,000, which may be waived. There is no maximum account size.

BRCM manages client assets of approximately 3,000,000. As of September 30, 2017, BRCM managed approximately $2,400,000 in assets on a discretionary basis and approximately $600,000 on a non-discretionary basis. 

BRCM may participate in the wrap fee or similar programs with financial advisors or brokerage firms. 

Fees and Compensation 

BRLO charges a 1.5% management fee paid quarterly in arrears.

BRLS charges a 2% management fee paid quarterly in arrears.

The fee accrues daily. The fee is calculated based on the daily Net Asset Value (NAV) and deducted by the custodian after the end of each quarter.

The Client authorizes BRCM to bill the custodian the fees described above and the Client authorizes, or will authorize the custodian to pay BRCM directly. The Client agrees that the custodian will send, at least quarterly, a statement indicating all amounts disbursed from the Client’s account, including the amount of fees paid directly to BRCM. 

Any objections to the amounts deducted may be made to wtr3@bigriverfunds.com within 14 days of the date the statement was sent via email. 

Some custodians of broker/dealers for the accounts of clients of BRCM may charge maintenance or transaction fees that are separate from the advisory fees charged by BRCM for its advisory services. The custodian of the client’s account may provide confirmations with each transaction and statements either monthly or quarterly. Any brokerage commissions, margin interest payments, transfer fees, transaction fees, redemption fees, wiring fees, etc. charged against an account are separate from the BRCM management fees, and will be deducted from the account by the custodian. 

Disputes

If a dispute arises out of the Client Agreement and cannot be settled through direct negotiation between BRCM and the Client, it may then be resolved by entering into a voluntary Mediation, and if the Mediation is unsuccessful, then, to the extent not inconsistent with applicable law, by voluntary Arbitration via the American Arbitration Association. Mediation shall end as soon as (i) the dispute is resolved (ii) the mediator informs the parties that Mediation is unlikely to be successful, or (iii) any party elects, after three days of good faith mediation effort, to end the Mediation. An agreement to arbitrate does not apply to future disputes arising under certain federal or state securities laws. Each party shall be responsible for the cost of its own legal representation at any Mediation or Arbitration proceeding. A Mediation or Arbitration hearing site will not be chosen if traveling to that site would cause undue hardship or expense to the Client or BRCM. Nothing contained in this Agreement shall constitute a waiver of any rights the Client may have under Federal and State securities laws.    

Types of Clients

BRCM Clients must have a high risk tolerance. BRCM Clients only invest money with Big River that they can comfortably afford to lose.

Clients invested in BRLO are typically affluent individuals or institutions. Clients invested in BRLO do not anticipate needing the funds invested in BRLO for at least five years.

Clients invested in BRLS must be accredited investors having a net worth of at least $1,500,000.00. Clients may be high net worth individuals or institutions. 

Methods of Analysis, Investment Strategies and Risk of Loss  

Clients invest with BRCM via Separately Managed Accounts (SMAs). 

The investment strategy for BRLO is value, plus growth, long term buy and hold with shareholder activism when action is required in order to protect or enhance our investment. BRLO aims for capital appreciation through low turnover costs and tax efficiency.

The investment strategy of BRLS is actively managed long and short security positions. The process utilizes Bill Robertson's more than twenty years of investment experience with a “test account approach”. Robertson trades a personal account to determine whether or not ideas or suitable for a Client’s SMA. This process will naturally result in SMA results which are materially different from the personal “test” account. If he views the security as undervalued with a good probability of increasing in value the client's account may purchase the security. Conversely, if he determines that a security is overvalued with a good probability of decreasing in value the client's account may short the security. BRLS does not operate with any tax considerations in mind.

There are certain risks which when making this investment the Client accepts, these include, but in no way are limited to the following: short selling, financial futures, leverage, concentration, market capitalization size and active portfolio turnover.  

Investment Risks

Market Risk: The price of a security may abruptly drop in reaction to world events and changes in business conditions or the perception of a change in business conditions. This type of risk is caused by external factors independent of a security’s particular underlying circumstances. For example, political, economic and social conditions may trigger market events. 

ETF Risks: Investing in ETF (Exchange Traded Fund) securities that benchmark an index of stocks or other assets carries certain risks. These include, but are in no way limited to, the following: Insolvency of the company backing the ETF, Bankruptcy of individual companies within the index as well as all of the risks associated with investing in securities. 

Inflation Risk: When any type of inflation is present, a dollar today will not buy as much as a dollar next year, because purchasing power is eroding at the rate of inflation. 

Deflation Risk: When deflation is present, a dollars worth of debt will become harder for a company to repay and could place the company at risk of bankruptcy. 

Currency Risk: Companies typically have substantial foreign investments which are subject to fluctuations in the value of the dollar against the currency of the investment’s originating country causing exchange rate risk. 

Reinvestment Risk: This is the risk that future proceeds from investments may have to be reinvested at a potentially lower rates of return.

Business Risk: These risks are associated with a particular industry or a particular company within an industry. For example, oil drilling companies and electric utility companies are both considered energy companies but these two types of companies have different business risks. An oil driller depends on finding oil and the recovering it, a lengthy process, before they can generate a profit. In terms of general risk, excluding the risks associated with technological innovation or change, oil companies typically carry a higher risk of loss than an electric utility company, where prices are regulated and the company generates its income from customers who historically buy electricity in both strong and weak economies. 

Liquidity Risk: Liquidity is the ability to readily convert an investment into cash. Generally, assets are more liquid if there are many active participants accessing a standardized product. For example, Treasury Bills are highly liquid, while real estate properties are not. BRCM may invest in securities on behalf of BRLS and BRLO which become illiquid during periods of financial distress for a specific company as well as during times of financial distress for the broader US or global economy.

Financial Risk: Excessive borrowing to finance business operations increases the risk of loss, because the company must meet the terms of its obligations in good times and bad. During periods of financial stress, the inability to meet loan obligations may result in bankruptcy and/or a declining market value. 

Short Selling Risk: Securities sold short have unlimited risk in that there is no limit to how high a security can trade. Selling securities short is a primary strategy deployed for BRLS.

Leverage: When BRCM sells a security short the proceeds are typically used to finance a long position. BRCM also utilizes margin debt to enhance returns. Both of these techniques are considered to leverage the portfolio thereby increasing the risk of loss. When the companies which BRCM invests in have debt, they are considered leveraged. Therefore, when BRCM adds leverage to an SMA, the portfolio is considered to have layers of leverage which substantially increases portfolio risks for that SMA.  

Futures: BRLS may utilize equity index and other futures contracts for hedging and speculation. Futures are derivative securities where the value is derived from an underlying asset. Futures are highly leveraged trading vehicles and the use of futures can lead to permanent losses. Futures are considered to be extremely high risk market contracts and the use of futures under any circumstances can be deemed speculative.

Concentration Risk: Portfolios with fewer positions and less diversification are inherently more risky than broadly diversified portfolios. An unexpected problem which results in losses for a particular security will have a larger impact on a concentrated portfolio. Both BRLO and BRLS accept concentration risks.

Market Capitalization Risk: Companies with market capitalizations which are considered to be small are generally more risky than larger companies, because small companies are generally more growth oriented and in such capacity are taking on more risks. Also, smaller capitalized companies may have more difficulty finding operating capital during recessions. The securities for smaller capitalized companies have prices that are more volatile and trading volumes which are less liquid. The mark-to-market losses during periods of financial distress are typically more exacerbated than for larger capitalized companies.  

Active Portfolio Turnover Risk: There are higher trading other costs and potentially negative tax consequences associated with active portfolio turnover. In addition, as a part of the BRLS investment process, there are frequent trading errors resulting in losses for the SMAs.

Account Variance: While BRCM seeks to trade every account fairly, in practice, due to differing prices at the time of investment, positions vary in the Client SMAs. Therefore, the performance reported in the primary tracking account will be different from the performance in the Client's account and different from other Client SMAs. The difference could be positive or negative relative to the tracking account/other SMAs and the difference between the Client's account performance and the tracking account’s/other SMAs performance could be material. BRCM bears not duty to match Client account performance to the tracking account.

Disciplinary Information 

There are no legal or disciplinary actions or outstanding judgments against Big River Capital Management, LLC or William Thomas Robertson, III. He is registered as an investment advisor representative of BRCM. 

Other Financial Industry Activities and Affiliations

Neither BRCM nor Bill Robertson are registered or do they have an application pending as a futures commission merchant, a commodity pool operator or a commodity-trading advisor. 

Neither BRCM nor Bill Robertson have any material relationships or arrangement with any related person listed below: ï A mutual fund, closed-end investment company, unit investment trust; ï Futures commission merchant, commodity pool operator, or commodity trading advisor; ï Accountant or accounting firm; ï Lawyer or law firm; ï Insurance company or agency

Code of Ethics, participation or Interest in Client Transactions and Personal Trading 

Bill Robertson’s personal trading and investing give rise to potential conflicts of interest. The two primary potential conflicts of interest are the amount of time Robertson devotes to each Client’s portfolio and the trading of his personal accounts. The Advisor strives to be fair to it’s Client’s in all material respects. 

Robertson reviews each Client’s portfolio at least quarterly, and the research that goes into managing his personal Long Only accounts is used to benefit each Client. This is evidenced by the fact that the long only Separately Managed Accounts and Robertson’s personal accounts hold many of the same securities. 

Robertson uses a “test account” approach when managing the Long Short strategy. The purpose of using his own personal account to “test” ideas and exposure changes is to reduce errors and transaction costs in the Client accounts. While this process, on the surface, creates the appearance of a conflict of interest, Clients who invest in the Long Short strategy acknowledge and accept via the Client Agreement that this process is not in conflict with their interest. 

Client’s acknowledge and accept via the Client Agreement that the results in the “tracking accounts” (Robertson’s personal accounts used in creating the track records for both Long Only and Long Short) will vary materially from the net of fee results in the Client’s Separately Managed Account.

Brokerage Practices BRCM has selected Interactive Brokers (IB) as the Clients Broker-Dealer according to the best possible execution, clearance services and commission rates. IB will execute security transactions in such a manner that the Client’s total cost or proceeds in each transaction is the most favorable, under the circumstances, in implementing our overall investment responsibilities to all Clients. BRCM may choose to use another Broker at any time. BRCM will make each of the following disclosures that may apply: 1. Disparity in commission charges 2. Any conflicts of interest arising from brokerage firm referrals. 3. Any soft dollar arrangements with a Broker. BRCM may select or recommend broker dealers for client transactions based in part on the research or other services made available by those broker dealers. 

BRCM is permitted to have soft dollar arrangements with a Broker, but BRCM presently does not have any soft dollar relationships with any broker dealers, vendors of research information, or vendors of equipment or other services. 

Review of Accounts

Each Client is provided with an electronic monthly statement directly from IB, which lists all securities in their account, along with the costs and market value. When trades are made in the SMA, the Client will receive a daily electronic statement from IB. Each Client is provided a quarterly performance report and an invoice from BRCM. IB will provide a quarterly statement to the Client. Capital gain and loss schedules and income summaries on a 1099 are also provided by IB on an annual basis. Additionally, the custodian may issue periodic statements and reports directly to the Client. 

Client Referrals and Other Compensation 

BRCM may offer remuneration to individuals or organizations that make referrals of potential clients under the following circumstances: BRCM has a written agreement with the person making the referral; A separate written disclosure document is furnished to the referral Client disclosing the relationship between the person making the referral and BRCM, the terms of the compensation arrangement between the person making the referral and BRCM are disclosed to the Client. 

BRCM works with financial advisors and may elect to split its fees with financial advisors. In these instances BRCM does not engage with the underlying clients, and any duty to disclose any fee sharing arrangements is between the financial advisor and his, her or it’s clients. 

Custody 

Each Client appoints, or will appoint, a separate qualified custodian (Interactive Brokers, the qualified custodian) to take possession of the cash, securities and other assets in the client’s account. As a result, BRCM will have no access to the assets in the account and will not be responsible for any acts or omissions of the qualified custodian. The custodian sends to the Client, at least quarterly, a statement indicating all amounts disbursed from the account (including the amount of any fees paid to BRCM pursuant to the Client Agreement), all transactions occurring in the account during the period covered by the statement, and a summary of the account positions and portfolio value at the end of the period.

Investment Discretion

By signing the Client Agreement, the Client grants BRCM the authority to invest/reinvest the assets under BRCM’s management on the Client’s behalf without prior consultation from the Client (discretionary basis). BRCM will invest in the securities types listed in this brochure which include, but are not limited to: cash, cash equivalents, U.S. Government securities, equities, futures, notes, bonds and ETF’s and may sell short any of the above. The Client also authorizes BRCM to take any other necessary action in connection with the opening and maintenance of the Client’s account as well as for the completion and payment of transactions for the account. The Client agrees to promptly inform BRCM if he or she is no longer suitable for this investment. For example, if a Client invested in BRLS has an event that causes their net worth to fall below $1,500,000 or any other adverse action or liability arises which renders this investment unsuitable for the Client. 

Voting Client Securities 

BRCM has no duty to vote client shares. 

Financial Information 

No disclosure of BRCM's financial information (balance sheet) is required, because BRCM does not have direct custody of the Client's funds and does not require prepayment of potential fees. Neither BRCM nor Bill Robertson, is presently the subject of a bankruptcy petition nor have they been subject to these proceedings at any time in the past. Supplemental Information about BRCM's personnel may be found on the IARD website at Finra.org. 

Educational Background and Business Experience

William Thomas Robertson, III (Bill Robertson) is the founder of Big River Capital Management, LLC. Prior to launching the Big River, in 2001 Bill founded Robertson Financial Services LLC, a hedge fund consulting and marketing business. During the first five years in operation, Robertson Financial raised nearly $200 million of assets allocated to hedge funds. Bill was registered with the Financial Industry Regulatory Authority (FINRA) and held his Series 7, Series 24, Series 27, Series 65 and Series 66 licenses. Bill is currently registered as a Series 65 investment advisor representative at Big River Capital Management, LLC. He has been active in the real-estate business since 1999 through Big River Real-Estate, Robertson Development and its predecessor Robertson Securities and Property Trading. He purchased, leased and sold an office building in Ridgeland, MS; developed, operated and sold a retail center in Gulfport, MS; acquired, improved and maintained residential rental properties and he owns additional real-estate holdings, none of which have or have ever had outside clients. While attending Mississippi State University, he was inducted into Phi Eta Sigma honor society, received the Bing Scholarship and was presented with a Certificate of Award for academic achievement from Sigma Alpha Epsilon. Bill graduated from MSU in 1995 with a Bachelor of Business Administration. Following his undergraduate degree, he became an exchange member at the Chicago Board of Trade and completed his Masters of Business Administration at DePaul University in 1998. Bill grew up in Indianola, MS where his family has been engaged in farming for over 100 years and banking for approximately 40 years. Bill has been a resident of the Jackson, MS metro area since 1998. He is a licensed pilot, an Eagle Scout, a member of the Rotary Club of Jackson and Christ United Methodist Church.

Other Business Activities 

The entities Bill Robertson uses to invest in real-estate are Robertson Development and Big River Real-Estate. He receives miscellaneous revenue through Robertson Financial, such as marketing fees from Crown Capital Corporation. Robertson makes equity investments through Big River Long Short Equity Fund, LP and Big River Investment Management, LLC. 

Additional Compensation

Bill Robertson receives marketing fees from the sale of hedge fund products from Crown Capital Corporation.      


Supervision 

It is unlawful for a registered investment advisor to provide investment advice unless the Advisor has adopted and implemented written policies and procedures reasonably designed to prevent violations under the Mississippi Securities Act. These written policies and procedures steer the Advisor and it’s supervised person in order to follow the rules and regulations under the Mississippi Securities Act. Bill Robertson is responsible for making sure that all regulatory requirements are met. The policies and procedures are reviewed annually.

Client Privacy Policy

According to the Financial Services Modernization Act of 1999, each financial institution with which you have a relationship must notify you on an annual basis of their policies regarding the privacy of your personal information. This document serves as your notification from Big River Capital Management, LLC.

Confidentiality of the information that you provide to BRCM is of utmost importance. The only information that we collect is the executed Client Agreement and the Client Suitability Form. Any additional information you provide BRCM in order to insure that we maintain complete and accurate records for reporting your investment information to you will be kept confidential. BRCM does not gather any other personal information about you and does not disclose any information about you, except as permitted or required by law. We maintain procedural safeguards in order to protect the information that is provided by you to us. If you have additional questions at any time, please email wtr3@bigriverfunds.com.