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ITEM 1 – COVER PAGE
Waterstone Advisors, LLC
Firm Brochure (Form ADV Part 2A)
10 Brook Street
Walpole, MA 02081 978-828-2188
March 18, 2014
This brochure provides information about the qualifications and business practices of Waterstone Advisors LLC (“Waterstone”). If you have any questions about the contents of this brochure, please contact V. Henry Astarjian at 978-828-2188 or by email at [email protected]. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission, or by any state securities authority. Registration with securities authorities does not imply a certain level of skill or training.
Waterstone Advisors, LLC Page 2
ITEM 2 – MATERIAL CHANGES
The Firm has not made any material changes since the filing of its last ADV Part 2 of February
28, 2013. The Firm will review and update its brochure annually, or more frequently, if there is
a material change, in order to keep it current. This brochure may be requested by calling V.
Henry Astarjian at 978-828-2188 or by email, [email protected].
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ITEM 3 – TABLE OF CONTENTS
Item 1 – Cover Page (p. 1)
Item 2 – Material Changes (p. 2)
Item 3 – Table of Contents (p. 3)
Item 4 – Advisory Business (p. 4)
Item 5 – Fees and Compensation (p. 5)
Item 6 – Performance-Based Fees and Side-by-Side Management (p. 6)
Item 7 – Types of Clients (p. 6)
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss (p. 6)
Item 9 – Disciplinary Information (p. 8)
Item 10 – Other Financial Industry Activities and Affiliations (p. 8)
Item 11 – Code of Ethics, Participation or Interest in Client Transactions and
Personal Trading (p. 8)
Item 12 – Brokerage Practices (p. 9)
Item 13 – Review of Accounts (p. 10)
Item 14 – Client Referrals and Other Compensation (p. 10)
Item 15 – Custody (p. 10)
Item 16 – Investment Discretion (p. 11)
Item 17 – Voting Client Securities (p. 11)
Item 18 – Financial Information (p. 11)
Item 19 – Requirements for State-Registered Advisers (p. 11)
Brochure Supplement Cover Page (p. 12)
Supplement Item 2 – Educational Background and Business Experience (p. 13)
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ITEM 4 – ADVISORY BUSINESS
Waterstone Advisors, LLC (“Waterstone”, “We”, “Our”, “Us”) was formed by V. Henry Astarjian,
to offer investment management services to individuals, families, and businesses. In addition,
Waterstone offers investment research and portfolio consulting services. The firm became a
Massachusetts registered investment advisor in 2012. V. Henry Astarjian is currently the
company’s sole managing member and employee.
Our objective is to grow the value of your account (“portfolio”) over time in accordance with
your investment goals. When you engage us to be your investment advisor, we will meet with
you to formulate an investment plan that will act as our guide in making investment decisions
for your portfolio.
This investment plan, also known as an investment policy statement (IPS), will take into
consideration your particular needs and goals and will be mindful of the appropriate level of
risk for your portfolio. We will review and update your investment policy statement with you at
least once a year, or more frequently if needed, to adjust for changes in your tax status, life
circumstances, or investment objectives.
We manage portfolios on a discretionary basis. This means that after we have agreed on an
investment strategy that is suitable for you, we will buy or sell securities without asking your
approval for each trade, prior to, or at the time it takes place. Such an arrangement allows us
to act in a timely manner in making investment decisions that comply with your IPS.
Waterstone will not assign your account to other parties without your consent.
You may make additions to, or request withdrawals from your investment account at any time
during normal business hours, and you may terminate your relationship with Waterstone
Advisors LLC for any reason at any time.
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ITEM 5 – FEES AND COMPENSATION
Our portfolio management fees are based on a percentage of assets managed and our fee
structure offers tiered discounts for progressively larger accounts.
Our fee schedule for portfolio management is:
1.25% of the value of the account, up to the first $1,000,000, plus
1.00% of the value of the account, from $1,000,001 to $2,000,000, plus
0.75% of the value of the account, from $2,000,001 to $3,000,000, plus
0.50% of the value of the account over $3,000,001.
The following is an example of an annual fee calculation for an account with an average
balance of $5,000,000:
1.25% of the first $1,000,000 = $12,500.00
1.00% of the next $ 999,999 = $ 9,999.99
0.75% of the next $ 999,999 = $ 7,499.99
0.50% of the next $1,999,999 = $10,000.00
Total Fee $39,999.98
The overall effective annual fee rate is 0.80% in this example.
Our fees are negotiable for related accounts, large accounts, or for accounts which anticipate
substantially increased asset inflows.
Our management fees are based on the market value of your account at the end of each
calendar quarter and are debited directly from your account by your custodian on our behalf
quarterly, in arrears. We do not require advance payment for any of our services. All fees and
authorizations are agreed upon in advance and are detailed in our engagement letter with you.
Our investment management fees exclude, and are in addition to, commissions paid to brokers
from your account. Exchange-traded funds and mutual funds also carry fees that are exclusive
of and are in addition to our fees.
You have the option to purchase investment products or services through brokers other than
the ones we use or recommend.
Our minimum account size requirement for our portfolio management service is $200,000. We
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may waive this requirement at our sole discretion, particularly if we anticipate future inflows of
assets, or if we manage related accounts.
If you wish to engage us only for investment research on individual stocks, mutual funds,
exchange traded funds (ETFs), or other investment vehicles or topics, we charge a fee of $250
per hour with a one hour minimum charge.
If you wish to engage us only for consulting services related to your current or future portfolio,
we charge a fee of $250 per hour with a one hour minimum charge.
We do not currently participate in any wrap fee programs.
ITEM 6 – PERFORMANCE-BASED FEES AND SIDE BY SIDE MANAGEMENT
Waterstone does not charge performance-based fees for any of its services and does not
manage any accounts that charge such fees. Performance-based fees are those that are
charged on a percentage of capital appreciation or capital gains.
ITEM 7 – TYPES OF CLIENTS
Waterstone provides portfolio management, investment research, and portfolio consulting
services to individuals, families, and businesses. Clients can engage us to manage either all or a
portion of their investment assets on a discretionary basis. We do not manage non-
discretionary accounts.
ITEM 8 – METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS
Methods of Analysis Waterstone’s proprietary research process is based on fundamental analysis that focuses on a
company’s long-term prospects for growth and profitability. We believe that share prices are
driven over time by earnings expectations that, in turn, are shaped by company-specific factors
and influenced by economic, political, legislative, and industry trends. Our research objective is
to understand relevant factors on multiple levels and to help our clients benefit from them.
There may be times when we may not achieve this objective.
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In selecting individual stocks, we favor companies that are leaders in their industries, are run by
capable management teams, have clear-cut growth strategies, promising prospects for
increased profitability, strong or improving balance sheets, and competitive advantages that
allow for pricing power.
We pay particular attention to share valuations as a barometer of investors’ interest in a
company and of their expectations for the company’s future prospects. We select stocks that
we believe are valued sensibly relative to their companies’ fundamental prospects. We favor
dividend paying stocks.
We do not have a market capitalization or industry bias in our selections, but seek the most
attractive investment opportunities which our research process identifies.
We utilize numerous sources of information which act as the raw materials for our investment
decisions. These sources include, but are not limited to, corporate regulatory filings, press
releases, earnings conference calls, industry conferences, news articles, proprietary screens,
and online financial news and data sites. While we make every reasonable effort to verify the
reliability of the data we use in our fundamental analyses, we cannot guarantee the accuracy of
such data in all cases.
We draw our investment ideas from a wide range of U.S.-listed stocks, mutual funds, exchange-
traded funds (ETFs), American Depository Receipts (ADRs), and cash instruments.
Investment Strategies Waterstone generally manages portfolios of up to 50 investment positions which may include
stocks, bonds, mutual funds, and exchange-traded funds (ETFs). We believe that this range of
investment positions is generally sufficient to achieve our clients’ investment objectives while
simultaneously reducing company-specific or issuer-specific risk in their portfolios. This number
of positions, however, may not completely eliminate broad market (systematic) risk.
Our research process is designed to identify attractive stocks and investments without regard
to sector classification. Therefore, at times we may overweight or underweight certain sectors
of the economy depending on the outcome of our research. Such an approach may outperform
or underperform the S&P 500 or other broad market indices during certain time periods. Such
an approach may also increase sector-specific or industry-specific risk.
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We deploy cash methodically and with regard to market conditions rather than solely on its
availability in our clients’ accounts. Therefore, there may be times when cash levels are high as
we anticipate future investment opportunities or as we protect portfolios from an expected
decline in asset values. We regard this approach as part of our asset allocation responsibilities
for our clients’ portfolios.
Waterstone does not participate in IPOs, initial public offerings, of securities.
Risk of Loss Our investment process places considerable emphasis on risk management as we work to meet
your objectives.
To mitigate risk, we conduct in-depth research and analysis on each security; monitor and
manage portfolios on an ongoing basis; maintain small position sizes; pay significant attention
to valuations; hedge portfolios with index ETFs, if necessary; maintain appropriate cash levels;
buy securities which are liquid under normal market conditions; and generally maintain
upwards of 50 securities to offer what we believe is sufficient diversification against company-
specific or issuer-specific risks.
While we employ a variety of risk reduction measures, investing in securities carries a risk of
loss which you should be prepared to bear. The value of your account can decrease.
ITEM 9 – DISCIPLINARY INFORMATION
Neither Waterstone Advisors LLC, nor its principal, has been the subject of legal or disciplinary
action by the Commonwealth of Massachusetts or any other governing body.
ITEM 10 – OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS
Waterstone Advisors LLC does not engage in any additional financial industry activities beyond
those discussed in this Firm Brochure.
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ITEM 11 – CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS AND PERSONAL TRADING
We have adopted a Code of Ethics which is designed to ensure that we maintain ethical
practices at all times, with paramount emphasis on our fiduciary duties to you, our client. Each
principal and employee of Waterstone Advisors LLC is required to annually review and sign the
Code of Ethics affirming that they understand and agree to its provisions. You may obtain a
copy of our Code of Ethics by contacting V. Henry Astarjian at 978-828-2188 or
At times, Waterstone Advisors, its principals or its employees may buy or sell in the open
market, for their own accounts, the same investments that we place in your portfolio. Our
Code of Ethics ensures that the interests of our clients are placed ahead of our own interests
when making such transactions.
All personal trading is subject to the provisions of our Code of Ethics and is monitored by V.
Henry Astarjian.
As part of our focus on ethical practices, we are committed to maintaining the confidentiality of
the personal information you have entrusted to us. We use such information to determine the
suitability of certain investments for you and to help us to formulate an investment plan and
objectives for your account. We do not sell or otherwise share your personal and confidential
information with third party marketers. With your permission, we may disclose limited
amounts of your information to your attorneys, financial planners, accountants, or brokerage
firms when your objectives require it, or when it is required by law. We maintain a secure office
where your information is kept, and we utilize electronic firewall and password protected
brokerage links.
ITEM 12 – BROKERAGE PRACTICES
Waterstone Advisors does not maintain custody of the assets in your account. Clients are
encouraged to open investment accounts at our preferred broker-dealer, Scottrade Advisor
Services (“Scottrade”). Scottrade provides institutional level trading services for independent
investment advisors and is a qualified custodian, able to maintain custody of your investment
assets.
If you wish to keep your current brokerage and custodial relationship, we will endeavor to work
with your current broker-dealer and custodian to manage your account. However, we cannot
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guarantee that we will be able to do so, or that you will receive better pricing or lower fees
than might be available to our other clients who use Scottrade Advisor Services.
Waterstone does not engage in “soft dollar” arrangements by which we receive research, goods
or other services from Scottrade or any other broker-dealer.
ITEM 13 – REVIEW OF ACCOUNTS
We review and monitor your portfolio on an ongoing basis to ensure that it conforms to your
investment plan and meets your investment goals.
We recommend that we meet personally with you at least once each year to review and update
your investment goals and to discuss your portfolio.
If you choose to open an account with Scottrade Advisor Services, they will send an account
statement to you each month or each quarter, depending on the level of activity in your
account. Whether you choose to custody with Scottrade or with another custodian, we suggest
that you carefully review each of your brokerage statements as you receive them and direct any
questions you may have to us.
ITEM 14 – CLIENT REFERRALS AND OTHER COMPENSATION
Waterstone Advisors LLC does not have any compensation arrangements beyond the ones
which have been previously detailed in this Firm Brochure.
We do not receive compensation for referring you to other service providers such as lawyers,
accountants, and insurance agents. While we welcome all client referrals to us, and our
practice relies on word-of-mouth introductions, we do not pay compensation to any third
parties for their referrals.
ITEM 15 – CUSTODY
Waterstone Advisors does not maintain custody of the assets in your account. We currently
use our preferred qualified broker-dealer and custodian Scottrade Advisor Services to custody
our clients’ investment assets. Some clients may choose to have their own custodians. We will
endeavor to work with your custodian to manage your account. Scottrade will send account
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statements to you monthly or quarterly, depending on the level of activity in your account.
As part of our attempt to maintain the integrity and transparency of your account, we
recommend that you review your statements thoroughly and direct any questions that you may
have to us.
ITEM 16 – INVESTMENT DISCRETION
Waterstone Advisors LLC accepts only discretionary accounts.
After we agree to an investment policy statement with you for your portfolio, our normal
practice is to transact purchases and sales in your portfolio without further prior approval from
you.
Our discretion over your portfolio extends to the type of securities and specific names to be
transacted, as well as their quantities and the general timing of those transactions.
ITEM 17 – VOTING CLIENT SECURITIES
Waterstone Advisors LLC does not request proxy voting authority from its clients for securities
held in their portfolios. Clients retain that responsibility and will receive proxies directly from
their custodian. Clients may contact us with questions they may have about voting, although
we cannot be considered to have voting authority as a result of the clarifications we may
provide to them for their questions.
ITEM 18 – FINANCIAL INFORMATION
Waterstone Advisors LLC has no financial commitments that impair our ability to meet our
contractual and fiduciary commitments to you or other clients. We have not been the subject
of bankruptcy proceedings.
ITEM 19 – REQUIREMENT FOR STATE-REGISTERED ADVISERS
Waterstone Advisors LLC is a Massachusetts registered investment advisor. Please see the
Brochure Supplement for further details about its Managing Director.
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ITEM 1 – COVER PAGE
Waterstone Advisors, LLC
Firm Brochure (Form ADV Part 2B)
Supplement
10 Brook Street
Walpole, MA 02081 978-828-2188
March 18, 2014
This brochure supplement provides information about V. Henry Astarjian that supplements the Brochure for Waterstone Advisors, LLC (“Waterstone”). You should have received a copy of that brochure. Please direct your questions to V. Henry Astarjian at 978-828-2188 or by email at [email protected]. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission, or by any state securities authority. Registration with securities authorities does not imply a certain level of skill or training.
Waterstone Advisors, LLC Page 13
ITEM 2 – EDUCATIONAL BACKGROUND AND BUSINESS EXPERIENCE
V. Henry Astarjian is the Managing Director of Waterstone Advisors, LLC. Prior to founding
Waterstone Advisors, Mr. Astarjian held a number of securities analyst and portfolio
management roles at several companies including Fidelity Investments, Gannett Welsh &
Kotler, MFM International, Detwiler Mitchell Fenton and Graves, American International Group,
the New York Stock Exchange, and most recently, Choate Investment Advisors.
While at Choate, Mr. Astarjian managed diversified portfolios for a number of Choate’s clients
while contributing equity recommendations to Choate’s model portfolio. Before Choate, he
was a medical device analyst at Detwiler Mitchell Fenton and Graves, and prior to that, a senior
analyst at MFM International, a major U.K.-based fund manager. At MFM he headed a team of
U.S. equity analysts and contributed investment recommendations to the firm’s portfolio
managers in London, Dublin, and Boston. At Gannett, Welsh & Kotler, Mr. Astarjian was
responsible for contributing recommendations on healthcare stocks for two of the Boston-
based firm’s equity strategies. As a healthcare sector analyst at Fidelity, he followed and
analyzed high level developments in the healthcare field related to economic, legislative, and
sector-specific trends.
Mr. Astarjian started his investment career in 1986 as a research associate for the Options and
Index Products Division of the New York Stock Exchange, where he worked with senior
managers at the Exchange to help design derivative products intended for both institutional
and retail markets. He subsequently joined American International Group’s Overseas Finance
division as a European equity analyst where he also co-managed equity and derivatives
portfolios. During his investment career, he has had extensive experience helping to manage
diversified portfolios over many market cycles for a wide range of clients including individuals,
families and institutions.
Mr. Astarjian was born in 1958. He holds a bachelor’s degree in philosophy from Boston
College and an M.B.A. in finance from Pace University in New York.
