Red Lady Capital, LLC

Transcription

1 Part 2A of Form ADV: Firm Brochure Item 1 Cover Page Red Lady Capital, LLC 223 Elk Avenue, Suite 202A, Crested Butte, CO Telephone: (970) Web Address: 3/21/2018 This Brochure provides information about the qualifications and business practices of Red Lady Capital, LLC doing business as Red Lady Capital Management, LLC (hereinafter RLCM, firm, or we ). If you have any questions about the contents of this Brochure, please contact RLCM at (970) or by at info@redladycapital.com. 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. Additional information about RLCM is available on the SEC s website at You can search this site by a unique identifying number, known as a CRD number. The CRD number for RLCM is RLCM may refer to the firm or its representatives as being registered. Being registered does not imply a certain level of skill or training. 1

2 Item 2 Material Changes On July 21, 2010, the U. S. Securities and Exchange Commission (the "SEC") unanimously adopted changes to Form ADV, Part 2. All fifty states have also adopted the new format, with some additional state-specific disclosures mandated. The new Part 2, also known as the Brochure has 19 separate items that state-registered advisers must address, each of which requires disclosure on a distinct topic, and answers must be presented in the order of the items in the form, using the headings in the form. Our goal is to provide you with easy-to-understand "plain-english disclosure," using an easy-to-read format and definite, concrete, everyday words. Our current (updated) Form ADV, Part 2 is available to our existing and prospective clients 24 hours a day through our website free of charge. Additionally, our Brochure is available 24 hours a day through the Investment Adviser Public Disclosure website. Additionally, we will annually, and within 120 days of the end of our fiscal year, provide you either: 1) a copy of our Form ADV, Part 2 that includes a summary of any material changes; or 2) a summary of material changes that includes an offer to provide a copy of the current Form ADV, Part 2. We will further provide you with a new Brochure as necessary based on changes or new information, at any time, without charge. We urge you to carefully review all subsequent summaries of material changes, as they will contain important information about any significant changes to our advisory services, fee structure, or business practices. There has been one material change since Form ADV, Part 2 was filed on March 6, The regulatory assets under management, listed under Item 4, have been updated to reflect assets as of fiscal year end December 31,

3 Item 3 Table of Contents Part 2A of Form ADV: Firm Brochure Item 1 Cover Page... 1 Item 2 Material Changes... 2 Item 3 Table of Contents... 3 Item 4 Advisory Business... 4 Item 5 Fees and Compensation... 6 Item 6 Performance-Based Fees and Side-By-Side Management... 7 Item 7 Types of Clients... 7 Item 8 Methods of Analysis, Investment Strategies and Risk of Loss... 8 Item 9 Disciplinary Information Item 10 Other Financial Industry Activities and Affiliations Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Item 12 Brokerage Practices Item 13 Review of Accounts Item 14 Client Referrals and Other Compensation Item 15 Custody Item 16 Investment Discretion Item 17 Voting Client Securities Item 18 Financial Information Item 19 Requirements for State-Registered Advisers Part 2B of Form ADV: Brochure Supplement Supervised Person Christy Kong Eaton, CFA (Items 1 7)

4 Item 4 Advisory Business Red Lady Capital Management, LLC is an independent, fee-only, registered investment adviser with its principal place of business located in Crested Butte, Colorado. RLCM was formed in 2011 and registered in 2012 with the Colorado Division of Securities. RLCM provides discretionary and non-discretionary portfolio management for clients in separate accounts held at a qualified custodian. RLCM also offers financial consulting services as requested by clients. Christy Kong Eaton, Managing Principal, owns 100% of the firm. As of December 31, 2017, RLCM managed approximately $41,587,940 in regulatory assets, on a discretionary basis, in 313 accounts. Portfolio Management Our firm provides continuous portfolio management services for clients, based on the unique needs of each client. Through personal discussions, we identify and document the client s individual objectives, time horizons, risk tolerance, and liquidity needs. As appropriate, we also review and discuss a client's prior investment history, as well as family composition and background. Accordingly, we create a client's personal profile and investment mandate, known as the Investment Policy Statement ( IPS ). We then construct and manage the client s portfolio based on the written IPS. Our investment process is further explained in Item 8, below. Except for non-discretionary engagements, RLCM provides portfolio management services on a discretionary basis. This means that once we have determined a profile and IPS with a client, we will execute day to day transactions without seeking prior client consent. Account supervision is guided by the client s written IPS. All clients have the right to impose investment restrictions on certain securities or types of securities. RLCM provides advice on a wide range of securities including (but not limited to): Exchange-listed securities Securities traded over-the-counter Foreign issuers Warrants Corporate debt securities (other than commercial paper) Certificates of deposit Municipal securities Mutual fund shares United States governmental securities Options contracts on securities Interests in partnerships investing in other assets 4

5 Because some types of investments involve certain additional degrees of risk, they will only be considered when consistent with the client's written IPS. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy (including the investment and/or investment strategies recommended or undertaken by RLCM) will be profitable or equal any specific performance level(s). In performing its services, RLCM shall not be required to verify any information received from the client or from the client's other professionals, and is expressly authorized to rely thereon. Moreover, RLCM s clients are advised to promptly notify us if there are ever any changes to their financial situation or investment objectives, or if they wish to impose any reasonable restrictions upon our management services. RLCM tries to adhere to reasonable restrictions on a best efforts basis. Neither RLCM, nor any of its representatives, serves as an attorney, accountant, or insurance agent, and no portion of RLCM s services should be construed as such. RLCM offers a model portfolio program named Asia Opportunity and a portion of client assets may be allocated to this program if appropriate. This program is not for all clients and is considered only if pursuant to the client s written IPS. For full discussion of this program, please see Item 9, below. Financial Consulting Financial consulting services generally include assessing the client s financial needs and providing appropriate recommendations, but do not include discretionary portfolio management. Financial consulting services include, but are not limited to, the following: Financial goals review and analysis Portfolio construction (recommending appropriate investment strategies) Written financial plans; comprehensive to modular Asset allocation recommendations Prospectus evaluation Private placement analysis Asset valuation Financial consulting can be performed at an hourly rate or as a flat fee arrangement (see Item 5, below). 5

6 Item 5 Fees and Compensation Initial consultations are free of charge, as RLCM will determine if the client s needs match any of the services provided by the firm. Portfolio Management Fees RLCM s annual portfolio management fee shall be prorated and paid monthly, in arrears, based upon the market value of the managed assets on the last trading day of the month. Clients may elect to 1) be billed directly for all portfolio management fees; OR 2) have portfolio management fees deducted directly from the client s account on a monthly basis. For direct debit arrangements, the Custodian will deduct fees from the client s account and pay RLCM the fees each month, after we submit a bill to the Custodian. RLCM will send each client a monthly statement showing the amount of our fees, the account value on which we based our fees, and how we calculated our fees. Clients are responsible for verifying fee computations since custodians typically do not to perform this task. The Custodian will include in their statement all amounts paid from the account, including our fees. RLCM s portfolio management fee will be calculated as a percentage of the market value of assets under management, according to the following schedule: Assets Under Management Annual Fee Monthly Fee First $500, % % From $500,001 to $1,000, % % From $1,000,001 and up 0.25% % Monthly Fee Examples Example 1 Example 2 Portfolio Balance $400,000 $4,000,000 First $500,000 * % $250 $313 From $500,001 to $1,000,000 * % - $209 Remaining Balance * % - $624 Total Monthly Fee $250 $1,146 Annualized Fee ($) $3,000 $13,752 Blended Annual Rate (%) 0.75% 0.34% *Blended annual rate is estimated by = (Monthly Fee * 12) / (household account balance). Realized fee rates may be different as account values are expected to fluctuate from month to month. The minimum annual fee is $1,875, which is equal to our 0.75% annual fee on a $250,000 portfolio. Under certain limited circumstances, we may negotiate fees. 6

7 Clients may terminate the investment management agreement at any time by notifying RLCM in writing. Fees are only payable through the termination date, and there is no additional cancellation fee. Additionally, clients may terminate the investment management agreement within five business days of signing the agreement, without penalty and with no fees incurred. Mutual Fund and ETF Fees and Expenses All portfolio management fees paid to RLCM are separate and distinct from the fees and expenses charged by mutual funds and ETFs to their shareholders. These fees and expenses are described in each fund's prospectus. These fees are typically embedded into the price of the index fund or ETF, and are not paid for with cash. Rather, the fees reduce the gross performance of the fund. These fees may include a fund manager fee, other fund expenses, and a possible distribution fee. A client could invest in a mutual fund or ETF directly, without the services of our firm. In that case, the client would not receive the services provided by us which include fund selection, allocation decisions, trading decisions and performance review. All clients are strongly encouraged to review the fees charged by RLCM, as well as the fees charged by mutual funds and ETFs, to evaluate the advisory services being provided. Brokerage and Custodial Fees In addition to the advisory fees paid to our firm, clients are also responsible for all transaction, brokerage, trade-away and custodial fees incurred as part of their account management. Please see Item 12 of this Brochure for important disclosures regarding our brokerage practices. Financial Consulting Fees Financial consulting fees are negotiated in advance and can be billed at an hourly rate ($250/hr) or flat fee arrangement. All terms are agreed to and documented in the financial consulting agreement. All consulting fees are payable upon completion of services rendered. Clients may terminate the financial consulting agreement at any time by notifying RLCM in writing. Fees are only payable through the termination date. Any services performed prior to the termination date will be prorated and billed accordingly. There is no additional cancellation fee. Clients may also terminate the financial consulting agreement within five business days of signing the agreement, without penalty and with no fees incurred. Item 6 Performance-Based Fees and Side-By-Side Management We do not charge any performance-based fees (fees based on a share of capital gains or capital appreciation of client assets). Item 7 Types of Clients We provide portfolio management services to individuals, families, trusts, estates, charitable organizations, endowments, corporations and other business entities. 7

8 Item 8 Methods of Analysis, Investment Strategies and Risk of Loss Methods of Analysis When evaluating capital markets and the investment landscape, RLCM considers numerous factors. We use the following methods of analysis in formulating our investment advice and managing client assets. Fundamental Analysis - RLCM uses a blended top-down/bottom-up approach to measure the intrinsic value of an investment. By evaluating macro-economic factors, industry conditions, management quality and potential catalysts, RLCM attempts to determine if the investment is under or overvalued. Quantitative Analysis - RLCM builds proprietary models and performs quantitative analysis as an overlay to fundamental analysis. We run potential investment ideas through our models to assist in valuation and further determine if the security holds hidden value. Mutual Fund and/or ETF Analysis RLCM reviews the tracking error for each mutual fund or ETF to be considered as an investment. We also analyze the underlying holdings in a mutual fund or ETF to identify any overlap in the underlying securities already held in other fund(s) or as individual positions in the client s portfolio, known as the cross-holdings. This helps us determine the level of exposure to the underlying securities, in relation to the client s entire portfolio. Asset Allocation - In addition to security selection, RLCM will determine the appropriate asset allocation for each client portfolio, according to the written IPS. RLCM will continuously monitor the efficacy of a portfolio s asset allocation, by performing statistical simulations, stress tests, and rebalancing the portfolio as necessary. Investment Strategies All investment strategies and methods of analysis involve significant risk. Before any strategy is determined, RLCM will determine the client s willingness and ability to take risk with their investable assets. Through detailed questionnaires and very personal discussions we identify and document the client s total risk tolerance, based on individual objectives, time horizons, tax profile and liquidity needs. After identifying the client s overall risk tolerance, RLCM will create a written Investment Policy Statement ( IPS ) which identifies the client s unique investment profile and goals. We use the following strategies in managing client accounts, provided that such strategies are in accordance with the client s written IPS. Long-term purchases We purchase securities with the idea of holding them in the client's account for one year or longer. Typically we employ this strategy when we believe the securities to be currently undervalued, and/or we want exposure to a particular asset class over time. 8

9 Short-term purchases When utilizing this strategy, we purchase securities with the intent of selling them within a year of establishing the position. We do this in an attempt to take advantage of conditions that we believe will result in a near-term rise in the securities we purchase. Short sales When utilizing this strategy, we borrow equity shares for your portfolio from a brokerdealer, with the intent to replace the shares on a specified future date at a certain price. Those borrowed shares are then sold. On the agreed-upon future date, we buy the same shares (hopefully at a lower price) and return them to the original owner. We engage in short selling based on our determination that the share price will decline after we have borrowed the shares. If we are correct and the share price declines accordingly, the client account realizes the profit. Margin transactions For most taxable accounts we have the ability to purchase securities for your portfolio with money borrowed from your brokerage account. This allows you to purchase more securities than you would be able to with your available cash, and allows us to purchase securities without selling other holdings. We do not use margin transactions as part of our investment strategy unless specifically requested by or discussed with a client. Risk of Loss Clients should understand that investing in any securities involves a risk of loss, of both principal and income, which a client must be prepared to bear. RLCM does not guarantee investment returns nor does it represent, warrant, or imply that services or methods of analysis can or will predict future results or insulate clients from loss due to a decline of investment value. No current or prospective client should assume that past performance is indicative of future returns. Particularly with mutual funds or ETFs, a fund manager who has been successful in the past may not be able to replicate that success in the future. All investments involve varying degrees of risk, and therefore there can be no assurance that any investment will be profitable. Model Portfolio Program RLCM offers one model portfolio program, named Asia Opportunity. We do not believe this strategy constitutes a complete or balanced investment program. Only when applicable, and in accordance with the client s written IPS, this program should represent merely a portion of an investor s portfolio. Asia Opportunity A diversified portfolio consisting primarily of publicly-traded equity securities in the Asia Pacific region, based on our long-term optimism for economic growth and development in these countries. We believe that the best way to capitalize on this anticipated expansion is to develop expectations about the economic growth of the region, and combine those expectations with a bottom-up focus on the businesses that we expect to benefit from that growth. We draw on our extensive experience in Asia Pacific markets to find companies that fit our philosophy and outlook. We further believe that a long-term approach is the most effective way to capitalize on the development of the Asia Pacific region. To support our long-term convictions, we conduct fundamental analysis of companies, emphasizing research and discussions with local company management. 9

10 Because of the special risks of investing in the Asia Pacific region, we believe that any investment in this program should constitute only a portion of the client s overall investment portfolio, not all of it. We recommend that clients invest in the region only for the long-term (at least five years), so that RLCM can better manage volatility in the value of the portfolio. Investing in the Asia Pacific region may not be appropriate for all clients. The minimum investment in this program is $1,000,000. Investing in the Asia Pacific region entails special risks, which include a wide range of market, financial, legal, political, economic, social and religious considerations: The value of your portfolio may be adversely affected by political, economic, social and religious instability; inadequate investor protection; changes in laws or regulations of countries within the Asia Pacific region (including both in countries where you invest, as well as in the broader region); international relations with other nations; natural disasters; corruption; and military activity. The economies of many Asia Pacific countries differ from the economies of more developed countries in many respects, such as their rate of growth, inflation, capital reinvestment, resource selfsufficiency, financial system stability, the national balance of payments position and sensitivity to changes in global trade. The governments of certain countries have placed restrictions on the operational freedom of private enterprise, and have or may nationalize privately-owned assets including companies held by your account. From time to time, a relatively small number of companies and industries may represent a large portion of the total stock market in a particular country or region, and these companies and industries may be especially sensitive to adverse social, political, economic or regulatory developments. Asia Pacific countries also have different accounting standards, corporate disclosure, governance and regulatory requirements than do more developed countries. As a result, there may be less publicly available information about companies in Asia Pacific countries. There is generally less governmental regulation of stock exchanges, brokers and issuers than in more developed countries, which may result in less transparency with respect to a company s operations. The economies of many Asia Pacific countries are dependent on exports and global trade and some have limited natural resources (such as oil), resulting in dependence on foreign sources for certain raw materials, and vulnerability to global fluctuations in price or supply. Changes in the economies of the main trading partners of Asia Pacific countries, including other developed countries, could negatively impact the growth prospects of Asia Pacific countries and markets. The securities markets of Asia Pacific countries may be correlated with the markets of other developed countries. A decline in the markets of other countries could result in a significant decline in Asia Pacific markets. 10

11 Item 9 Disciplinary Information Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of RLCM or the integrity of RLCM s management. RLCM and its management have no disciplinary events to disclose. Item 10 Other Financial Industry Activities and Affiliations We have no other financial industry activities and/or affiliations. Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading RLCM has adopted a Code of Ethics for all supervised persons of the firm describing its high standard of business conduct, and fiduciary duty to its clients. RLCM s principal, Christy Kong Eaton, is a CFA charterholder and as such, RLCM has adopted the CFA Institute s Code of Ethics and Standards of Professional Conduct (as revised June 2010). The Code of Ethics includes policies and procedures for the monitor and review of employees personal trading accounts. The Code of Ethics includes provisions relating to the confidentiality of client information, a prohibition on insider trading, a prohibition of rumor mongering, restrictions on the acceptance of significant gifts and the reporting of certain gifts and business entertainment items, and personal securities trading procedures, among other things. All supervised persons at RLCM must acknowledge the terms of the Code of Ethics annually, or as amended. The Code of Ethics permits employees to buy or sell securities identical to those purchased or sold for RLCM s clients. This represents a conflict of interest, as employees have an incentive to manipulate the timing of such purchases (or sales) and obtain a better price for themselves or obtain a more favorable allocation (in the cases of limited availability). In addition, employees may have existing positions in securities which are also held by clients. This represents a conflict of interest because there is a possibility that employees might benefit from market activity by a client in a security held by an employee. In order to mitigate these conflicts of interest and to ensure the fulfillment of our fiduciary responsibilities, RLCM has established the following restrictions: All employee trades must be approved in writing and in advance by management. All employees of RLCM must submit copies of their securities transaction reports on a monthly basis, as well as initial and annual securities holdings reports, for each of their personal accounts. 11

12 No person employed by RLCM may buy or sell any securities prior to a transaction being executed for a client account, therefore preventing such employees from benefiting from transactions placed on behalf of advisory accounts. RLCM may aggregate employee trades with client trades (block trading), ensuring identical and fair execution. If RLCM determines that the additional volume of trades required to fill employee orders would result in unfavorable pricing for the client, the employee trades are postponed and executed at a later date. RLCM s clients or prospective clients may request a copy of the firm's Code of Ethics by ing us at info@redladycapital.com, or by calling us at (970) Item 12 Brokerage Practices RLCM participates in the Schwab Institutional ( SI ) services program offered to independent advisers by Charles Schwab & Company, Inc. ( Schwab ), an unaffiliated FINRA-registered broker-dealer. Clients in need of brokerage and custodial services may have Schwab recommended to them. As part of the SI program, our firm receives benefits from Schwab. These benefits include: receipt of duplicate client confirmations and bundled duplicate statements; access to a trading desk serving SI participants exclusively; access to block trading which provides the ability to aggregate securities transactions; ability to deduct portfolio management fees directly from client accounts. The benefits received through participation in the SI program may or may not depend upon the amount of transactions directed to, or amount of assets custodied by, Schwab. Participation in the SI program results in a conflict of interest for our firm, as the receipt of the above benefits creates an incentive for RLCM to recommend Schwab to clients. Nonetheless, we have reviewed the services of Schwab and recommend their services based on a number of factors. These factors include the professional services offered, lower commission rates and the custodial platform provided to clients. Trade Aggregation We may aggregate trades when doing so is advantageous to our clients. Mostly, we will batch client transaction orders and ask the broker to trade them in a block to obtain better and more uniform pricing across client accounts. After the broker executes block trades, transactions will be averaged as to price and will be allocated among our clients based on the trades originally requested and submitted to the broker. Any exception to the allocation procedure will be carefully documented and disclosed to clients who may be impacted. Directed Brokerage Some clients may have a pre-established relationship with a broker and may instruct RLCM to execute all transactions through that broker. In this case, it is understood that RLCM may not obtain volume discounts and best execution may not be achieved. When the client chooses the broker, there may be a disparity between the commissions a client pays and those paid by other clients who do not direct us to use a broker or those clients who direct us to use different brokers. 12

13 Item 13 Review of Accounts Portfolio management clients will have their accounts monitored continuously and reviewed at least monthly. All accounts are reviewed for consistency and adherence to the client s written IPS. More frequent reviews may be triggered by, but not limited to, any of the following events: Changes to the client s personal, tax or financial status Changes in the economic environment Changes in capital market expectations The client s request for an additional review of the account RLCM will seek to meet with each client on at least an annual basis. Client accounts are monitored and reviewed by RLCM s Principal, Christy Kong Eaton, CFA. In addition to the monthly statements and confirmations of transactions that clients receive from their broker-dealer, RLCM will independently prepare and provide monthly statements which detail management fees, investment holdings and portfolio performance. Financial consulting clients will have their accounts monitored and/or reviewed on a monthly, quarterly or annual basis as defined by the client in the financial consulting agreement. These account reviews may be performed on an hourly or flat fee arrangement as determined by the client and as agreed upon in the financial consulting agreement. Item 14 Client Referrals and Other Compensation RLCM does not receive additional compensation from third parties for providing investment advice to its clients and does not compensate anyone for client referrals. Item 15 Custody Custody is defined as any legal or actual ability by our firm to access client funds or securities. Since all client funds and securities are maintained with a qualified custodian, we don t take physical possession of client assets, except for authorized fee withdrawals. However, our firm is deemed to have constructive custody of client assets due to our ability to debit management fees in arrears directly from client accounts. Therefore, we urge all of our clients to carefully review the monthly statements received from their qualified custodian and compare those statements with the monthly statements that are prepared and provided by RLCM. Should you notice any discrepancies, please notify us and/or your custodian as soon as possible. 13

14 Item 16 Investment Discretion Clients may choose to appoint RLCM for discretionary or non-discretionary portfolio management services, as identified and executed in the investment management agreement. For discretionary engagements, RLCM will identify the securities and amount of securities to be bought or sold. In all cases, such discretion is to be exercised in a manner consistent with the stated investment objectives for the particular client account, as stated in the written IPS. Investment guidelines and restrictions must be provided to RLCM in writing, as part of the investment management agreement. At any time, clients may amend such restrictions by providing us with such instructions in writing. Item 17 Voting Client Securities Portfolio management clients may or may not choose to delegate their proxy voting authority to RLCM. When we are given authority to vote proxies for our clients, we will vote those proxies in the best interest of our clients and in accordance with our established policies and procedures. Our firm will retain all proxy voting books and records for the requisite period of time, including a copy of each proxy statement received, a record of each vote cast, a copy of any document created by us that was material to making a decision how to vote proxies, and a copy of each written client request for information on how the adviser voted proxies. In cases where an employee of RLCM owns the same security or securities as a client, voting proxies on behalf of that client represents a conflict of interest, as we may be tempted to act in our best interest rather than the best interest of the client. In order to mitigate this conflict, and to ensure that we act in the best interest of the client while upholding our fiduciary responsibility, if RLCM has a conflict of interest in voting a particular proxy, we will notify the client of the conflict and retain an independent third-party to cast a vote. Clients may, at any time, instruct RLCM to vote proxies according to a particular criterion. Clients may also direct RLCM how to vote in a particular solicitation. These requests must be made in writing. Clients may obtain a copy of RLCM s complete proxy voting policies and procedures by contacting us directly. Clients may also obtain information from RLCM regarding how we voted any proxies on behalf of their account(s). As an alternative, clients may elect to vote their own securities entirely. In this case, clients will receive proxies and solicitations directly. At any time, clients may transfer proxy voting authority to or from RLCM by contacting us or their custodian. We will neither advise nor act on behalf of the client in legal proceedings involving companies whose securities are held in the client account(s), including, but not limited to, the filing of Proofs of Claim in class action settlements. 14

15 Where RLCM receives written or electronic notice of a class action settlement, lawsuit or verdict affecting securities owned by a client, it will forward all notices, proof of claim forms and other materials to the client in a timely manner. Item 18 Financial Information RLCM charges fees in arrears, and does not require or solicit pre-payment of any type of client fees in advance. RLCM has no financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients, and has not been the subject of a bankruptcy proceeding. Item 19 Requirements for State-Registered Advisers Ms. Christy Kong Eaton, CFA Management Persons Ms. Eaton is the Founder and Principal of Red Lady Capital Management, LLC. She started her career in finance as a Research Salesperson at Deutsche Bank Securities (New York, NY), specializing in Asia Ex- Japan Equities for US institutional investors. Following Deutsche Bank, Ms. Eaton worked at CR Intrinsic Investors (Stamford, CT), a division of S.A.C. Capital, functioning as a Quant Analyst for the Risk Analytics team. Most recently, she served as National Accounts Manager at Andrews Securities (fka Keating Securities) and Keating Investments (Greenwood Village, CO). Ms. Eaton is a summa cum laude graduate of Western State College with a B.A. degree in Spanish Language and Literature. She earned her MBA with Honors at Thunderbird School of Global Management, where she specialized in International Finance. Prior to Thunderbird, Ms. Eaton worked as an Accountant for Crested Butte Mountain Resort (Crested Butte, CO). Ms. Eaton was born in 1974 and has previously passed FINRA Series 7, 63 and 79 exams. She is a CFA Charterholder and member of the CFA Institute. Other Business Activities Investment Advisers are required to disclose all business activities in which they are actively engaged and the approximate amount of time spent on those activities other than investment advisory activities. RLCM has no information applicable to this Item. 15

16 Part 2B of Form ADV: Brochure Supplement Item 1 Cover Page Christy Kong Eaton, CFA Red Lady Capital, LLC 223 Elk Avenue, Suite 202A, Crested Butte, CO Telephone: (970) Web Address: 3/21/2018 This Brochure Supplement provides information about Christy Kong Eaton, CFA ( Ms. Eaton ) that supplements the Brochure of Red Lady Capital, LLC doing business as Red Lady Capital Management, LLC. You should have received a copy of that Brochure. Please contact Ms. Eaton if you did not receive Red Lady Capital, LLC s Brochure or if you have any questions about the contents of this supplement. Additional information about Ms. Eaton is available on the SEC s website at You can search this site by a unique identifying number, known as a CRD number. The CRD number for Ms. Eaton is

17 Item 2 Educational Background and Business Experience Ms. Christy Kong Eaton, CFA Ms. Eaton is the Founder and Principal of Red Lady Capital Management, LLC. She started her career in finance as a Research Salesperson at Deutsche Bank Securities (New York, NY), specializing in Asia Ex- Japan Equities for US institutional investors. Following Deutsche Bank, Ms. Eaton worked at CR Intrinsic Investors (Stamford, CT), a division of S.A.C. Capital, functioning as a Quant Analyst for the Risk Analytics team. Most recently, she served as National Accounts Manager at Andrews Securities (fka Keating Securities) and Keating Investments (Greenwood Village, CO). Ms. Eaton is a summa cum laude graduate of Western State College with a B.A. degree in Spanish Language and Literature. She earned her MBA with Honors at Thunderbird School of Global Management, where she specialized in International Finance. Prior to Thunderbird, Ms. Eaton worked as an Accountant for Crested Butte Mountain Resort (Crested Butte, CO). Ms. Eaton was born in 1974 and has previously passed FINRA Series 7, 63 and 79 exams. She is a CFA Charterholder and member of the CFA Institute. Description of the CFA Designation The Chartered Financial Analyst (CFA) charter is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute the largest global association of investment professionals. There are currently more than 90,000 CFA charterholders working in 137 countries. To earn the CFA charter, candidates must: 1) pass three sequential, six-hour examinations; 2) have at least four years of qualified professional investment experience; 3) join CFA Institute as members; and 4) commit to abide by, and annually reaffirm, their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct. High Ethical Standards The CFA Institute Code of Ethics and Standards of Professional Conduct, enforced through an active professional conduct program, require CFA charterholders to: Place their clients interests ahead of their own Maintain independence and objectivity Act with integrity Maintain and improve their professional competence Disclose conflicts of interest and legal matters 17

18 Global Recognition Passing the three CFA exams is a difficult feat that requires extensive study (successful candidates report spending an average of 300 hours of study per level). Earning the CFA charter demonstrates mastery of many of the advanced skills needed for investment analysis and decision making in today s quickly evolving global financial industry. As a result, employers and clients are increasingly seeking CFA charterholders often making the charter a prerequisite for employment. Additionally, regulatory bodies in 22 countries and territories recognize the CFA charter as a proxy for meeting certain licensing requirements, and more than 125 colleges and universities around the world have incorporated a majority of the CFA Program curriculum into their own finance courses. Comprehensive and Current Knowledge The CFA Program curriculum provides a comprehensive framework of knowledge for investment decision making and is firmly grounded in the knowledge and skills used every day in the investment profession. The three levels of the CFA Program test a proficiency with a wide range of fundamental and advanced investment topics, including ethical and professional standards, fixed-income and equity analysis, alternative and derivative investments, economics, financial reporting standards, portfolio management, and wealth planning. The CFA Program curriculum is updated every year by experts from around the world to ensure that candidates learn the most relevant and practical new tools, ideas, and investment and wealth management skills to reflect the dynamic and complex nature of the profession. To learn more about the CFA charter, visit Item 3 Disciplinary Information Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of each supervised person providing investment advice. Ms. Eaton does not have any legal, civil, criminal, regulatory or disciplinary history applicable to this Item. Item 4 Other Business Activities Ms. Eaton has no other financial industry activities and/or affiliations. Ms. Eaton does not receive additional compensation from third parties for providing investment advice to its clients and does not compensate anyone for client referrals. 18

19 Item 5 Additional Compensation Item 5 requires disclosure of economic benefits received from someone who is not a client in exchange for providing advisory services. Ms. Eaton does not receive such economic benefits or compensation of any kind that would be construed as a conflict of interest. Item 6 Supervision Ms. Eaton is the Principal of Red Lady Capital Management, LLC and maintains responsibility to supervise the operation of the firm. This supervision extends to the ongoing review of the firm s business practices and monitoring the advice given to clients. Questions related to the operation of the firm may be directed to Ms. Eaton at the phone number listed on the cover of this brochure supplement. Item 7 Requirements for State-Registered Advisers Ms. Eaton has not been involved in any legal, civil, criminal, or administrative proceedings applicable to this Item. Ms. Eaton has not been the subject of a bankruptcy petition. 19