This presentation is an introduction to Silveus Financial - who they are, what they do, how they do it. It includes a demo of the proprietary Silveus Financial Client Portfolio Manager.
2. who we are
An affiliate of the Silveus Insurance Group
Based in Chicago with branch offices in Indiana and an
agent network across the USA
online at www.silveusfinancial.com
3. what we do
• Work exclusively with producers and commercials
• Help clients understand and utilize agricultural risk
management products
• Provide brokerage for listed futures and options and
structured OTC products
• Work with clients’ banks and OTC dealers to arrange
for margin financing and credit lines
• Monitor client positions, send periodic risk reports,
and suggest strategies as market conditions change
4. how we do it
• We have a proprietary approach that is disciplined
and analytical
• We stay focused on post harvest profits and the risks
across multiple dimensions
Profit = Yield x Price – Input Costs
• We take a portfolio approach to managing risk
• We overlay alternatives: insurance, futures and
options, and OTC structured products
• We invest in tools and technology that facilitates
management of the entire portfolio
5. our tools
Client Portfolio Manager
We track everything a producer does or believes that can
affect his end of year profits across all his crops:
• Acres planted and input cost per acre
• Insurance bought
• Bushels sold forward
• Futures and options trades executed
• OTC Accumulators entered into
• Assumptions about yields and basis
We aggregate all the above together and focus on his net
overall P&L across two dimensions of risk:
• Actual yield at harvest (bushels/acre)
• Harvest price ($s/bushel)
6. Client Portfolio Mgr
Example: Producer in Ohio (Corn & Beans)
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Acres planted
Insurance purchased
We keep a chronology of
everything our producer client
Yield and basis has done or believes with
expectations
respect to his farm and his
crops that could affect his P&L
at harvest.
Futures and
options traded
7. Client Portfolio Mgr
Net Position for Corn
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We net everything down by crop
and use current futures prices
and options volatilities to place
a “mark-to-market” value on
each open item.
8. Client Portfolio Mgr
P&L Matrix
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Yield
Harvest
Price
We stay focused on the P&L
post-harvest across two
dimensions of risk.
9. Client Portfolio Mgr
Farm P&L Matrix for Corn
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Note the potential for significant
losses if no risk management
The P&L from products are incorporated.
his crop is
highly variable
given different
price/yield
points.
10. Client Portfolio Mgr
Net Insurance P&L
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Premium paid
w/no payout
That’s why we
always
recommend
crop insurance.
The insurance
pays just where
Insurance
it’s needed. kicks in
11. Client Portfolio Mgr
Farm + Insurance P&L
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With the
appropriate
insurance But a huge
policies in place, upside bias to
the chance for corn prices
loss can be remains.
eliminated.
12. Client Portfolio Mgr
Risk Reduction with Options
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We can use Calls sold to
futures and generate income
options to
offset some of
this bias to corn
prices
Put spreads bought provide
profits to the downside
13. Client Portfolio Mgr
P&L when including *Everything*
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When we look at
everything together
as a portfolio, the
P&L is now
comfortably
balanced across a
Even if yields wide range of
fall and prices price/yield
soar, the P&L outcomes.
is known and
sizable.
14. Client Portfolio Mgr
Re-Centered Matrix after Drought
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Sure enough,
despite the
drought and
heat wave
changing
everything,
overall P&L Price and yield
remains just re-calibrated
what was to new
expected. realities
15. Client Portfolio Mgr
Re-Centered Matrix after Drought
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The expected
profits are
attractive but
in this case
there’s now
We always
risk again to think ahead
corn prices
heading back “what should
down! we do now?”
16. Client Portfolio Mgr
Testing New Hedges in the Matrix
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The CPM allows us to test out different
hedging alternatives. Here, we are
considering selling 15 futures to hedge the
risk that prices may fall and profits drop.
17. Client Portfolio Mgr
P&L from the Proposed Hedge
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By selling some
futures, we can
offset some of the
profit drop if corn
prices move back
down.
18. Client Portfolio Mgr
Overall P&L if Hedge Executed
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The end result is a nicely balanced P&L profile with little
profit variance across a wide range of yields and prices!
19. why work with us?
• We educate, inform, and consult - not sell
• Access to a complete set of risk
management products and strategies
• Deeper and more comprehensive
understanding of your overall risks
• Superior tools and technology
• Provide individualized portfolio analysis
20. getting started
• Fill and fax back the “Getting Started” form
• We verify details and enter into the CPM
• Schedule a one-on-one online meeting to go
over risks to your profitability
• Jointly examine various hedging alternatives
• Two ways to work with us:
① Open accounts and let us broker hedges
② Straight risk consulting arrangement
