Investment Approach
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W2 Freedom, LLC believes that community banks and thrifts offer investors the potential for superior returns, relative to the financial services industry in general, due to the relative size, service advantage and lower risk business mix of these institutions.
Historically, however, it has been difficult to invest in any meaningful way in the community bank segment. W2 Freedom's approach tries to overcome a number of the obstacles to investing in banks with less than $1 billion in assets.
By screening those markets and banks which fit our investment criteria and cultivating relationships with community bankers and their advisors, we believe investors will benefit from portfolio diversification and experienced management. We expect to become significant investors in 10 to 20 start-up and existing community bank franchises, with the goal of enhancing their growth and profitability. These investments will consist of companies that have sound core businesses in need of additional capital to support growth, restructure their capital position and/or undertake a shareholder transition. Whether the need arises due to growth opportunities or an ownership transition, W2 Freedom can help portfolio companies create a more tax efficient growth solution for all stakeholders.
Our managers will then provide input to our community bank partners regarding the design and implementation of long-term strategic, capital, and compensation plans as needed. These plans will focus on aligning the interests of all stakeholders towards the goal of enhancing our companies' long-term franchise value.
It's important to realize that this approach is not predicated on achieving liquidation events for our investment companies. Our belief and approach are driven by the benefits of good old fashioned compounding as these banks grow. We expect to build trust and represent attractive shareholders because our focus will primarily be on those key management decisions that build long-term value, not short-term earnings gains. We believe investors in this space are better served by a longer view that gives management the opportunity to focus their attention solely to building the best franchises possible in attractive markets.
A number of community banks and thrifts have significant opportunities to achieve superior growth. Many, however, lack long-term equity capital or other resources to take advantage of those opportunities – W2 Freedom can help.