AICA Member Profile: Liberty Street Advisors

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Liberty Street Advisors, Inc. (“Liberty Street”), is a New York City-based investment advisory firm founded in 2007. The firm is employee-owned and led by CEO Timothy Reick, COO Victor Fontana, and CIO Christian Munafo, the latter of whom also manages the firm’s listed closed-end interval fund. Liberty Street also supervises sub-advisors for the general management and operations of four listed, income-focused mutual funds.

Liberty Street provides access to niche investment strategies that aren’t always available to independent financial advisors and retail investors. As of September 30, 2023, Liberty Street had approximately $1.4 billion in AUM.

“We seek to identify independent asset managers who excel at managing strategies less trafficked by Wall Street. Our managers take the road less traveled to provide investors with multiple differentiated strategies designed to seek strong risk-adjusted returns. It’s easy to find passive and actively managed funds that fit nicely into a style box. The funds we offer feature strategies that aren’t easily style-boxed, and generally don’t correlate with traditional asset classes.” – Timothy Reick, Chief Executive Officer, Liberty Street Advisors, Inc.

The Private Shares Fund

Liberty Street manages The Private Shares Fund (“the Fund”), a listed closed-end interval fund with the Nasdaq ticker symbols PIIVX (Class I), PRIVX (Class A), and PRLVX (Class L). The Fund seeks capital appreciation by investing in the equity securities of certain private, operating, late-stage, growth companies. The Fund’s profile includes a daily NAV, a quarterly redemption program, no performance fees, and 1099 tax reporting. The Fund provides quarterly tenders for up to 5% of the Fund’s outstanding shares at NAV. Shares in the Fund are highly illiquid. Due to transfer restrictions and the illiquid nature of the Fund’s investments, an investor may not be able to sell shares when, or in the amount, desired.

The retail product, launched on March 25, 2014 (Class A), has a total of approximately $934 million in assets across all three classes as of September 30, 2023.

For its investments, the Fund typically targets companies that are already generating revenue in the range of hundreds of millions to billions of dollars and are at, or approaching, profitability with anticipated exit events in two to four years’ time.

The Fund’s investment sectors include the space economy, artificial intelligence, cybersecurity, analytics and data, digital health, gaming, and “hard tech”/robotics. Its portfolio of more than 90 positions across nearly 20 sectors includes some of the most prominent private innovation companies in the United States such as SpaceX, Databricks, Discord, Nanotronics, Arctic Wolf, Grubmarket, and Devoted Health as of November 30, 2023.

“The Private Shares Fund’s combination of primary and secondary investment tactics often enable investment at discounts to fair market or intrinsic value, with more favorable terms likely during periods of market dislocation.” – Christian Munafo, Chief Investment Officer, Libert Street Advisors, Inc., Portfolio Manager of The Private Shares Fund

The Fund’s Top Ten holdings as of November 30, 2023 can be found on the Fund’s website here. The Fund’s website updates top holdings and total holdings frequently.

Q&A with Timothy Reick

Does Liberty Street interact with the AICA universe of funds beyond The Private Shares Fund?

We are continuously looking at the universe of funds to see what trends are emerging in the industry. We are also looking at the flows and what is being well received by the marketplace.

Where do you feel Liberty Street does its best work?

Liberty Street has always positioned itself as a firm that brings differentiated strategies to the market via the 40 Act structure. As the industry and investors continue to adopt increased usage of alternatives, we believe we are very well positioned to offer these alternatives in the interval fund structure.

Where do you see Liberty Street in three years?

We believe The Private Shares Fund, with its focus on late-stage venture growth, has significant ability to gather more assets alongside several bespoke products such as special purpose vehicles (SPV) and traditional limited partnerships. We are also evaluating several other strategies in the private credit and private real estate sectors that may be suitable for additional interval fund offerings.

What do you like most about being a member of AICA?

We joined AICA as an additional channel for our firm to advocate for closed-end funds, expand our network, and leverage connections within the interval fund space. It has been our pleasure to attend various AICA events as a speaker and to participate on panels.

How do you define success?

We define success as delivering investment products that are not only well received by financial advisers, but that also provide retail investors access to an asset class or investment strategy that they may not otherwise have access to, and which may improve their investment allocations and outcomes.

Learn more about Timothy Reick, Liberty Street, and its listed closed-end interval fund The Private Shares Fund.

Important Private Shares Fund Disclosures

As of December 9, 2020, Liberty Street Advisors, Inc. became the adviser to the Fund. The Fund’s portfolio managers did not change. Effective April 30, 2021, the Fund changed its name from the “SharesPost 100 Fund” to “The Private Shares Fund.” Effective July 7, 2021, the Fund made changes to its investment strategy. In addition to directly investing in private companies, the Fund may also invest in private investments in public equity (“PIPEs”) where the issuer is a special purpose acquisition company (“SPAC”), and profit-sharing agreements.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus with this and other information about The Private Shares Fund (the “Fund”), please download here, or call 1-855-551-5510. Read the prospectus carefully before investing.

The investment minimums are $2,500 for the Class A Share and Class L Share, and $1,000,000 for the Institutional Share

Investment in the Fund involves substantial risk. The Fund is not suitable for investors who cannot bear the risk of loss of all or part of their investment. The Fund is appropriate only for investors who can tolerate a high degree of risk and do not require a liquid investment. The Fund has no history of public trading and investors should not expect to sell shares other than through the Fund’s repurchase policy regardless of how the Fund performs. The Fund does not intend to list its shares on any exchange and does not expect a secondary market to develop.

All investing involves risk including the possible loss of principal. Shares in the Fund are highly illiquid and can be sold by shareholders only in the quarterly repurchase program of the Fund which allows for up to 5% of the Fund’s outstanding shares at NAV to be redeemed each quarter. Due to transfer restrictions and the illiquid nature of the Fund’s investments, you may not be able to sell your shares when, or in the amount that, you desire. The Fund intends to primarily invest in securities of private, late-stage, venture-backed growth companies. There are significant potential risks relating to investing in such securities. Because most of the securities in which the Fund invests are not publicly traded, the Fund’s investments will be valued by Liberty Street Advisors, Inc. (the “Investment Adviser”) pursuant to fair valuation procedures and methodologies adopted by the Board of Trustees. While the Fund and the Investment Adviser will use good faith efforts to determine the fair value of the Fund’s securities, value will be based on the parameters set forth by the prospectus. As a consequence, the value of the securities, and therefore the Fund’s Net Asset Value (NAV), may vary.

There are significant potential risks associated with investing in venture capital and private equity-­backed companies with complex capital structures. The Fund focuses its investments in a limited number of securities, which could subject it to greater risk than that of a larger, more varied portfolio. There is a greater focus in technology securities that could adversely affect the Fund’s performance. The Fund’s quarterly repurchase policy may require the Fund to liquidate portfolio holdings earlier than the Investment Adviser would otherwise do so and may also result in an increase in the Fund’s expense ratio. Portfolio holdings of private companies that become publicly traded likely will be subject to more volatile market fluctuations than when private, and the Fund may not be able to sell shares at favorable prices, such companies frequently impose lock-ups that would prohibit the Fund from selling shares for a period of time after an initial public offering (IPO). Market prices of public securities held by the Fund may decline substantially before the Investment Adviser is able to sell the securities.

The Fund may invest in private securities utilizing special purpose vehicles (“SPV”s), private investment funds (“Private Funds”), private investments in public equity (“PIPE”) transactions where the issuer is a special purpose acquisition company (“SPAC”), and profit-sharing agreements. The Fund will bear its pro-rata portion of expenses on investments in SPVs, Private Funds, or similar investment structures and will have no direct claim against underlying portfolio companies. PIPE transactions involve price risk, market risk, expense risk, and the Fund may not be able to sell the securities due to lock-ups or restrictions. Profit sharing agreements may expose the Fund to certain risks, including that the agreements could reduce the gain the Fund otherwise would have achieved on its investment, may be difficult to value and may result in contractual disputes. Certain conflicts of interest involving the Fund and its affiliates could impact the Fund’s investment returns and limit the flexibility of its investment policies. This is not a complete enumeration of the Fund’s risks. Please read the Fund prospectus for other risk factors related to the Fund.

The Fund may not be suitable for all investors. Investors are encouraged to consult with appropriate financial professionals before considering an investment in the Fund.

Companies that may be referenced in this material are privately held companies. Shares of these privately held companies do not trade on any national securities exchange, and there is no guarantee that the shares of these companies will ever be traded on any national securities exchange.

Fund holdings subject to change. Not a recommendation to buy, sell, or hold any specific security. Current and future holdings are subject to risk.

The Private Shares Fund is distributed by FORESIDE FUND SERVICES, LLC