Archive for the ‘Investing’ Category
I want to invest in commercial real estate, where do I start?
Da Man asked:
I am looking into investing in commercial real estate (apartment buildings specifically). If I do my homework on a particular investment (say $1 million) and I estimate a fair sized profit once I sell it, would I have much trouble getting a loan, even if I have no real estate investing experience? I realize how vague my question is, but I would like as much info as you can spare. One could argue that $1 million is a high place to start. Is that true? Do I really *need* to start small?
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I am looking into investing in commercial real estate (apartment buildings specifically). If I do my homework on a particular investment (say $1 million) and I estimate a fair sized profit once I sell it, would I have much trouble getting a loan, even if I have no real estate investing experience? I realize how vague my question is, but I would like as much info as you can spare. One could argue that $1 million is a high place to start. Is that true? Do I really *need* to start small?
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Where is a good place to get a start up business grant?
icesk8a00 asked:
I’ve seen all those commercials to get free grants from the government and I bought a couple of them online but they want me to read a 600page guide to figure it out and that would clearly take me 2 years to read, lol. Does anyone know where there is an easy place to get business start up loans for at least $4k or $5k?
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I’ve seen all those commercials to get free grants from the government and I bought a couple of them online but they want me to read a 600page guide to figure it out and that would clearly take me 2 years to read, lol. Does anyone know where there is an easy place to get business start up loans for at least $4k or $5k?
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I’ve figured out a way to buy a property w/o having to get a mortgage. Tell me what you think?
Chris J asked:
Let’s say I want to buy a commercial property for 200K and don’t want to put do 30% and get into an 8 – 10% interest rate commercial mortgage. I own a very profitable company which grosses 1M per year, Bank are always offering this company large loans or equity lines on the business. What if my company borrow me some money, at a fair interest rate of say 5% simple interest and I use it to buy this property ?
Let’s say I want to buy a commercial property for 200K and don’t want to put do 30% and get into an 8 – 10% interest rate commercial mortgage. I own a very profitable company which grosses 1M per year, Bank are always offering this company large loans or equity lines on the business. What if my company borrow me some money, at a fair interest rate of say 5% simple interest and I use it to buy this property ?
What are the advantages and disadvantages? From what I can see. I will have lots of money on the loan (interest) and not have to make a large down-payment and I’ll own the properly free and clear.
Thanks guys.
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What is Meant by a "private Offering" or "private Placement?" Offering to Sell Interest in My Fund. Accredited Investors
Turn Key Hedge Funds asked:
http://www.turnkeyhedgefunds.com
What is meant by a "Private Offering" or "Private Placement?"
The whole point of the private offering is to avoid burdensome registration and prospectus delivery requirements of the Federal Securities Laws. A "private offering" is exempted from such compliance. Regulation D provides the "safe harbor" provisions which, if complied with, will have the effect of exempting the private offering from compliance with the registration and prospectus delivery requirements of the Federal Securities Laws. It does not exempt the offering and persons associated therewith from compliance with the fraud provisions of the Federal Securities Laws or compliance with the various State Securities Laws. However, pursuant to recent federal legislation, states are prohibited from imposing their blue sky regulation on securities offered pursuant to Rule 506 of Regulation D except for the filing of the Form D or a substantially similar form and the payment of filing fees.
How do I offer to sell interest in my fund ?
Rule 502(C) of Regulation D prohibits any form of a general solicitation or general advertising. Generally the interests in your hedge fund may sold by Registered Broker Dealers or officers of the management (general partner) to those persons with whom there has been a prior relationship.
Is the hedge fund restricted to selling only to "accredited investors" and what is an "accredited investor"?
Rule 501 of Regulation D provides the definition "accredited investor" and provides that any person who comes within the following enumerated categories, or who the issuer reasonably believes to come within those categories, at the time of the sale of securities is an "accredited investor." Those categories include, banks or savings and loans association whether acting individually or as a fiduciary; any broker or dealer ; any insurance company, investment company registered under the Investment Company Act; employee benefits plan if the investment decision is made by a plan fiduciary as defined by such Act, which is either a bank, savings and loan association, insurance company, or registered advisor, or if the employee benefit plan has total assets in excess of $5 million or is a self-directed plan, with investment decisions made solely by persons who are accredited investors; any private business development company as defined by the Investment Advisors Act of 1940; any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose not formed for the specific purpose of acquiring securities offered, with total assets in excess of $5 million; any director, executive officer, or general partner of the issuer of the securities being offered or sold or any director, executive officer, or general partner of a general partner of that issue; any natural person whose individual net worth or joint net worth with that person’s spouse at the time of his purchase exceeds $1 million; any natural person who had an individual income in excess of $200,000 for each of the two most recent years or joint income with that person’s spouse in excess of $300,000 for each of those years and has a reasonable expectation of reaching the same income level in the current year; any trust with total assets in excess of $5 million not formed for the specific purpose of acquiring securities offered, whose purchase is directed by a sophisticated person as described in Section 230.506(b)(2)(ii); and, any entity in which all of the equity owners are accredited investors. Under Regulation D, a hedge fund can accept up to 35 non-accredited investors. However, Rule 502(B) requires that hedge funds offered to non-accredited investors have certain adequate financial statements.
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What is meant by a "Private Offering" or "Private Placement?"
The whole point of the private offering is to avoid burdensome registration and prospectus delivery requirements of the Federal Securities Laws. A "private offering" is exempted from such compliance. Regulation D provides the "safe harbor" provisions which, if complied with, will have the effect of exempting the private offering from compliance with the registration and prospectus delivery requirements of the Federal Securities Laws. It does not exempt the offering and persons associated therewith from compliance with the fraud provisions of the Federal Securities Laws or compliance with the various State Securities Laws. However, pursuant to recent federal legislation, states are prohibited from imposing their blue sky regulation on securities offered pursuant to Rule 506 of Regulation D except for the filing of the Form D or a substantially similar form and the payment of filing fees.
How do I offer to sell interest in my fund ?
Rule 502(C) of Regulation D prohibits any form of a general solicitation or general advertising. Generally the interests in your hedge fund may sold by Registered Broker Dealers or officers of the management (general partner) to those persons with whom there has been a prior relationship.
Is the hedge fund restricted to selling only to "accredited investors" and what is an "accredited investor"?
Rule 501 of Regulation D provides the definition "accredited investor" and provides that any person who comes within the following enumerated categories, or who the issuer reasonably believes to come within those categories, at the time of the sale of securities is an "accredited investor." Those categories include, banks or savings and loans association whether acting individually or as a fiduciary; any broker or dealer ; any insurance company, investment company registered under the Investment Company Act; employee benefits plan if the investment decision is made by a plan fiduciary as defined by such Act, which is either a bank, savings and loan association, insurance company, or registered advisor, or if the employee benefit plan has total assets in excess of $5 million or is a self-directed plan, with investment decisions made solely by persons who are accredited investors; any private business development company as defined by the Investment Advisors Act of 1940; any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose not formed for the specific purpose of acquiring securities offered, with total assets in excess of $5 million; any director, executive officer, or general partner of the issuer of the securities being offered or sold or any director, executive officer, or general partner of a general partner of that issue; any natural person whose individual net worth or joint net worth with that person’s spouse at the time of his purchase exceeds $1 million; any natural person who had an individual income in excess of $200,000 for each of the two most recent years or joint income with that person’s spouse in excess of $300,000 for each of those years and has a reasonable expectation of reaching the same income level in the current year; any trust with total assets in excess of $5 million not formed for the specific purpose of acquiring securities offered, whose purchase is directed by a sophisticated person as described in Section 230.506(b)(2)(ii); and, any entity in which all of the equity owners are accredited investors. Under Regulation D, a hedge fund can accept up to 35 non-accredited investors. However, Rule 502(B) requires that hedge funds offered to non-accredited investors have certain adequate financial statements.
http://www.turnkeyhedgefunds.com
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Managed Futures Funds
Mark Plummer asked:
WealthCap offers managed futures funds which lets the investors make such esoteric plays as shorting currencies and betting on cattle prices. It is basically a strategy used by some hedge funds and the two types of investment vehicles are close that many financial firms lump them together.
Managed futures funds can be considered since this fund is for investors who require investments that have a low correlation with traditional asset classes, such as equity and fixed income investments. WealthCap provides superior investment returns through investment in a diversified portfolio of commodity contracts, while reducing the risk of loss of capital through the implementation of prudent risk controls.
This funds also suits investors who are willing to tolerate a high degree of volatility. It is a good alternative for enhancing the risk-adjusted returns of a diversified portfolio. If you are a qualified investor with a diversified investment strategy, you may want to consider adding managed futures investment to your total long-term financial plan.
Like other managed futures and hedge funds, WealthCap tries to boost its returns by investing with lots of borrowed money, which allows it to buy contracts with face values that far exceed invested equity, losses and magnifying potential profits. Both hedge funds and managed futures funds tend to favor risky and secretive investing methods.
You can get the following potential benefits of managed futures
1. In any economic environment, you have the ability to gain (or lose)
2. The returns have been historically non-correlated to the stock or bond markets.
3. You have the monthly redemption rights (some funds may have a 12 month redemption penalty)
4. There is ease for diversification.
Managed futures funds may employ leverage and might acquire positions with a face amount of as much as six to ten times or more of its total equity. The leverages magnify the effect of both profits and losses. The potential of being profitable in any type of economic climate makes the managed future funds more demanding since the trading advisors have the flexibility to go long (buy in anticipation of rising prices) or short (sell in anticipation of declining prices).
Hence this ability to go long and short gives managed futures the potential to profit (or lose) in times of
1. Economic strength or weakness
2. Inflationary or deflationary environments
3. Energy abundance or crisis
4. Upheaval or political stability.
Managed futures can provide exposure to many of the world’s largest economies through currencies and interest rates that may enhance the portfolio diversification. This may help to balance portfolio returns in difficult market environments. The difference between private and public managed futures funds is that public funds are ideal for qualified retail investors and private funds are open to investment by high net worth and accredited investors. Investors who are financially eligible and willing to accept managed futures inherent fluctuations should consider managed futures investments.
For more details please visit www.wealthcapfund.com
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WealthCap offers managed futures funds which lets the investors make such esoteric plays as shorting currencies and betting on cattle prices. It is basically a strategy used by some hedge funds and the two types of investment vehicles are close that many financial firms lump them together.
Managed futures funds can be considered since this fund is for investors who require investments that have a low correlation with traditional asset classes, such as equity and fixed income investments. WealthCap provides superior investment returns through investment in a diversified portfolio of commodity contracts, while reducing the risk of loss of capital through the implementation of prudent risk controls.
This funds also suits investors who are willing to tolerate a high degree of volatility. It is a good alternative for enhancing the risk-adjusted returns of a diversified portfolio. If you are a qualified investor with a diversified investment strategy, you may want to consider adding managed futures investment to your total long-term financial plan.
Like other managed futures and hedge funds, WealthCap tries to boost its returns by investing with lots of borrowed money, which allows it to buy contracts with face values that far exceed invested equity, losses and magnifying potential profits. Both hedge funds and managed futures funds tend to favor risky and secretive investing methods.
You can get the following potential benefits of managed futures
1. In any economic environment, you have the ability to gain (or lose)
2. The returns have been historically non-correlated to the stock or bond markets.
3. You have the monthly redemption rights (some funds may have a 12 month redemption penalty)
4. There is ease for diversification.
Managed futures funds may employ leverage and might acquire positions with a face amount of as much as six to ten times or more of its total equity. The leverages magnify the effect of both profits and losses. The potential of being profitable in any type of economic climate makes the managed future funds more demanding since the trading advisors have the flexibility to go long (buy in anticipation of rising prices) or short (sell in anticipation of declining prices).
Hence this ability to go long and short gives managed futures the potential to profit (or lose) in times of
1. Economic strength or weakness
2. Inflationary or deflationary environments
3. Energy abundance or crisis
4. Upheaval or political stability.
Managed futures can provide exposure to many of the world’s largest economies through currencies and interest rates that may enhance the portfolio diversification. This may help to balance portfolio returns in difficult market environments. The difference between private and public managed futures funds is that public funds are ideal for qualified retail investors and private funds are open to investment by high net worth and accredited investors. Investors who are financially eligible and willing to accept managed futures inherent fluctuations should consider managed futures investments.
For more details please visit www.wealthcapfund.com
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Transparency and the Privately Funded Company
Hasik Broad asked:
New businesses often generate startup and growth capital through private equity investments. These businesses seek funding along with expert assistance from Private Investors, who invest in many different ventures like construction, real estate development, entertainment, retail, hospitality projects, technology, biotech, online businesses, and more.
A category of private investors are Angel Investors, who often serve as one of the most useful resources available to entrepreneurs. Not only do they provide the finances needed to get a business off the ground, but often offer a wide range of help and information pertaining to the enterprise. Their reasons for Angel Investing are often due to their familiarity with or interest in that line of business.
Venture Capital firms also make investments in private companies. Venture Funds are comprised of asset pooled from a number of sources including large retirement funds, institutions and high net worth individuals. Investments made by Venture Capital firms are typically managed by a partner in the firm who is usually an active board member and advisor to the company.
Venture & Angel Investors utilize both financial and non-financial information for evaluating risk, and making critical investment decisions. They need ongoing progress reports in order to determine the best course of action and whether a follow-on round of funding is in the best interest of both the company and its investors.
However, the most common complaint about companies who have taken in private investment is that the CEO’s of the companies they invest in do not provide regular status reports. And most provide no formal reports at all, even though they have a moral, legal, and fiduciary responsibility to do so.
The question is, why? Is it their intent to mislead? Are they lazy? Are they hiding something?
It is probably not any of those things. Instead, there are usually other factors that cause a CEO to fail to report to their investors?
Waiting for good news. For most companies, the good news is just another day or week away. And even when some good news finally arrives, there is some even better news another day or week away. So why not wait and send the report when you can announce the new customer, the product release, and the astounding financial performance all at once? The problem is, the stars usually do not align that way and that perfect reporting moment never seems to arrive.
Afraid to report bad news. Every angel investor knows that companies are going to miss the targets now and then. Probably more now than then. But CEO’s have a terrible time reporting even the most obvious of their foibles. But investors know that everyone makes mistakes, plans change, markets change, and the key is being able to react and redirect energy if necessary. And, in many cases, the investors may have the knowledge or key contact that could make the difference. If investors don’t know what’s wrong, they can’t help.
It is just too hard. Unless the company is a very small enterprise, most CEO’s have to gather information from multiple team members in order to compile and investor report. This involves multiple requests of people who are already stretched thin, especially as companies are forced to do less with more. So, after attempting to bird-dog status out of team members, the CEO decides to write it herself. So what started as a thorough report from across departments becomes a midnight musing of high level information. Or, more often, the months go by and nothing
Time goes by. The worst thing about being the CEO of a company is that time seems to go by at warp speed. Every day you wake up it seems to be Friday again. Or Monday, depending on your perspective. And, weekends are when you do all the things you can’t do Monday through Friday. So the CEO says to herself, I will get that report out on Friday. Then all the sudden it is the next Friday. After months of Fridays, the task just becomes too daunting to even deal with. And a little embarrassing too. What does one say after months of no communication? Where to start?
If entrepreneurs want their investors to be there through thick and thin, then they must provide investors with consistent, meaningful, quality investor updates. When things are difficult, everyone needs to pull together to ensure the best opportunity for success. And the best way for that to happen: communication and transparency.
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New businesses often generate startup and growth capital through private equity investments. These businesses seek funding along with expert assistance from Private Investors, who invest in many different ventures like construction, real estate development, entertainment, retail, hospitality projects, technology, biotech, online businesses, and more.
A category of private investors are Angel Investors, who often serve as one of the most useful resources available to entrepreneurs. Not only do they provide the finances needed to get a business off the ground, but often offer a wide range of help and information pertaining to the enterprise. Their reasons for Angel Investing are often due to their familiarity with or interest in that line of business.
Venture Capital firms also make investments in private companies. Venture Funds are comprised of asset pooled from a number of sources including large retirement funds, institutions and high net worth individuals. Investments made by Venture Capital firms are typically managed by a partner in the firm who is usually an active board member and advisor to the company.
Venture & Angel Investors utilize both financial and non-financial information for evaluating risk, and making critical investment decisions. They need ongoing progress reports in order to determine the best course of action and whether a follow-on round of funding is in the best interest of both the company and its investors.
However, the most common complaint about companies who have taken in private investment is that the CEO’s of the companies they invest in do not provide regular status reports. And most provide no formal reports at all, even though they have a moral, legal, and fiduciary responsibility to do so.
The question is, why? Is it their intent to mislead? Are they lazy? Are they hiding something?
It is probably not any of those things. Instead, there are usually other factors that cause a CEO to fail to report to their investors?
Waiting for good news. For most companies, the good news is just another day or week away. And even when some good news finally arrives, there is some even better news another day or week away. So why not wait and send the report when you can announce the new customer, the product release, and the astounding financial performance all at once? The problem is, the stars usually do not align that way and that perfect reporting moment never seems to arrive.
Afraid to report bad news. Every angel investor knows that companies are going to miss the targets now and then. Probably more now than then. But CEO’s have a terrible time reporting even the most obvious of their foibles. But investors know that everyone makes mistakes, plans change, markets change, and the key is being able to react and redirect energy if necessary. And, in many cases, the investors may have the knowledge or key contact that could make the difference. If investors don’t know what’s wrong, they can’t help.
It is just too hard. Unless the company is a very small enterprise, most CEO’s have to gather information from multiple team members in order to compile and investor report. This involves multiple requests of people who are already stretched thin, especially as companies are forced to do less with more. So, after attempting to bird-dog status out of team members, the CEO decides to write it herself. So what started as a thorough report from across departments becomes a midnight musing of high level information. Or, more often, the months go by and nothing
Time goes by. The worst thing about being the CEO of a company is that time seems to go by at warp speed. Every day you wake up it seems to be Friday again. Or Monday, depending on your perspective. And, weekends are when you do all the things you can’t do Monday through Friday. So the CEO says to herself, I will get that report out on Friday. Then all the sudden it is the next Friday. After months of Fridays, the task just becomes too daunting to even deal with. And a little embarrassing too. What does one say after months of no communication? Where to start?
If entrepreneurs want their investors to be there through thick and thin, then they must provide investors with consistent, meaningful, quality investor updates. When things are difficult, everyone needs to pull together to ensure the best opportunity for success. And the best way for that to happen: communication and transparency.
Get Business Loans Now
Private Equity Investment
Nawaz Shahzad asked:
Private equity investment is money invested in companies that do not trade on the public stock markets. Private equity investments run the scope of corporate finance strategies from financing new companies to infusing capital in established companies. Channels that include private equity include: leveraged buyouts, venture capital, real estate & special situations. Private equity fund managers negotiate acquisition prices and terms to often obtain significant control of billion dollar ventures. They take a vigorous role in monitoring and directing the companies in which they invest. They frequently change management to ensure their strategic plans are implemented forcefully and efficiently under 100 day plans. This provides them the opportunity to enhance returns by directly influencing the company and eventually creating value. While private equity investments typically span five to eight years, quick flips of two years or less are not uncommon. Here’s a quick idea to some of the other investment options.
Mutual Funds; a mutual fund is ideally a professionally managed pool of cash from a group of investors. A fund manager invests your funds in securities, including stocks & bonds and decides the right time to buy and sell adhering to the fund’s stated investment objective (eg, capital preservation, growth, income, etc.)
Savings Accounts; along with mattresses are a fine place to keep your crisis funds.
Money Market Accounts; generally make somewhat higher interest than a savings account but still permit easy access to your funds.
Bonds; when you buy bonds you basically loaning money to a corporation for a definite period of time, known as term. The bond certificate promises that the issuing body will pay you back the principal on a particular date with periodic fixed interest payments at the coupon rate.
Stocks; similarly when you purchase stocks, you technically own a piece of a company’s assets. If the company performs well, you may receive intermittent dividends and be in position to sell your shares of stock at a profit, generating a tax liability in many countries.
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Private equity investment is money invested in companies that do not trade on the public stock markets. Private equity investments run the scope of corporate finance strategies from financing new companies to infusing capital in established companies. Channels that include private equity include: leveraged buyouts, venture capital, real estate & special situations. Private equity fund managers negotiate acquisition prices and terms to often obtain significant control of billion dollar ventures. They take a vigorous role in monitoring and directing the companies in which they invest. They frequently change management to ensure their strategic plans are implemented forcefully and efficiently under 100 day plans. This provides them the opportunity to enhance returns by directly influencing the company and eventually creating value. While private equity investments typically span five to eight years, quick flips of two years or less are not uncommon. Here’s a quick idea to some of the other investment options.
Mutual Funds; a mutual fund is ideally a professionally managed pool of cash from a group of investors. A fund manager invests your funds in securities, including stocks & bonds and decides the right time to buy and sell adhering to the fund’s stated investment objective (eg, capital preservation, growth, income, etc.)
Savings Accounts; along with mattresses are a fine place to keep your crisis funds.
Money Market Accounts; generally make somewhat higher interest than a savings account but still permit easy access to your funds.
Bonds; when you buy bonds you basically loaning money to a corporation for a definite period of time, known as term. The bond certificate promises that the issuing body will pay you back the principal on a particular date with periodic fixed interest payments at the coupon rate.
Stocks; similarly when you purchase stocks, you technically own a piece of a company’s assets. If the company performs well, you may receive intermittent dividends and be in position to sell your shares of stock at a profit, generating a tax liability in many countries.
Get Business Loans Now
Forex, Hedge Funds. Registering With the Commodity Futures Trading Commission
Turn Key Hedge Funds asked:
www.turnkeyhedgefunds.com
ForEx, hedge funds. Registering with the Commodity Futures Trading Commission
Generally, the Commodity Futures Trading Commission has jurisdiction over transactions in ForEx futures and options contracts offered to retail customers, and the only counterparties that can lawfully enter into these contracts with retail customers on an off-exchange basis are persons that are: (i) registered with the Commission as a futures commission merchant (FCM); (ii) certain affiliates of a registered FCM;, or (iii) otherwise regulated, e.g., as a securities broker-dealer, a bank, a financial institution or an insurance company.
On May 22, 2008, the Congress passed the Farm Bill which, in Title XIII, contains several amendments to the Commodity Exchange Act involving the retail trading of foreign exchange.
Under the CFTC Reauthorization Act, a person operating pool solely trading spot ForEx is not required to register as a CPO at this time (but may be so required in the future upon promulgation of regulations by the CFTC).
If I start up a Fund of Funds and allocate among equity and futures funds what kinds of registration issues do I need to be concerned with?
As a Fund of Funds you must be aware of each particular states Investment Advisor rules. Many states have exemptions from registration. Also if you intend to invest in futures or commodity funds, you should register with the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) as a Commodity Pool Operator (CPO). This CPO’s associated person must successfully complete the NASD Series 3 examination.
Must a finder be registered as a broker-dealer?
Generally, No. Generally a finder does not have to be registered as a broker-dealer if its finder’s activities are limited. A “broker” under the Securities Exchange Act of 1934 is “any person engaged in the business of effecting transactions in securities for the account of others.” The SEC staff has found activities such as (a) participating in presentations or negotiations, (b) making any recommendations concerning securities, (c) receiving transaction-based compensation, (d) structuring a transaction or making recommendations regarding the nature of the securities, whether to issue securities or to assess the value of securities sold, and (e) continuing involvement in sales of securities to trigger broker-dealer registration obligations. However, a number of states, Texas and California for example, take the position that only a registered representative (broker) may receive kind of compensation.
Are there any other types of finders available to issuers in a private placement?
Yes. Rule 3a4-1 provides a non-exclusive safe harbor from the definition of a broker for persons associated with an issuer who are engaged in securities-related activities incident to their duties on behalf of the issuer. See Securities Exchange Act Rel. No. 22172 (June 27, 1985). Employees and possibly individual affiliates of an issuer who are not registered representatives of broker-dealers may be considered “associated persons” for purposes of Rule 3a4-1, in which case they may be exempt from registration and will be permitted to engage in limited sales activities pursuant to the Rule’s safe harbor.
www.turnkeyhedgefunds.com
Commercial Loans to 65% of Value
www.turnkeyhedgefunds.com
ForEx, hedge funds. Registering with the Commodity Futures Trading Commission
Generally, the Commodity Futures Trading Commission has jurisdiction over transactions in ForEx futures and options contracts offered to retail customers, and the only counterparties that can lawfully enter into these contracts with retail customers on an off-exchange basis are persons that are: (i) registered with the Commission as a futures commission merchant (FCM); (ii) certain affiliates of a registered FCM;, or (iii) otherwise regulated, e.g., as a securities broker-dealer, a bank, a financial institution or an insurance company.
On May 22, 2008, the Congress passed the Farm Bill which, in Title XIII, contains several amendments to the Commodity Exchange Act involving the retail trading of foreign exchange.
Under the CFTC Reauthorization Act, a person operating pool solely trading spot ForEx is not required to register as a CPO at this time (but may be so required in the future upon promulgation of regulations by the CFTC).
If I start up a Fund of Funds and allocate among equity and futures funds what kinds of registration issues do I need to be concerned with?
As a Fund of Funds you must be aware of each particular states Investment Advisor rules. Many states have exemptions from registration. Also if you intend to invest in futures or commodity funds, you should register with the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) as a Commodity Pool Operator (CPO). This CPO’s associated person must successfully complete the NASD Series 3 examination.
Must a finder be registered as a broker-dealer?
Generally, No. Generally a finder does not have to be registered as a broker-dealer if its finder’s activities are limited. A “broker” under the Securities Exchange Act of 1934 is “any person engaged in the business of effecting transactions in securities for the account of others.” The SEC staff has found activities such as (a) participating in presentations or negotiations, (b) making any recommendations concerning securities, (c) receiving transaction-based compensation, (d) structuring a transaction or making recommendations regarding the nature of the securities, whether to issue securities or to assess the value of securities sold, and (e) continuing involvement in sales of securities to trigger broker-dealer registration obligations. However, a number of states, Texas and California for example, take the position that only a registered representative (broker) may receive kind of compensation.
Are there any other types of finders available to issuers in a private placement?
Yes. Rule 3a4-1 provides a non-exclusive safe harbor from the definition of a broker for persons associated with an issuer who are engaged in securities-related activities incident to their duties on behalf of the issuer. See Securities Exchange Act Rel. No. 22172 (June 27, 1985). Employees and possibly individual affiliates of an issuer who are not registered representatives of broker-dealers may be considered “associated persons” for purposes of Rule 3a4-1, in which case they may be exempt from registration and will be permitted to engage in limited sales activities pursuant to the Rule’s safe harbor.
www.turnkeyhedgefunds.com
Commercial Loans to 65% of Value
Can Private Alternative Investments Hedge Against Equity Based Hedge Funds
Dominic Mazzone asked:
I recently spoke at the World Alternative Investment Summit in Niagara, Canada and for such a prestigious, well organized event, I was somewhat surprised by the lack of attendance and the overall mood of the conference. We all know that times are tough for hedge funds right now, but the numbers don’t speak as loudly as seeing the faces of its managers and investors. Over the years, hedge funds have been attractive because they have produced good returns and have been an alternative to traditional investments. However, since they are so closely correlated to the markets they have definitely taken a dent to their reputation lately, and many have ceased to be effective or profitable for that matter.
The obvious reason has been market correlation and the down market has annihilated those correlated strategies. US funds hover somewhere around a 60% correlation to the S&P while Canadian hedge funds have something close to an 80% correlation to the Toronto Stock Exchange(TSX). Since many of these funds have fallen so much, many of their investors are starting to exercise their right of redemption. This has been widely reported but there is something interesting to note. Many fund managers are in an almost stifling position because to cover the redemptions they may need to raise additional capital through new investors. Finding new investors to invest in a strategy that has been showing losses, in a market that doesn’t have any impetus to move up, is like convincing someone it is safe to fly in a plane with no wings. It’s just not worth the risk.
Many brokers that I know in the industry are telling me that they are feeling absolutely paralyzed when it comes to trying to invest their clients’ money. The general feeling is that nobody knows what the direction is, and unlike a sideways market, the incredible volatility we are seeing can wipe out a trader for good if he is on the wrong side of a trade. The two questions that are on every investor’s mind are when will the downturn end and what to invest in since everything is down and moving down further? In historic times it’s impossible to predict the future since there isn’t a past event to compare it too, so an end cannot be predicted. I think that investors in general are starting to realize that we are seeing some very historical times right now, and things are not likely to go back to how they were anytime soon.
I think they are also starting to realize that the only way to possibly shelter your portfolio from the market is to not be invested in the market. In other words, seeking private alternative investments that are not directly correlated to global financial markets could hedge against a portfolio that is weighted in equities. We are way past the days of investing in an equity based hedge fund strategy and calling it an alternative investment. Extraordinary times bring about new paradigms and at this point, private investments are the definition of alternative investments. The general perception within the markets right now is that we are in a possible free fall. There doesn’t seem to be anything on the horizon that would motivate a turnaround and since perception is everything, the fall is real and the plane has no wings.
Copyright: Dominic Mazzone, Regent Global Funds 2008
This article was written by Dominic Mazzone, Managing Partner and Fund Manager of Regent Global Funds.
This article and other like it can be viewed at http://www.investingsymposium.com which is part of the Regent Global Funds Network.
Regent Global Funds, http://www.rgfunds.com, is an alternative investment fund that offers its participating investors and asset backed investment through asset based lending.
The Fund Managers of Regent Global Funds have an expertise in commercial real estate lending and have created a successful alternative investment vehicle that is diversified through this structure.
They separate themselves from other fund mangers by personally investing their own money side-by-side with their investors in the fund, creating an absolute structure of accountability. Dominic Mazzone has written about the need for this type of accountability in an article titled “Fund Managers Need to be Accessible and Personally Invested.”
Commercial Loans to 65% of Value
I recently spoke at the World Alternative Investment Summit in Niagara, Canada and for such a prestigious, well organized event, I was somewhat surprised by the lack of attendance and the overall mood of the conference. We all know that times are tough for hedge funds right now, but the numbers don’t speak as loudly as seeing the faces of its managers and investors. Over the years, hedge funds have been attractive because they have produced good returns and have been an alternative to traditional investments. However, since they are so closely correlated to the markets they have definitely taken a dent to their reputation lately, and many have ceased to be effective or profitable for that matter.
The obvious reason has been market correlation and the down market has annihilated those correlated strategies. US funds hover somewhere around a 60% correlation to the S&P while Canadian hedge funds have something close to an 80% correlation to the Toronto Stock Exchange(TSX). Since many of these funds have fallen so much, many of their investors are starting to exercise their right of redemption. This has been widely reported but there is something interesting to note. Many fund managers are in an almost stifling position because to cover the redemptions they may need to raise additional capital through new investors. Finding new investors to invest in a strategy that has been showing losses, in a market that doesn’t have any impetus to move up, is like convincing someone it is safe to fly in a plane with no wings. It’s just not worth the risk.
Many brokers that I know in the industry are telling me that they are feeling absolutely paralyzed when it comes to trying to invest their clients’ money. The general feeling is that nobody knows what the direction is, and unlike a sideways market, the incredible volatility we are seeing can wipe out a trader for good if he is on the wrong side of a trade. The two questions that are on every investor’s mind are when will the downturn end and what to invest in since everything is down and moving down further? In historic times it’s impossible to predict the future since there isn’t a past event to compare it too, so an end cannot be predicted. I think that investors in general are starting to realize that we are seeing some very historical times right now, and things are not likely to go back to how they were anytime soon.
I think they are also starting to realize that the only way to possibly shelter your portfolio from the market is to not be invested in the market. In other words, seeking private alternative investments that are not directly correlated to global financial markets could hedge against a portfolio that is weighted in equities. We are way past the days of investing in an equity based hedge fund strategy and calling it an alternative investment. Extraordinary times bring about new paradigms and at this point, private investments are the definition of alternative investments. The general perception within the markets right now is that we are in a possible free fall. There doesn’t seem to be anything on the horizon that would motivate a turnaround and since perception is everything, the fall is real and the plane has no wings.
Copyright: Dominic Mazzone, Regent Global Funds 2008
This article was written by Dominic Mazzone, Managing Partner and Fund Manager of Regent Global Funds.
This article and other like it can be viewed at http://www.investingsymposium.com which is part of the Regent Global Funds Network.
Regent Global Funds, http://www.rgfunds.com, is an alternative investment fund that offers its participating investors and asset backed investment through asset based lending.
The Fund Managers of Regent Global Funds have an expertise in commercial real estate lending and have created a successful alternative investment vehicle that is diversified through this structure.
They separate themselves from other fund mangers by personally investing their own money side-by-side with their investors in the fund, creating an absolute structure of accountability. Dominic Mazzone has written about the need for this type of accountability in an article titled “Fund Managers Need to be Accessible and Personally Invested.”
Commercial Loans to 65% of Value
The Inside Scoop on Mutual Fund Rip Offs
Ulli G. Niemann asked:
The bear market that showed up at the end of 2000 has every brokerage house—as well as the entire mutual fund industry—scrambling to find creative ways to boost both their image and bottom line. Unfortunately, this is often at the investors’ expense.
Fund managers are ever on the lookout for ways to spin the stats to hide lousy track records and to find ways to obscure fees. To add insult to (financial) injury, investors end up being penalized for selling. So what’s an investor to do? In this case, knowledge is power. Here are some of the ways mutual fund investors are being taken advantage of:
*
Performance is always an issue for any investor. Formerly great funds, which I’ve used myself during the 90s, are the junkyard dogs of this century. Janus Fund comes to mind and is one of many that buy-and-hold investors got stuck with. It’s down 59%, since we acted on our Sell signal on 10/13/2000.
* Most of the funds today have 12b-1 fees place, and some go as high as 1% of a fund’s assets per year. Between fees, commissions and management charges, the mutual fund industry is always getting paid, even if you, the investor, are losing money. For example, if you had bought SunAmerica 2-1/2 years ago, you would have paid the above fees at 2.35% per year. And, if you finally decided your investment wasn’t going anywhere, you would have been stuck with a 5% deferred sales charge.
* If you hold a fund less than 180 days, plan on being hit with a redemption fee. It’s almost standard. What’s the deal? Brokers only get paid while you hold their fund. So, if you’re going to sell, they get a last whack. It’s a great deterrent for selling, too. Can this be avoided? Not completely, but if you have your money managed by an investment advisor, the holding period is reduced to 90 days.
* Then there’s the deceptive no-load rip-off involving B-shares. Sure investors don’t pay anything up front for these, but you’ll pay hefty surrender fees when you sell. Plus, they carry higher management fees.
Keep in mind that mutual fund companies have market share in mind, not your best interest. If you think that might not be true, consider the skyrocket growth rate for pure technology funds. But look at them now: they’ve crashed & burned and no buy & holder has come out with a win.
Then there’s the sad story of incompetence in the mutual fund industry. There are hordes of inexperienced financial planners (commissioned salesmen) just waiting to sell you load funds (A and B shares), or to recommend an asset allocation approach with no real plan or strategy that will serve you in a bear market.
Of course, there’s always the option of having a perfectly balanced portfolio designed. Such was the case when a prospective client phoned me in 1999 during the height of the technology boom. He felt left out because everybody was making money in one of history’s great bull markets, but his portfolio was so well balanced that he was neither making nor losing anything. He would have been better off in a money market account.
To me, the term balanced portfolio translates into this: I have no clue what I’m doing, where the major trend is, what I should be buying or whether I should be in the market in the first place. I’m hedging so much that one investment goes up and another goes down.
Balance is one thing and safety is really quite another. And mutual funds do not automatically mean either safety or balance. The key is always information—knowing how to get reliable info and what it means once you have it.
This is not for everyone. If you have money to invest and you don’t have the time or the inclination to do the homework, then your smartest move is to find someone you trust. That would be someone with a track record you can verify, and someone who is not going to make money off your investment every time you buy or sell something.
People like this do exist, and the good news is you only need to do your homework once. That’s when you check them out. From then on, you can relax knowing you’re just not likely to fall prey to any of the rip-offs that are out there.
Get Business Loans Now
The bear market that showed up at the end of 2000 has every brokerage house—as well as the entire mutual fund industry—scrambling to find creative ways to boost both their image and bottom line. Unfortunately, this is often at the investors’ expense.
Fund managers are ever on the lookout for ways to spin the stats to hide lousy track records and to find ways to obscure fees. To add insult to (financial) injury, investors end up being penalized for selling. So what’s an investor to do? In this case, knowledge is power. Here are some of the ways mutual fund investors are being taken advantage of:
*
Performance is always an issue for any investor. Formerly great funds, which I’ve used myself during the 90s, are the junkyard dogs of this century. Janus Fund comes to mind and is one of many that buy-and-hold investors got stuck with. It’s down 59%, since we acted on our Sell signal on 10/13/2000.
* Most of the funds today have 12b-1 fees place, and some go as high as 1% of a fund’s assets per year. Between fees, commissions and management charges, the mutual fund industry is always getting paid, even if you, the investor, are losing money. For example, if you had bought SunAmerica 2-1/2 years ago, you would have paid the above fees at 2.35% per year. And, if you finally decided your investment wasn’t going anywhere, you would have been stuck with a 5% deferred sales charge.
* If you hold a fund less than 180 days, plan on being hit with a redemption fee. It’s almost standard. What’s the deal? Brokers only get paid while you hold their fund. So, if you’re going to sell, they get a last whack. It’s a great deterrent for selling, too. Can this be avoided? Not completely, but if you have your money managed by an investment advisor, the holding period is reduced to 90 days.
* Then there’s the deceptive no-load rip-off involving B-shares. Sure investors don’t pay anything up front for these, but you’ll pay hefty surrender fees when you sell. Plus, they carry higher management fees.
Keep in mind that mutual fund companies have market share in mind, not your best interest. If you think that might not be true, consider the skyrocket growth rate for pure technology funds. But look at them now: they’ve crashed & burned and no buy & holder has come out with a win.
Then there’s the sad story of incompetence in the mutual fund industry. There are hordes of inexperienced financial planners (commissioned salesmen) just waiting to sell you load funds (A and B shares), or to recommend an asset allocation approach with no real plan or strategy that will serve you in a bear market.
Of course, there’s always the option of having a perfectly balanced portfolio designed. Such was the case when a prospective client phoned me in 1999 during the height of the technology boom. He felt left out because everybody was making money in one of history’s great bull markets, but his portfolio was so well balanced that he was neither making nor losing anything. He would have been better off in a money market account.
To me, the term balanced portfolio translates into this: I have no clue what I’m doing, where the major trend is, what I should be buying or whether I should be in the market in the first place. I’m hedging so much that one investment goes up and another goes down.
Balance is one thing and safety is really quite another. And mutual funds do not automatically mean either safety or balance. The key is always information—knowing how to get reliable info and what it means once you have it.
This is not for everyone. If you have money to invest and you don’t have the time or the inclination to do the homework, then your smartest move is to find someone you trust. That would be someone with a track record you can verify, and someone who is not going to make money off your investment every time you buy or sell something.
People like this do exist, and the good news is you only need to do your homework once. That’s when you check them out. From then on, you can relax knowing you’re just not likely to fall prey to any of the rip-offs that are out there.
Get Business Loans Now