Activist Investing, Ben Graham, Business Articles, History of Finance, Investing, Investment Philosophy, Learn About Investing, Securities, Value Investing, Warren Buffett

Berkshire Hathaway Acquires Warren Buffett

It was May 6th, 1964 New Bedford, Massachusetts Warren Buffett’s (Buffett Partnership LTD) owns Seven Percent (7%) of Berkshire Hathaway’s outstanding shares totaling One Million Five Hundred Eighty Three Thousand and Six Hundred and Eighty (1,583,680),a failing textile company was busy seeking outstanding shares from it’s shareholders and while conducting the share negotiations Berkshire’s Management Seabury Stanton made a miscalculation of slighting a young partnership investment manger named Warren Buffett.

What happens next will change the fate of it’s CEO and secure the legendary investors future.

It was a normal day in may 1964 Warren Buffett was a Humble Midwesterner who wore his good faith on his sleeves. Began noticing the markets downward pressure on a little declining Textile Company named Berkshire Hathaway. After some research Buffett briefly meets the CEO at a gathering. The company was closing factories and repurchasing shares on the open market from shareholders as a way to slow it’s Market downward pressure on the Stock Market.

Then CEO Seaborn Stanton of Berkshire Hathaways was a Harvard graduate who’s personality included a passive aggressive smugness when peacocking around. Stanton mailed a share buyback letter to the Buffett Partnership Warren Buffett the Managing Partner of Buffett Partnership Limited has the fortune of selling his stake in Berkshire at a quick profit. Based on the fact Buffett received a letter by Seabury Stanton who manages Berkshire Hathaway was asking Shareholders to SELL back 225,000 class A shares to Berkshire Hathaway Stock at a price point of $11.375 per share. Buffett shares; “Buffett admits he expected the letter from Berkshire’s Stanton and was surprised at the price Seabury Stanton was offering.”

“A SLIGHTED OFFER WARREN BUFFETT COULD NEVER IGNORE”

At the time Warren Buffett had all of his net worth inside Buffett Partnership Limited. And one day during the offering period in 1964 Stanton and Mr. Buffett and had a brief conversation with Buffett asking what price point would Buffett Partnership Limited be willing to sell it’s shares? “Buffett answers $11.50!” Stanton responded, “Fine we have a deal.” So a few days later after the Acceptance by Stanton? Berkshire did a disservice to Stanton and sent a letter to Buffett Partnership Limited offering an Eighth of a Point lower. We don’t know the actual words. However we can assume this slight was anything but honorable. It would cost Seabury Stanton his Company later.

Crediting Business Insider: “Warren Buffett’s entire legacy would’ve been quite different if he had swallowed that eighth of a point ($0.125) discount and just sold. The $11.275 Stanton was offering was a massive 50% return relative to the $7.50 he paid just two years before in December 1962.

Buffett describes how the New England textile industry was spiraling. Which was His initial rationale for buying shares, however, was that it was selling at a steep discount to its working capital per share and book value per share.”

What does a $0.125 drop in offer Mean?

So let’s get this straight? Stanton wanted to lowball Buffett Partnership Limited’s offer of the initial $11.50 per share down to $11.275 per share. This alone equals a Eighth of a Point. And if we consider the initial Price Buffett paid two years previously of $7.50 per share for Berkshires Shares. Equals a 50% margin at $11.275 per share. So the fact Stanton slighted Buffett on ($0.125) would set in motion a event in the future from this shaved Offer that has made The Oracle of Omaha the Legend he is!

Buffett Partnership Limited Responds

In light of the clear lowball that was sent in the form of a passive aggressive counter offer letter offering $11.275 from Seabury Stanton to BPL after the initial offer of $11.50 agreement to buy back shares. I think it would be understandable this lowball letter had a irritating affect on Mr. Buffett. It was understandable Mr. Buffett did not accept this situation. And felt the need to establish ownership of the situation. So he planned his next moves carefully in secret.

Buy up undervalued or falling value Class A Shares Quietly

Mr. Buffett amazingly began to buy shares quietly instead of selling his partnerships exposure. Warren began quietly buying the declining shares of Berkshire Hathaway’s equities in the market as the company began to drift downwards in price. Buying the Shares at a Discount is a savvy move by Partnerships wanting to buy their way onto Boards of Directors.

This classic action will force change through an Activist Investor Action. The act of buying large blocks of shares quietly and buying undervalued shares will allow a investor or Investment Group to acquire a seat at the Board of Directors Meeting and table. The question is? Exactly what was Mr. Buffett aiming for when he began buying shares of Berkshires Hathaways outstanding shares?

Mr. Buffett’s plan was to gain control of Berkshires Hathaway Board of Directors Seat. For the purpose of exacting change to the Executive management from the Board of Directors level. This was secretly Warren’s Goal.

Everyone was telling Mr. Buffett Buying Berkshire Hathaway would be a Mistake!

Even though quietly people were telling Warren Buffett that buying control of Berkshire Hathaway would be a mistake. The mentee of legendary Columbia Professor Ben Graham did exactly the contrarian option. And opted to begin buying a controlling stake in the failing Berkshire Hathaway Company. Warren Buffett officially took control of Berkshire Hathaway on May 10, 1965. And on the Day the news broke that Warren Buffett had obtained control of Berkshire Hathaway, the President of Berkshire Hathaway, Seaford Stanton who had recently slighted the up and coming maverick Investment Partner Warren Buffett, quietly tendered his resignation immediately following the news.

This is one of many legendary Investments that would cement Warren Buffett as a Man the many Public Company Chairmen should never trifle with again!

Dear Mr. Chairman By Jeff Gramm

Are you interested in Boardroom Battles and Challenges?

Please read Dear Mr. Chairman by Jeff Gramm. There is a time and place for Activist Investment Stories. This book is a good start. It’s also interesting to read about David Ellison’s recent action to obtain positioning for Skydance Paramounts acquisition offer for Warner Brothers HERE.

What happened after Warren Buffett took control of Berkshire Hathaway?

After taking control of the Board of Directors at 15 dollars per share? Mr. Buffett pivoted the business into insurance, creating a vast conglomerate. Under his leadership, the company achieved a historic compounding shareholder return, famously transforming into a trillion-dollar enterprise. Ultimately retiring stepping aside and appointing Greg Abel a long standing lieutenant assume the helm of CEO in 2026.

Corporate Governance You Be the Judge?

According to Google’s Gemini, the definition of Corporate governance is the system of rules, practices, and processes used to direct and control a company. It establishes a structure for balancing the interests of a company’s stakeholders—such as shareholders, management, employees, customers, and the community. So with this shared, the Corporate governance equation inside many Boards of Directors is a subject that deserves it’s own Political spectrum. Given the breadth and depth of this topic it’s to deep as a topic for todays post. However I do believe we all can agree when someone makes a commitment and fails to satisfy the Board of Directors Mission, Obligations and Marching orders? That it’s time to reconsider your effectiveness for the organizations benefit. Outside Removal by the Boards vote is always a threat to a Board members incumbency.

I do hope you enjoyed todays post as this post details some key facts about Mr. Warren Buffett’s beginnings inside Investing using a Partnership Structure and his mission to obtain a controlling interest in a Public Company that eventually became Mr. Buffetts Holding Company. However if you have read and followed and researched the history of Berkshire Hathaway like Christopher Bloomstran has and has become an expert on Berkshire? It’s highly likely we mutually agree the facts do align that Mr. Warren Buffett and his team at Berkshire Hathaway has touched nearly all of our lives in a positive way through his long horizon investing. Including Warren’s ambitious and righteous humbling mission of evicting Seabury Stanton from Berkshire’s Board of Directors during 1965.

Business Articles, Series 79 Exam

The Series 79 Investment Banking Rep Exam?

So as I sat here outlining how to build the Application for Investment Banking Deal Flow? I asked What is the Job of Investment Banking?

According to Google Gemini the Description of a Investment Banker includes: “An investment banker is a financial professional who helps organizations, governments, and large institutions raise money and manage complex financial transactions. They act as strategic advisors, connecting entities that need capital with investors who can provide it”

Investment Banking Representative | Series 79 Exam

What are the Duties of a Investment Banker and what do you need to do to qualify as a Investment Banking Representative? You must pass a extensive difficult Licensing Qualification Exam.

An IB Analyst preparing for the Investment Banking Rep. will need to study and pass the Series 79 Qualifications Exam?

FINRA Describes the Exam As: “The Series 79 exam, or Investment Banking Representative Exam, is administered by FINRA and qualifies individuals to advise on or facilitate debt/equity offerings and M&A transactions. It consists of 75 scored multiple-choice questions with a 2.5-hour time limit. Candidates must pass the SIE exam first and secure firm sponsorship.” More here from FINRA

Did you catch my Investment Advisors Article Here?

The Career Path of the Investment Banking Associate?

The Pipeline: Top candidates typically secure junior or summer analyst roles during their undergraduate years, eventually converting these into full-time return offers.

The Analyst Stint (Years 1-3): You act as the backbone of the team. Daily tasks involve detailed financial valuation, building LBO/M&A models, and creating presentation slides for senior bankers.

The Exit Opportunities: After 2–3 years, top analysts transition into highly lucrative buy-side roles like Private Equity or Hedge Funds. Alternatively, some pursue an MBA, transition to Corporate Development, or climb the ladder to Associate.

Content you need to know to study for your Series 79 Investment Banker Representatives Exam?

Analyzing capital structure, market trends, and valuation methodologies (e.g., DCF, comparable companies).
Due diligence activities and SEC disclosure rules.
Underwriting/New Financing Transactions, Types of Offerings, and Registration (approx. 29 questions):
Preparing sales documents, deal structuring, and underwriting processes.
Securities Act of 1933, registration statements, and exempt transactions.
Mergers and Acquisitions (M&A), Tender Offers, and Financial Restructuring (approx. 27 questions):
Sell-side processes, auction structures, bidding, and tender offers.
Defensive tactics (e.g., poison pills), legal compliance, and corporate reorganizations.

Advising Institutions and Companies you will need to know KEY AREAS OF FOCUS

Capital Raising: Helping companies issue stocks (like an IPO) or bonds to fund expansion, pay off debt, or launch new projects.
Mergers & Acquisitions (M&A): Advising corporations on buying, selling, or merging with other companies. This involves valuing the business, structuring the deal, and ensuring regulatory compliance

What are the Duties of a Investment Banker Representative or Analyst?

Generally, the role of an analyst is to perform the bulk of the analytic work needed to facilitate these corporate transactions, and this typically involves a lot of work with presentations and models.
Website StreetofWalls.com States;

Presentations, or Pitch Books, are simply marketing material for the bankers to present to their corporate clients. These PowerPoint presentations get printed and are bound for meetings with clients/companies. Pitch Books will generally be 30-40 pages in length, though in some cases can be substantially longer; they will show the bank’s qualifications, recent industry data, sample transaction and analysis information, and advisory recommendations.
The analytical work consists of building and perfecting financial models for any given corporate situation. We will get into this in further detail later, but this work will typically include Discounted Cash Flow (DCF) analysis, Comparable Companies and Comparable Transactions (Comps), M&A models, and/or LBO models.
Analysts will spent substantial time repeatedly building and evaluating different financial alternatives for the client. One example might be running M&A models and showing the accretion/dilution effects to earnings based on different allocation scenarios for debt and equity in the proposed transaction.

The Series 79 is great exam to prepare for the quality as a Investment Banking Representative Exam. However? The Series 7 is also a Securities Exam and many Advisors will allow you to take the Series 7 in place of the 79. This exam allows you to Sell Securities in the Market. Dean Tinney and Brian Lee trained me in the arts of Studying for my Investment Advisors Representatives Exam Successfully. They were fantastic. Check them Out Here! Brian Lee, Dean Tinney, and even Wallstreet Oasis.

I do hope you found this informative and informationally rich about the Series 79 Investment Banking Representatives Exam. I will continue to expand on the Series 79 exam. Then I will expand on Investment Banking more in depth in the future. This was only a brief post on the details of Investment Banking Career Path and the Exam you must pass in order to move forward.

Until Next Time? I wish you well

Thank you
Jameson Sharp

Asset Management, Billionaire, Business Articles, Investment Banking, Mergers and Acquisitions, Securities

Mr. Larry Fink Founder BlackRock

TEN FACTS THAT MAKE MR. LARRY FINK THE MOST POWERFUL MAN ON WALL STREET

Capitalized

Mr. Laurence D. Fink (Larry Fink) needs no introduction he is a Founder of BlackRock a Asset Management Company with over 10 Trillion of Assets under management and has been a leader in Investments and Technology space since Founding his company in 1988. Mr. Fink’s story should be defined by his exceptional resiliency. In the early 1980’s Mr. Fink was a M&A Investment Banker at First Boston. And quickly rose to be the top of the Bond M&A Leader space. Until a loss that would ultimately change his career’s trajectory.

It is no mystery Mr. Fink and Blackstone’s Founder Mr. Stephen Schwarzman were partners during the late 1980’s and after a proposal was declined? Mr. Fink decided to sell his stake. Which led to Mr. Fink to start his own Asset Management firm. And ultimately this move led to BlackRock becoming THE Dominant name in the the Asset Management Space.

Entrepreneurs are Outcasts

Any Man of Good Courage like Mr. Fink knows you will encounter opposition to your mission. But you must over come the opposition. “With good courage.””Interestingly as a Entrepreneur like Mr. Fink? I too have had a professional brush ups with Blackstone’s Management. But all is forgiven, and I honestly do have nothing but the greatest respect for Blackstone’s leadership. Mr. Fink, Mr. Schwarzman and even Myself have all been treated as Outcasts in the Investment space. So I believe I am in good company as a fellow Entrepreneur. Smile.”

EXCEPTIONAL SUCCESS IN THE ASHES OF A 100 MILL FAILURE

In light of all the incredible success’s Mr. Larry Fink has had in becoming the most Powerful Man in Finance. It must be shared in order to build his investment success’s? He was subjected to torturous intractable failures and pain along the way.

It is said by some entrepreneurs our failures sometimes become “Badge’s of Honor Stories”. And great stories and legendary stories that circulate within the community.” Mr. Fink’s 1986 One Hundred Million Dollar trading loss has to be best described by me as a “Badge of Honor!” Not because his trading team lost 100 million. But because he did not allow this to define his future.

Even though Mr. Fink did experience a One Hundred Million Dollar Trading Failure that originated when his team was running the Bond Trading at the Investment Bank “First Boston” in the second financial quarter of 1986. Mr. Fink was not fired from First Boston Bank. But he was sidelined. This was not the end for Mr. Fink. He would move on to demonstrate exceptional resiliency moving forward. He has shown us all defeat is not the end. He quietly left First Boston Investment Bank at the age of 36. And moved on from this to Become one of the Greatest of All Time within Asset Management.

Risk is everywhere in Business

After Mr. Fink’s team failure at First Boston, suddenly other Bond Traders and other associates within the Banking space did not want to be associated with him. He was BlackBalled. Just like I have experienced in my quest as a Software M&A Investment Entrepreneur. People will throw mud at you, the groupie cowards quietly snicker and talk behind your back, sabotage you, spreading untrue rumors, and even sabotaging your prospects. All the while avoiding you.

But on any day? These same subversive types will never be able to handle open physical combat with real bone crushing consequences, or in general? Perform at your level. Mr. Fink as a fellow entrepreneur knows how to let your Investment Performance do the talking for you. We learn that the under-performers who sabotage others? They hide. But it’s not the end. Keep moving forward. Punish them with your performance. Risk will always be present.

Mr. Fink has been there done that and now? So have I! “If your not failing and fighting your way forward? Your Not Learning.” This brings me to this Posts purpose.

It’s important to point out even though Mr. Larry Fink experienced a failure and decided to leave his Investment Bank at First Boston. It was clear no one was going to give Mr. Fink access to capital to manage. Until everything changed! Mr. Fink quietly met the Legendary Blackstone Founder Mr. Stephen Schwarzman and then his professional life changed. Access to capital is everything.

Ten Facts about Mr. Larry Fink that make him Formidable

If your not “HARDCORE” about your business and life’s mission? Your not defining your legacy.

1988 Mr. Larry Fink Establishes his Investment Fund which becomes known as BlackRock

1989 Mr. Larry Fink takes BLACKROCK Public. When BlackRock goes public in 1989 it is the Fifth largest Asset Manager listed on the New York Stock Exchange.

Mr. Fink serves as interim Co-Chair of the Board of Trustees of the World Economic Forum and Co-Chair of NYU Langone Medical Center.

Mr. Fink is a current member of the board of the Museum of Modern Art and serves on the Advisory Board of the Tsinghua University School of Economics and Management in Beijing

Mr. Fink’s Duty To Preserving the Liberal Arts

On a side note: “I love that Mr. Fink loves Art like myself and is PURPLE in his political beliefs”. And this is really refreshing Mr. Fink is a staunch advocate and invests in Philanthropy and keeping the Liberal Arts Scene alive. Thank you Mr. Fink! I would like to introduce you to someone who was very kind to me when I was first starting out and who recently passed on and was a fellow Investment Professional from Kansas City. “Mr. G. Kenneth Baum.” Mr. Baum facilitated H&R Bloc Initial Public Offering during his Investment Career. Mr. Baums Son Jonathan Baum, lovely Wife Anna Baum and their entire lovely family in Kansas City would be happy to see I am keeping Mr. G. Kenneth Baums legacy alive in this post by sharing The Baum Family has contributed substantially to our local Art’s scene and the Nelson Museum of Art in Kansas City. It makes me sad I am not in Kansas City currently. However I am there in Spirit. It’s home.

For more info on Mr. G Kenneth Baum? Click here. Back to Mr. Fink.

Facts about Mr. Larry Fink

If you did not know? Mr. Larry Fink is a leader on the Executive Committee of the Partnership for New York City.

Mr. Fink’s Education Success earned him an MBA from the University of California at Los Angeles (UCLA) in 1976 and a BA from UCLA in 1974.

Mr. Larry Fink is the Chairman and CEO at BlackRock: As the firm’s leader, he is responsible for senior leadership, succession planning, and client relationships

Global influence: Fink sits on the board of the World Economic Forum and is a highly influential figure in global finance, with his letters to investors often setting the agenda for major market trends and corporate social responsibility.

Mr. Larry Fink is a leader and in Good Standing as a Member of Kappa Beta Phi Fraternity

Mr. Larry Fink is a Global Leader in Finance and AI Global Influence. His professional Opinion and Influence reach all the way to the Oval Office of the United States of America, The Senate on Capitol Hill, and to Political Leaders across the globe. A Professional Man To Take Serious. Honor.

Capital, Risk, Initial Public Offering

Thank you for reading my post on the Ten Facts about BlackRocks Founder Mr. Laurence D. Fink, Mr. Larry Fink. I would like to end this post with a quote that details Mr. Finks Character and Commitment to helping his guys who are Investment Fund Managers. In a recent article Mr. Fink was heard Praising the alway’s respectable and Dominant Bond Market Analysis Voice his Chief Investment Officer Mr. Rick Reider.

In a 2018 interview, Fink expressed his admiration for Rieder’s character and passion, particularly his “headfirst approach to everything he does”.
- “More than 50 percent of what attracted me to Rick in having him come to BlackRock was his personal being and his character”.
In a 2013 article, Fink praised Rieder’s work, which helped to turn around BlackRock’s active fixed-income business after years of underperformance and redemptions.
Fink referenced a “great statistic that my good friend, Rick Rieder, uses all the time” in a 2024 CNBC interview.

As a Entrepreneur I do believe soon, I too will be in a position to have serious conversations with Investment Professionals about raising my own Company from the ground up. Like Mr. Fink and Mr. Reider’s Fund has done. And I do appreciate my own moves and investment performance will dictate that opportunity.

All things Considered?

Mr. Fink has previously stated on CNBC “IPO’s are good thing!” CNBC Appearnce . Hopefully soon? Me and a Group of Investment Professionals, We can make that reality. And just like taking a page from Mr. Finks Book? I too won’t allow the failures and painful defeats I have sustained from keeping me from going public like Mr. Larry Fink has also done. Making me another Entrepreneur outcast that has reached serious success with serious minded Investment Professionals.

Even though I have also sustained embarrassing failures like Mr. Fink and other professsionals? I too won’t allow these failures to decide my future success. Keeping my integrity, and mission simple and keep moving forward. Like Mr. Larry Fink has done. Thanks for reading. And Thank You Mr. Fink and Mr. Rieder for the content. Jameson “Doc” Sharp.

Credit, Securities Backed Lines Of Credit

Securities Backed Lines Of Credit

The Differences between Individual Margin Accounts and Revolving Credit?

It’s noon the day after Donald Trump has been victorious in his comeback cementing his Re-Election as President of the United States, and the country is electrified and the Stock Market is Roaring to all time heights today. But did you know? You can use you Securities as collateral to finance a loan? Yep! So I felt the need to share more about this today. Hmmm…It’s true!

Imagine yourself in the world of business and your a entrepreneur and all of a sudden you find yourself needing to use some debt to pay for your liquidity crisis? It happens and happened to me recently here is what I learned!

Credit Types

First before we dive into Margin Accounts that Banks Offer, we first must distinguish the two different types of Credit. The first type is Short term high interest credit. This credit type is usually one year or less and has a higher Interest rate because of the convenience it offers consumers. Just like in the Bond market the second type of credit is moderate to long term credit. Depending on the time involved with your credit needs? Moderate to long term credit is longer than one year and shorter than 10 years. This credit facility is used to offer borrowers lower interest rates.

Endowment Funds are a unique topic alone. Read all about this topic I wrote HERE!

Margin Vs. Short Term Revolving Credit

It seems I must share some quick facts and differences about Margin and Short Term Revolving Credit. Margin is credit offered by a Investment Bank that is lent to a individual who has a Brokerage Account with securities as collateral. It is usually high interest credit and short term. Margin credit works like this, Your portfolio of Securities of Stocks, Bonds, Mutual Funds and Investments held in your Brokerage account act as collateral for the Credit granted by the Bank.

It also must be pointed out that it’s highly likely you must have at least Fifty Thousand to One Hundred Thousand Dollars minimum invested in your Brokerage Account before the Bank will grant you a Securities Backed margin account. Under Finra rules a Bank is not allowed to grant credit of more than fifty percent of the total Securities held in the persons brokerage account. Example: If I have Fifty Thousand of Blackstone Stock in my Brokerage Account? The Bank can lend or extend me Fifty Thousand dollars on Margin. This credit is not to be used for purposes of Trading securities. It must be used as cash on anything else except Investments.

Revolving Credit | Credit Cards

According to Investopedia Revolving Credit is explained best by:

How Revolving Credit Works?

When a borrower is approved for revolving credit, the bank or financial institution establishes a credit limit that can be used over and over again, all or in part. A credit limit is the maximum amount of money a financial institution is willing to extend to a customer seeking funds.

Revolving credit is generally approved with no date of expiration. The bank will allow the agreement to continue as long as the account remains in good standing. Over time, the bank may raise the credit limit to encourage its most dependable customers to spend more.

Did you read my Page and Investment Portfolio? HERE.

Borrowers pay interest monthly on the current balance owed. Because of the convenience and flexibility of revolving credit, a higher interest rate typically is charged on it compared to traditional installment loans. Revolving credit can come with variable interest rates that may be adjusted. The costs of revolving credit vary widely:

So as you can see and imagine this can be a complex topic of discussion and to explain. However I like to keep thing simple and straight when I am writing. To sum up Securities Backed Lines Of Credit? It’s a Bank Loan that is deposited into your Brokerage account with the expectation that you will pay it back and use your Securities or Investments in the Account as collateral for the Loan. It’s that simple.

Larry Ellison loves his margin Account so much he uses it regularly for very large purchases. In fact if you want to read more on the topic? I would highly suggest you read this article by Forbes.

“How the Richest Public Company Executives use their Stock to have access to Billions.”

Speaking about Billions My Good Friend and Fellow Value Investor and Investment Advisor Mr. Bogumil Barnowski has built a Fantastic Podcast “Talking Billions” and Finance Professional Presence. Click on image.

Mr. Barnowski’s Podcast and Advisory Practice is incredibly interesting. Soon I will have to do a interview or post all about his Life as a Professional Advisor to High Net Worth Families.

SBLOC’s

As I conclude this Post about Margin Accounts and Securities Backed Lines Of Credit (SBLOC’s) Id like to leave you with this thought. Securities Backed Lines of Credit are more convenient than most other Lines of Credit. After all Securities are Asset’s just like a Home is a Asset to most Americans who invest into a Mortgage and store and grow their wealth using this method. However I would disagree with the thought “A Home is a Asset.”

I was taught by Investment Bankers as a Investment Advisor and as a Qualified Advisor? I do not feel a Home is a Asset. It is indeed a Liability. The upkeep and maintenance costs alone will erode and defy the mere fact your trying to create wealth for the future. I prefer my assets to be cash producing Investments. Buying Companies is a great way to build wealth as a Investor. At least you know if your wealth is increasing. Anyway’s I am getting off topic.

Using Securities Backed Lines of Credit

Securities Backed Lines of credit can incredibly useful as a Business owner or as extra source of finance when you find you need the convenience of fast money. As a Entrepreneur this can be incredibly useful and easy. The thought you can deposit income then buy stocks and bonds over time using your Income will no doubt generate wealth for you as a Entrepreneur.

Be Responsible With Debt and Credit

I would like to leave you with this one thought. What better way as a entrepreneur is there than taking the income we make from our Careers or Businesses than to deposit into a Brokerage account and buy Investments? Then when we have built up a small fortune with our stocks and bonds and investments? We can begin using them as assets to generate new strategies to building wealth.

I would argue that it could be risky if you don’t use this responsibly. However even thought with this said? If Larry Ellison and Elon Musk can use this for their convenience? To me that just seems like a convenient and winning strategy. It no doubt is bullish and capitalistic. Thank you for reading.

Godspeed
JS

Business Articles, Corporate Finance, Finance Articles, Investing, Securities

Corporate Secured & Unsecured Debt Securities

Lending Money to Corporations using Corporate Secured and Unsecured Debt Securities could be a risky opportunity for Institutional Lenders and for the Banks and Private Credit Investors. If your not up to date on the legal hierarchy or priority of claims for repayment? Allow me to share that Priority list below. Familiarity with a Corporate Balance Sheet will likely make this list easy for you.

Liquidation/bankruptcy fees and charges – this does not include court fees.
Debts due to preferential creditors – those entitled to certain payments in priority over other unsecured creditors – including wages owed in the four months before the date of the insolvency order, as well as all holiday pay and contributions to occupational pension schemes.
In company cases, any creditor holding a floating charge over an asset, such as a debenture. This is where a class of goods or assets – eg the debtor’s stock – are named as security for a debt.
All unsecured creditors.
Any interest payable on debts.
The shareholders in company cases.

The hierarchy of Credit starts with Secured Creditors then Unsecured Creditors. However for this Post I would like to focus on deliberately on Secured and Unsecured Debt for Institutional Investing. This small list is meant to be used in order and will help Retail Investors, Students, and Business Executives who need to brush up on this topic of interest. As a value investor we are laser focused at looking on a Companies Balance Sheet and focus directly and early on a Companies Solvency. If the company is Debt heavy? This usually indicates we need to consider the use of the Debt in order to make a informed decision on “How we arrive at a Companies Valuation”. If the Company we are investigating has no Debt on the Books? This is a good sign. And tells us as Value Investors “This maybe a very profitable Business to investigate further.”

Secured Debt

Corporate Debt Securities are like any other Loan, and are backed by various types of assets of the issuing Corporation. This list is a Seniority list. Meaning they are Secured Debt options in order.

Mortgage Bonds

Just as a Individual would go to the Bank to ask for a Loan backed by the Home and Land as Collateral for the Mortgage, a corporation will borrow money backed by Real Estate and Physical Assets that belong to the Corporation. If the Corporation fails and is unable to repay the Long Term Debt Obligation “Mortgage Bondholders”. The Assets pledged are liquidated by Court Order when the Corporation is insolvent and goes through the Chapter 7 Bankruptcy process. For further explanation? This video should help.

Equipment Trust Certificates

Interestingly Railroads and Airline companies, finance the acquisitions of their Rolling Stock, Train Rail Cars, Airplanes, by issuing an Equipment Trust Certificate. The Company provides a Down payment of usually 20% Twenty Percent of the cost of the rolling stock, and finances the balance over the course of time. For example, 20 years time. Because equipment has wear and tear from daily use in the operations of the Business, the Railroad will pay off a portion of the loan on an annual basis. Interestingly at no time, theoretically, is the value of the assets (rolling stock, rail-cars,Jet Aircraft) worth less than the amount of the principal remaining on the loan. When the company finishes paying off the loan it receives a clear title for the equipment pledged from the Trustee. If a company does fail to make the payments for the loan? The lender can then repossess the collateral and sells it for his benefit. It’s the same concept of financing a new Car.

Did you catch my post here on: Pooled Investments What you need to know?

Collateral Trust Bonds

Sometimes a Corporation doesn’t have real estate, Equipment, or assets to pledge as collateral for a Mortgage or Loan. Instead the Board of Directors or Management can pledge Company Securities like Stock or other Negotiable Securities from a Parent Corporation into a Trust as a form of secured collateral. This is useful because the Securities are readily liquidated in case of default. Obviously the better quality of Securities deposited as collateral the better the Rating of the Bond. Sometimes these are also referred to as Collateral Trust Certificates.

Unsecured Debt Securities

Debentures

A Debenture is a Debt Obligation of a Corporation backed by only the Corporations word and general creditworthiness. Debentures are written promises of the corporation to pay the principal loan amount back its due date with interest on a regular basis.Debentures surprisingly are not secured by any pledge of property. They are considered safe when the Lender has trust or a credit relationship with the Corporation. This is sort of like a Revolving line of Credit for Commercial Banks and their clients who are the Corporations. Example: Similar to Consumers who use a Bank Credit Card and have great credit worthiness.

Guaranteed Bonds

A Guaranteed Bond is a Bond that is guaranteed as to payment of interest, or both principal and interest, by a corporate entity other than the issuer. The guarantee is only as good and valued if the company providing the guarantee has a strong business. Guaranteed Bonds were popular in the Railroad industry in which Major Railroad Companies sought to ease the trackage rights from a short line Rail lines, and would guarantee the smaller Rail Lines companies debt. A more recent example would be Exxon Mobile Corporation guaranteeing a subordinate companies debt issue.

Senior Debt

This is used to describe the seniority of a Debt Issue. Or the relative priority of repayment claim of a Debt that has been issued. Every preferred stock has a Senior claim to Common Stock. Every Debt security has a senior claim to preferred stock. Secured Bonds have a senior claim to unsecured debt.The term senior securities means bonds and preferred stock, because they have a claim senior to common stock. If you would like to see the Seniority of Debt and Equity? Please refer to the Chart Above below the opening paragraph.

Subordinated Debt

Subordinated Debt is just that! “Belonging to a lower class or rank.” Please refer to above list of Ranked Repayment Obligations.

Credit Ratings

It would be unprofessional of me not to include Ratings and Credit Ratings Agencies in this Post. When evaluationg a Bonds Ratings? You should refer to the Bond Ratings are defined by the Creditworthiness of a Companies Debt. These are issued by Standard & Poors and Moody’s and Jefferies Investment Bank. All these are fantastic Companies who hand Credit Worthiness of Debt Issues and Companies Debt History.

For Credit Ratings This Image Below Will show my Notes on Bond Ratings.

High-Yield Bonds

Since I would have a difficult time explaining in detail High-Yeild Bonds. Investopedia has shared and described High-Yield Bonds as?

High-yield bonds (also called junk bonds) are bonds that pay higher interest rates because they have lower credit ratings than investment-grade bonds. High-yield bonds are more likely to default, so they pay a higher yield than investment-grade bonds to compensate investors.1

Issuers of high-yield debt tend to be startup companies or capital-intensive firms with high debt ratios. However, some high-yield bonds are fallen angels, which are bonds that lost their good credit ratings.

In conclusion I hope you learned a few things about Corporate Secured and Unsecured Debt Securities. In the end Bond Investing can fail. So it’s vital to know the basics of Bonds and Credit. This Wall Street Journal Animated Video should help you understand this fact.

These are basics we use as Investing and Finance professionals. Feel free to share and if you learned something? Fantastic! “

This post is for Educational purposes only. And should not be construed, implied, or taken as Investment Advice.”

Godspeed! Thank You.

Business Articles, Finance Articles, Investing, Law, Securities

National Securities Markets Improvement Act

Wether your a Financier, a curious investor or a even new Stock Broker/Dealer Agent, If your not up to speed on the NSMIA of 1996? This short post will give you a brief overview of what the National Securities Markets Improvement Act is and what it is used for.

Here is a question? What is the National Securities Markets Improvement Act of 1996 (NSMIA)? The National Securities Markets Improvement Act is a law passed in 1996 that sought to simplify securities regulation in the U.S. by apportioning more regulatory power to the federal government.

NSMIA is a List of Securities that are Federally Listed on the NSMIA Website.

NSMIA Securities are Federally Covered Securities.

The National Securities Markets Improvement Act (NSMIA) amended the Investment Company Act of 1940 and the Investment Advisers Act of 1940 and went into effect on Jan. 1, 1997. Its main consequence was to increase the authority of federal regulators at the expense of their state-level counterparts, a change that was expected to increase the efficiency of the financial services industry.

What Changed after NSMIA was Introduced?

NSMIA caused a material impact on the responsibilities of federal and state regulators. Ultimately, it reduced the overlap between federal and state power. State security laws no longer oversaw the following topics:

1. Capital

2. Margin

3. Bonding

4. Custody requirements

N.S.M.I.A

The National Securities Market Improvement Act (NSMIA) was introduced to more efficiently allocate capital in financial markets.
NSMIA amended the Investment Company Act of 1940 to promote more efficient management of mutual funds, protect investors, and provide more effective regulation.
Nationally traded securities, securities of registered investment companies, sales to qualified purchasers, and securities issued in certain exempt offers are exempt from state regulation.

There are a-lot of Securities that are listed on the N.S.M.I.A website. To catch up on the latest case by case basis? Here is the List HERE.

I do hope you learned something here, If you did not catch my Invesment Fund Article Here, Id highly recommend you go read it. It’s all about Investment Funds.

What are covered securities under NSMIA?

Today, most stocks traded in the U.S. are considered covered securities. In addition to the offers and sales of certain exempt securities, the NSMIA defines “covered” securities as securities that: Are listed on national securities exchanges such as the New York Stock Exchange and the Nasdaq.

Thanks for Stopping by,
Godspeed

Business Articles, Finance Articles, Financial Products, Investing, Law, Securities

Thought’s On Crypto Regulation & Binance Lawsuit

Anthony Scarramucci CEO of Skybridge Capital Shares Opinion Segment In My Youtube Video Provided.

People do ask for my opinion on Crypto and its shaky history of legitimacy.There are many questions that need to be asked. Is it useful? Does it have a place in the Financial Service Industry or Markets? Can we leverage it for good? And can we keep the Scam Artists, Conmen, and Charlatan’s from promoting their shady dealings with this unregulated Currency?

My latest video on the topics above will give you better understanding “How the Securities and Exchange Commission used a little known Law that describes a “Investment Contract – THE HOWEY TEST” to bring a Lawsuit against Binance Crypto Exchange.”

Did you catch my latest Article on “Asset Backed Securities”? HERE.

Enjoy, and Please Do Share if you find useful.

Godspeed
JS

Business Articles, Finance Articles, Financial Products, Real Estate, Securities

“Asset Backed Securities”

What are Asset Backed Securities? “Why every Finance Professional Should Know All the Asset Classes and “How they impact our Community and Business’s.”

Asset-backed securities (ABS) finance pools of familiar asset types, such as auto loans, aircraft leases, credit card receivables, mortgages, and business loans. In one way or another, these asset types represent contractual obligations to pay.

These contractual obligations to pay often rank senior to a borrower’s traditional debt obligations, reducing ABS investors’ exposure to the borrower’s financial health. ABS also have many other investor-friendly features that may help protect against loss and improve liquidity, such as traunching (SEGMENTS) of risk, over-collateralization, and diversity of payers in each underlying pool. Despite these and other strengths discussed in this report, some ABS and other forms of structured credit continue to offer higher yields than similarly rated corporate or municipal bonds. ABS investors’ principal job is to analyze the cash flows from these obligations to assess value and the possibility of loss, rather than relying solely on the current market prices of hard assets, the reputation of a sponsor, or the presence of an investment-grade rating.

Guggenheim

What is a RMBS? (Residential Mortgage – Backed Security)

Residential Mortgage – Backed Security is exactly what it sounds like. A Home or Residential Building Mortgage Contracts packaged and registered by a Investment Bank Institution placed into a folder with other Residential Mortgages and Packaged as a Security product by the Investment Bank for the purpose of trading and Investing within the Public Markets.

LARRY FINK – BLACKROCK

1970 to 2000

It is with great enthusiasm that I am able to introduce the Man who pioneered Mortgage Backed Securitization. Mr. Chairman of BlackRock Larry Fink. According to Wikipedia’s Profile on Fink? Larry started his career in 1976 at First Boston, a New York-based investment bank,^[13] where he was one of the first mortgage-backed security traders and eventually managed the firm’s bond department.^[14] At First Boston, Fink was a member of the management committee, a managing director, and co-head of the Taxable Fixed Income Division; he also started the Financial Futures and Options Department, and headed the Mortgage and Real Estate Products Group.^[15]

Fink added “by some estimates”^[3] $1 billion to First Boston’s bottom line. He was successful at the bank until 1986, when his department lost $100 million due to his incorrect prediction about interest rates.^[3] The experience influenced his decision to start a company that would invest clients’ money while also incorporating comprehensive risk management.^[3]

In 1988, under the corporate umbrella of The Blackstone Group, Fink co-founded BlackRock and became its director and CEO. When BlackRock split from Blackstone in 1994, Fink retained his positions, which he continued to hold after BlackRock became more independent in 1998. His other positions at the company have included chairman of the board, chairman of the executive and leadership committees, chair of corporate council, and co-chair of the global client committee.^[3][15] BlackRock went public in 1999.

For more info on Mr. Fink please refer and read Blackstone – Mr. Scwarzman’s Book “What it Takes“.

Continuing with Asset Backed Securities.

Did you catch and watch my latest Youtube Channel Video on Derivative Contracts Below?

Commercial Mortgage Backed Security

(CMBS)

A commercial mortgage-backed security (CMBS) is a type of fixed-income security. It is backed by real estate loans. These loans are for commercial properties. They might include office buildings, hotels, malls, apartment buildings, and factories.

Learn more about CMBSs, how they work, and what they mean for individual investors HERE.

In 2008 WallStreet’s Lehman Brothers Investment Bank was overly exposed by backing, and registering TOXIC Securities, otherwise known as Subprime Mortgage Backed Securities.

Watch as Warren Buffet shares and explains more about the Financial Crisis that happened in 2008 Below.

CDO SWAP Derivative – Collateralized Debt Obligations

According to my friends at the Corporate Finance Institute: A Collateralized Debt Obligation (CDO) is a synthetic investment product that represents different loans bundled together and sold by the lender in the market. The holder of the collateralized debt obligation can, in theory, collect the borrowed amount from the original borrower at the end of the loan period. A collateralized debt obligation is a type of derivative security because its price (at least notionally) depends on the price of some other asset.

Historically, the underlying assets in collateralized debt obligations included corporate bonds, sovereign bonds, and bank loans. A CDO gathers income from a collection of collateralized debt instruments and allocates the collected income to a prioritized set of CDO securities.

Similar to equity (preferred stock and common stock), a senior CDO security is paid before a mezzanine CDO. The first CDOs comprised cash flow CDOs, i.e., not subject to active management by a fund manager. However, by the mid-2000s during the lead up to the 2008 recession, marked-to-market CDOs made up the majority of CDOs. A fund manager actively managed the CDOs.

Finishing out this month’s post on Corporate Finance and Investing, I genuinely hope this article and post was of value to you. Did you know I began learning all about the depths within Corporate Finance only few years ago? This has been a difficult road. But I am having a Blast learning and becoming a Professional Investor and Corporate Finance Professional. There have been times learning all these Financial Products has been Challenging. Especially learning the exact details of Markets, Contracts, and the growing list of Sophisticated Financial Products. But I can say with certainty all my efforts and has been worth the effort. And I do hope you will share the Post. And until next time? We will see ya. Thank you for reading.

Godspeed.
J.S.

Business Articles, Investing, Investment Banking, Mergers and Acquisitions

The Federal Reserve Raises Interest Rates

The Federal Reserve raises it’s Benchmark Interest Rates by half a percentage point which is the most aggressive action since the US is facing highest inflation rates in 40 years. Behold a new term for most? “Quantitative Easing”

After much anticipation, fan fare, and business news speculation due to rising costs within the market and easy access to cheap margin debt? The Fed convenes and finally comes out and say’s “It’s time to raise the Fed’s Interest Rates.”

The last time the Fed Raised Interest rates were in 2018. Quantitative Easing is now working by pushing more money into the economy by way of the Central Banks buying more Government Bonds through individual banks which lends money to businesses and individuals.

Ok! But What does raising the interest rates mean? After yesterday’s press conference, the Federal Reserve’s Chairman Mr. Jerome Powell began informing the Press and the Finance community. Today’s Information and Report from the Good Reporter Mr. Jeff Cox, The Business News Editor of CNBC. FULL ARTICLE

“The Federal Reserve will begin to Raise Interest rates by a half a Percentage point per the markets anticipation. When asked, The Fed’s Chairman Jerome Powell had to say about this historic increase?

“Inflation is much too high and we understand the hardship it is causing. We’re moving expeditiously to bring it back down,” Fed Chairman Jerome Powell said during a news conference, which he opened with an unusual direct address to “the American people.” He did touch on the burden of inflation on lower-income people, saying, “We’re strongly committed to restoring price stability.”

Furthermore the Feds Chairman say’s, “The American economy is very strong and well-positioned to handle tighter monetary policy,” he said, adding that he foresees a “soft or softish” landing for the economy despite tighter monetary policy.

It’s likely according to the Chairman Powell’s opinion and comments on this interest rate hike, “Their will be many Fifty 50-Basis Points rate increases are coming soon. But likely not more aggressive than that.”

When you stop and consider how the Fed will begin raising the Interest rates in detail? It will look like this. They will start by raising the Interest rates by Half a percent in the first stage. Then raise again to the Three Quarters range of a Point. Then another quarter percentage of a point, Equaling the Full 1.0 percentage point. The video below demonstrates the numbers in detail.

With all the free flowing margin debt that has been free flowing for years? It makes sense the Fed is wanting to take the steps and transition raising the debt interest rates instead of a sudden hike. This ensures markets are not suddenly impacted to the point of panic. Rolling out stricter policy for a soft landing on the American People and Investors. This also begins to address the Inflation that is beginning to be out of control. But here are some more in depth facts from the report.

In conclusion we will need to sit back and see how things begin to work. It’s never easy to accept the Party’s over with easy free cash. But as time moves on I have a suspicion the market wont rise above what the market can handle. That is just my 2 cents

In addition, the central bank outlined a program in which it eventually will reduce its bond holdings by $95 billion a month.

This undoubtedly is the largest rate increase since the fed relaxed rates in 2000, and the inflation of American Debt has pressured the Fed to begin the process restricting Debt Rates.

Fed Chairman Jerome Powell underlined the commitment to bringing inflation down but indicated that raising rates by 75 basis points at a time “is not something the committee is actively considering.”

Thanks for reading todays Post on this Historic Event we have all been anticipating and speculating on for quite some time. If you have anything worth the time to add? Please comment below,

GODSPEED
JS

Business Articles, Investment Banking, M&A Intelligence Services, Mergers and Acquisitions

Mergers & Acquisitions Strategy and Intelligence

Today’s post will be revealing a creative Strategy a British Businessman used for a unlikely Acquisition netting him 60 million pound richer on just 4 million in finance. This post will share more about his creative strategy, and ask the question? Did he use secret intelligence from former British Intelligence to make a deal of a lifetime?

Mergers & Acquisition Case Study

This is Mr. Peter Jones. Mr. Jones usually appears on the Hit TV Show Dragon’s Den on the BBC. During one episode many years ago on the BBC. Peter interviewed a quiet Businessman that did not seem like a creative business magician. When this man was pressed in the interview about his transaction that netted him 8 figures? He revealed a creative strategy that made him an 8 figure fortune.

The man we are talking about in this article is British Businessman and Financier Mr. Chris Dawson. Mr. Dawson negotiated his way to a very lucrative Transaction of a lifetime. Paying literally pennies on the pound.” Making him 60 million pounds richer all of just 4 million in finance.

“How did he do this?

Business Communications Strategy

Did you know as a Business owner and Community leader how you communicate with the Public and Business community is more important than ever? Most Executives and business owners would rather stay quiet and out of the news and it’s ridiculous untrue headlines. However there are a select few Business figures Id like to point out who made it work for them. One of those people is my friend Mr. Marcus Lemonis CEO and Chairman of Camping World and Host of the Hit TV Show The Profit. Marcus has basically turned Prime Time Television into a Deal Flow PR machine for his Company. And if you really consider all things being equal? So has Mr. Peter Jones with his BBC Series and Appearances on Dragons Den. It’s literally the Entrepreneurs Deal Flow Machine. It’s pure Brilliance under the understanding of being a Reality TV Series. This type of strategy is not cheap. However I feel both of these fella’s understand full well the power of the Mass Media. So much so they are laughing all the way to the bank.

This next use of Mass Media and creative strategy for business exhibits pure brilliance.

Developing Business Strategy

This brings me to my point for Strategy on today’s post. A British Businessman named Chris Dawson used the Media clearly to his advantage. Basically what he did was this. The small Business Finance community was informed through Business NEWS, a failing Business Department store was accepting offers. However here is what happened next?

Chris used a someone other than himself to drop a hot tip to several journalists that cover this area in the business papers. The business tip shared that the Failing Department Store had five buyers already in line to buy the failing business. The Media Reported this story. This reported new story basically worked so well. No other buyer wanted to pursue making a offer for the failing company. Leaving Chris as the only Offer which happened to be a low ball offer. This worked in his favor. He cornered and had tricked the competition in to moving on. Leaving him as the only last option for the Failing Business. LOL HAHA!

Since he closed this Transaction. You can already see this strategy secured him a deal of a Lifetime. What other factors made this opportunity so lucrative for Mr. Dawson? Chris owns a chain of Department Stores and it was super easy for him to liquidate all the extra product he had just acquired. Making him a very very rich man. Plus He used the Media to kill off interest from other buyers. That is sure brilliance. But that’s not all that he did to secure this huge Business victory. In the end? It’s likely Mr. Dawson was not only just lucky. Word on the street from my own sources within my community share? He had help from a shadowy group of former British MI6 professionals. We will never know. But I can share this. His deal wasn’t all luck.

M&A Deal and Market Intelligence

Competition Is Fierce. Have a team of Advisors willing to secure on the ground intelligence rather than finance intelligence is vital to successful transactions. I do have several Attorneys and Accountants that have confided in me some of the large firms have become relaxed on the due diligence standards. To combat this when it matters the most? You need professionals who can ensure victory with information not easily found with normal due diligence.

The current Mergers and Acquisitions Market is so competitive and fierce most Private Investors and Private Equity Buyers do sometimes need extra information on markets and on Targets. With all the moving parts and info needed to make a decision? The finances sometimes do not tell the entire story. Wouldn’t it be nice if your executive team had peace of mind with secret information like Chris Dawson? We can offer advisory consulting, and Executive management consulting other firms can not. If your team needs an extra layer of security and intelligence? CONTACT ME NOW. Myself and my veteran brothers come from a variety of backgrounds and all of us have served inside the Intelligence and Military Special Operations community.

Using our teams specialized training and Global War on Terror experiences. Our professionals can ensure your team of executives a extra layer of security while your team of executives and Attorneys are at the negotiating table. Or for when making a group decision to move forward with a transaction. Our small group includes service within Army 75th Rangers. Army Special Forces Green Beret NCO’s, and Senior Officers, and experienced Operators from Marine Special Operations.

In conclusion developing a strategy and securing additional information for business transactions is a smart play. The only thing that truly matters in todays hyper competitive environment is information others are trying to hide. It could very well be a life changing event, or put in play a series of events that create a extraordinary win for you and your team. I hope you enjoyed todays post. And I will hope you found this story and strategy of a British Businessman useful.

Godspeed.