Business Articles, Family Offices, Interviews

Mr. Family Office | On Twitter

As an Investment Adviser, Banker, or Investment Professional, you will discover other interesting stories from professionals in our investment space. Today’s post regards a confidential Adviser, who posts fascinating content about the often-misunderstood world of Ultra High Net Worth Family Offices. He is the King of Twitter’s Family Office Investment Space, the always generous and astute Mr. Family Office X- Account.

While preparing for this interview I knew I would have to give up control, as I don’t want to put anyone’s job or livelihood at stake. After all, I am still new to the community, and I need to build trust and demonstrate my strict competency with professional leaders such as Mr. Family Office. We must keep the personal Identity of Mr Family Office hidden. We have rules in this small space, just like serving in secret areas of the Military. So, in the small world of Ultra High Net Worth Family Offices, trust is earned, and reputation is everything. The rules are simple, bluntly spoken, and strictly enforced… “KEEP YOUR MOUTH SHUT ABOUT YOUR FAMILY AND WORK”.

Confidentiality and Discretion

Mr. Family Office is an X account, (Twitter) and has grown to over thirty thousand followers and is the undisputed authority in the Family Office space on X. He generously educates his Investment Professionals and even Entrepreneurs, who have become Centi-millionaires who want to open their own Family Offices. His account has been an incredible resource for me, as a growing Venture Capital Investor and Qualified Adviser and Entrepreneur. Here is a photo of his X Account.

Mr. Family Office

Mr. Family Office is a Twitter or X account and has grown to over 30 thousand Followers and is the undisputed authority in the Family Office space on X. He generously educates his fellow Investment Professionals and even Entrepreneurs who have had an exit and have become Centi-Millionaires who want to open their own Family Offices. His account has been an incredible resource for me as a growing Venture Capital Investor and Qualified Adviser and Entrepreneur. Here is a photo of his X Account.

The Community Network of Family Offices

Since the Family Office or Space of Ultra High Net Worth Individuals is a small, elite community, another person I want to introduce and just had to include later in this post is a friend, Jorge Nikaido from Grupo Salinas in Mexico.

Jorge is the trusted Right-Hand Man or “Chief of Staff” for a bold and honorable Mexican Business Magnate named Don Ricardo Salinas Pliego. And being a right-hand man of a Business Entrepreneur doing great, philanthropic projects for your community, earns you a spot in our group of Trusted Family and Friends. This is why I just had to include this Professional Leader later on in this article. More about Jorge later.

So, without further delay, let’s jump into the interview with Mr. Family Office.

1.Thank you for agreeing to be here with me and writing this post Mr. Family Office, When you first started your Twitter account Mr. Family Office did you feel any apprehension you were going to get pushback from our Adviser and Banker community because we have a Professional Duty to keep things secretive and confidential in our Investment world?

“Thanks Jameson, it’s good to meet you! Confidentiality and discretion are obviously fundamental in my world and it’s always my first thought when tweeting about any topic. I never tweet specific details about the family I represent or other family offices I work with. I would not break trust in this way. This can be limiting, there is a lot that I could share. But in fact there is plenty to talk about whether it’s general stories, my own stories or insights from the sector.“

“The feedback I get from advisors and bankers has been very positive so I think I get the balance about right. ”

2. It’s Fascinating to others out there in the World “How Family Offices Work” what was it like building your twitter account so others could see into this secretive space?

“It’s a lot of fun! I’ve met some very interesting people who I wouldn’t have met otherwise and I’m learning every day. I think family offices are slowly opening up, so the Twitter account is riding the wave of more transparency. “

3. How did you feel when you saw a community of Advisers, Investors, and Entrepreneurs being built around your Family Office Guy Account? What excited you about this and where do you see it going?

“It’s great to see. I started tweeting without any expectations at all, so I’m delighted to see the community that has grown around the account.”

As to where it’s going… good question. I’m focusing on the newsletter at the moment, but also discussing a few ideas with others from the family office world. Watch this space.

His NEWSLETTER LINK HERE:

https://mrs-newsletter-6afd08.beehiiv.com/

4. Not many people know Investment Partner has ownership in a Investment Advisory Firm with many Advisers as part of his Family Office, can you tell us about the spectrum “Small to Large Family offices you have seen as a Professional?

It’s an age old question – how much is enough for a family office. Family offices have become something of a status symbol in recent years. The SFO Alliance requires that members have at least $400 million AUM, I feel that this is a good minimum benchmark – but even at that level, the core team is going to be pretty small.

5. Do you feel your Twitter presence is helping to demystify the secretive and sensitive world of family offices and Billionaire investment management? “I hope so! “

SFO Family Office Website

Did you catch my latest article “Why VC Firms are turning to Investment Advisers”

Interview Continued

6.Have you ever been worried anyone would find out who you are? And how do you stay safe? ( Stupid question. Sorry No worries if it crosses the line. Don’t answer if it’s stupid. ) 🙂

“Quite a few people know who I am… but it’s safe to say that the mystery is far more interesting than the reality! As the account has grown, there have been contributions from various people in the sector, so it’s fair to say that there is more than one Mr (or Mrs) Family Office”

7.Has building your Family Office Acct. on twitter/X given you access to opportunities, relationships, and Investment Transactions you wouldn’t otherwise have access to? Do you have a short example?

“I have not sourced deals through Twitter yet, but I have connected with a bunch of family offices and FO professionals. ”

8. What does the continued growth of Family Office Account look like in 10 years?

“I’m certainly not looking 10 years ahead! Twitter under Elon Musk can be pretty wild, so you never quite know where you are! As I said, my focus for the immediate future is on collaborating with other contributors and building the newsletter.”

9. Can you share more about your Process for choosing Content and topics for your Posts of Family Offices?

“I like to mix things up.. I generally tweet about stuff I find funny or interesting. The inspiration comes from day-to-day work or from what I read. I think it’s important to have a balance between serious and non-serious. Overall, I don’t take myself too seriously… I think people like that about the account.”

10. What is the largest family office and (AUM) you have seen as a Family Office Expert?

“The largest I have worked with has been several billion dollars. But there’s always a bigger fish.”

11. Is there anything you can share that may be controversial about you building Mr. Family Office?

“Being anonymous on Twitter can be controversial in itself. But once people figure out that I’m not hawking courses or selling sketchy deals they tend to relax. “

12. How do aspiring Professional CFP’s, CFA’s and Investment Advisors get into the Family Office space as a career?

“Look out for some upcoming newsletters! I am planning to write a lot more on careers in family offices in the coming weeks.“

End of Interview questions.

This certainly was an interesting interview and opportunity. I would like, to take this opportunity to personally Thank Mr. Family Office for his time, generosity, and willingness, to help educate all my readers and myself about the World of Family Offices. It’s a look into a world and a view many professionals do not get to see, now they do have a little view into this discretionary world. This is very insightful and helpful. Thank you, Sir! It’s very professional of Mr. Family Office to help me as a part-time Journalist, grow with another interesting interview into our world of High Finance and Investing. Thank you again, Mr. Family Office.

Grupo Salina’s “Chief Of Staff” Jorge Nikaido

My friends in life are special and keeping their “Trust” is everything to me. So, I hope you understand I would never betray the confidence of anyone who does not wish to be publicly identified or participate in my posts. However, Don Ricardo and Jorge Nikaido are celebrities in Mexico and Latin America. Even so, I informed Jorge, that I was going to mention him in my article with Mr. Family Office. He deserves a little love and recognition considering he is always selflessly serving family and friends of ours.

Feel Free To Follow Jorge Nikaido on X-HERE

While preparing for this post and interview, I immediately thought ‘Who else do I know who is in our small world?’ And it hit me! My good friend, who I am connected to on X, (Twitter) and is Mexican Billionaire Don Ricardo Salina’s Pliego’s Right Hand Man, Sénior Jorge Nikaido.

Jorge is known as “THE FIXER” in the life and Family Office of Don Ricardo’s Salinas Pliego Empire in Mexico. So it’s only natural I would give a quick mention to him in my Post here with Mr. Family Office. To my Professional Friend in Mexico City who is always helpful and ready to assist and advise his Family and Friends like Me and Mr. Family Office? Salud Sénior Nikaido! I can’t wait to interview you soon and drop in to see you in Mexico City in the near future. Thank you.

Thank you for reading this week’s article and post about Mr. Family Office. As I continue to find new and interesting stories from High Finance, Investing and the Community of Business, I would like to leave you with this thought from Don Ricardo Salina who I consider an Honorable Community Leader, who cares about his friends and family. Don Ricardo says to us…

“To me, wealth is the peace of mind you have, your family, your friends, your colleagues. Everything else is just money, and it really is funny how people pay so much attention to that.”

Follow Don Ricardo Salinas Pliego here.

If you found this Article, and Interview Post interesting, please share and comment on your Social Platforms. If you’re taking time out of your busy day to read this post, we greatly appreciate all who find this interview insightful, informative and interesting.

Thank you for reading.
JS

Asset Management, Business Articles, Financial Adviser, Investment Adviser, Investment Adviser Arizona, Investment Adviser Kansas City, Investment Adviser Representative, Money Manager

News: Series 65 Law Exam Investment Adviser

Professional Investment Adviser Representative Law Exam “PASS”

After studying and taking on the challenges that lasted for nearly 2 years. Monday March 11th 2024 I passed my Professional Series 65 Uniform Investment Adviser Representative Law Exam.

Passing this difficult professional exam allows me to register with a State Securities Administrator as a Licensed Investment Adviser Representative, through a Federal Registered Covered Investment Adviser or State Investment Adviser. Investment Advisers are hired as Fiduciary’s to give Institutions and Individuals Investment Advice, and are also able to Manage large pools of money inside Investment Funds. To read FINRA’s description of what this Exam does for a Professional Money Manager click this link, HERE.

Investment Adviser Examples: Some give Investment and Securities advice to Corporations, Institutions, Boards of Directors, Individuals planning for Retirement, work as Hedge Fund Managers, Pension Consultants, Sports & Entertainment Management, Asset Managers, Wall Street Private Bankers, and also High Net-Worth Wealth Advisors. It’s a serious Profession. That comes with serious responsibilities. Investment Advisers are considered Fiduciary’s.

This is a Huge Victory for me professionally. And it’s only fair that I Thank the people who helped push me to achieve this life long professional goal. The list of people who have helped prepare me to pass this difficult exam is small. As soon as I left the exam office I took some time and shared the special news firstly with my Dad. To the others who did help me? You know who you are and I am whole heartedly eternally grateful for your confidence and trusting in me to perform.

Cheers to you all. I am very excited of what’s is to come next on my journey.

The mission continues.

Business Articles, Investment Vehicles

Treasury Inflation Protected Securities (TIPS)

What is (TIPS) Bonds/Fixed Income and How do Investment Advisors, Investment Banker, Stock Broker Professionals Calculate TIPS Payments?

Very interesting Topic has come up on my Study Plan this week inside the Fixed Income topic and Investment Vehicles. This post will go on to explain and demonstrate exactly “How” and “What” Treasury Inflation Protected Securities are used for as Investment Vehicles and the math that we use to calculate the Payments.

To make this simple according to the United States Treasury “(TIPS): are marketable Treasury securities whose principal amount is adjusted for inflation. They were first auctioned in January 1997 after the market expressed a strong interest in the inflation-indexed asset class. In 2009, 20-year TIPS were discontinued in favor of 30-year TIPS. Treasury now offers 5-year, 10-year, and 30-year TIPS.”

TIPS are used in Investment Portfolio’s for the purpose of staying ahead or keeping pace with inflation happening on the Consumer Price Index. The following article is “How Investment Professionals calculate and do the math for TIPS for your Portfolio. But first let’s watch more for The Money Guy Show explaining TIPS and How they are bought and used by Retail Investor and Investment Management.

TIPS are not just another Investment vehicle we use in Portfolio Management or as Investment Fund Managers. We must be highly selective on what make since at the time when we are building Investment Portfolios. Like other Treasury securities, TIPS are exempt from state and local tax. But! The TIPS interest and income on the principle are still taxed at the Federal Level for that year. Please have your Investment Counsel or Investment Advisor give you more information related to the Taxation of your own Investments. This post should not be used as Investment Advice and is strictly a informative guide to math of TIPS.

How to Calculate Treasury Inflation Protected Securities

It’s true when calculating TIPS that there is a part of this method that does involve compounding of the Coupon Rate and the Principle Semiannually. This is how we Make the Math Make Since. You need to know first, That we use the Nominal Yield as the Coupon and we also use the Principle value for our computation/calculations.

Let’s say for instance we have (TIPS) that pay’s 6% annually and then Inflation Rate is 4% for the next 3 years? Here is what happens Mathematically and how we see this Investment Vehicle work and keep pace with Inflation.

Let’s say you bought the 6% TIPS BOND and the Inflation Rate is 4% for the next three years.

You first need to understand the Coupon/Nominal Yield of 6% will be paid in two installments of 3% semiannually. And the 4% will be compounded and paid on the Principle of the Bond.

BOND is $1000 at par.

6months pass by… We are paid as the Bond Holder $1020.00,(2%+1000=1020.00) the first semi annual Dividend we are paid is $30.60.

6months later? We are paid another 40.20. Which now added brings our Bond Principle to ($1040.40). Our Second semi annual Dividend paid to us is $31.21

Year 1 Complete.

Year 2 after 6 months We are paid on the Principle and now Principle increases to (1,061.21). The math to get to this number is (1,040.40×102%=1,061.21) Our first Dividend for this year is paid to us $31.84. How we arrive at this dividend number? We take 1,061.21×3%=31.84

Six Months later our Principle is paid again (1,061.21×102%=$1,082.44) Our final semi annual year 2 Dividend is paid out. (1,082.44×3%= $32.47)

Year 3, six months pass and our Principle is paid (1,082.44×102%=1,104.09) Our first year 3 Dividend is paid out (1,104.09×3%=$33.12)

Six Months later our final year three semi annual Principal is paid (1,104.09×102%=1,126.17) Our final year 3 Dividend is paid out (1,126.17×3%=$33.78).

The Math is clear and so is the method we use to calculate (TIPS) Treasury Inflation Protected Securities. It’s easy, clean math. If you had trouble calculating the math here? Please feel free to email me and I would be happy to walk you through the math in a Video. You may be wondering why I wrote and posted this? Well truth is? I love this stuff and do it for fun. I know I am slightly bizarre. But in all fairness Mr. Bill Gross who is a fellow Navy Veteran and Bond Bad Ass who built the Bond Company PIMCO is also a life long student of Fixed Income and Investing Wisdom. Please do feel free to watch this video Documentary of Mr. Gross. It’s certainly is worth the watch!

However the proof is in the numbers. And rolling up your sleeves and learning new things is the backbone of what makes a Great Investor and Investment Professional. I hope you enjoyed todays post and learned something. Thank You for stopping by.

Godspeed

Business Articles, Investing, Value Investing

2023 Annual Letter & Investment Performance

The following post is my personal Investment Portfolio’s 2023 Performance and How I achieved a 19.9% Real Rate of Return. This in depth investment post will also include incredibly in depth personal thoughts, and thought processes from my Education as a Value Investor from this year. It’s likely to surely strike a chord with many out there who are in the Investment Management, Family Offices to the Entrepreneurial space. Thank you for spending a few minutes reading my annual Investment Notes. Let’s begin.

It’s been a good year, I learned a lot more about being a Investment Portfolio Manager and what it takes to build your skills as a Value Investor and as Howard Marks would share “What is the most important thing?”. With all the distractions in this world working against us and our Investment performance? I still managed to pull off a great victory. Achieving a stable 19.9% Real rate of return for my personal Investment Portfolio. As I posted to the Value Investors I am connected with? I shared, “I will take it!”

This post will be about my personal Investment Portfolio and I will take you trade by trade “The Good and The Bad” and show you how I ended up with a stable 19.9% Real Return at the end of the year.

Charlie Munger May G-D Rest His Soul, was right! “There are only a three ways a smart person can go broke: Liquor, Ladies, and leverage.”
-Charlie Munger (Jan 1st 1924 – Nov 28,2023)

In January 2023 I wanted to begin Earning and training a Series 65 Investment Advisor/Investment Fund Manager Course. This career move will pay massive dividends in my life. And already is beginning to as I write this. There are about two dozen Investment Professionals on Wall-Street watching me closely. Along the way I have developed attracted a little community of Commercial Real Estate Brokers as well. I am positive they will be awesome to know as well. But back to studying as a Investment Advisor Rep. It’s true there have honestly been times I have experienced complete and embarrassing failures. Like failing practice tests. And then times I have overcome obstacles and demonstrated incredible resilience. If I am being honest? Sometimes because progress is slow? I feel absolutely Retarded! LOL It feels like my brain is not absorbing the content I am reading. It’s incredibly frustrating. But you put the book down. And the next day at the same time? You begin studying again. It’s only a matter of weeks before I am able to officially say I conquered this latest stepping stone.

Militant discipline, I use? Is precise and plainly works. When you feel your unable to continue? You stop for a break. Then get back after it. And then you feel better. Because you begin to internalize the information and content your supposed to absorb. I do admit I have had to learn to forgive myself. A. Because I have had a Massive Head injury while serving in the Military. And B. Because my Metabolism Illness/Disability plays havoc on my Body and emotions at times. And this does cause my brain to have concentration issues on some days. But as one of my Veteran Brothers from the Army Ranger Special Operations community always tells me after a failed evolution? “Lets just Keep Rangering On Doc!” And thats the key to learning in life! Wether your learning as a Value Investor. Or as a Competent and Dangerous Investment Portfolio Fund Manger. This Discipline just makes you a Bad Ass in general. You just keep marching forward regardless of your repeated failures.

A Foundation of Conservative Investments

There have been many ups and downs during the 2023. Most people were afraid of full on Recession and others were very Greedy riding the never ending train of the Bull market. But when I began in January 2023 and opened a new Brokerage Account to build a new Experimental Value Portfolio, I was reading Seth Klarman’s famous book “Margin of Safety” just one more time. Because admittedly there is so much in his book that I learn something new as I go deeper into his Books Lessons. And I feel that can be said in life in general. We all start off from a place of sheer ignorance to finding which direction makes since. I must share I am not much of a Speculative Investor. I like to keep my foundation very Conservative when investing. So that is why the First Stock I bought in my portfolio was a Deep Value Real Estate Company “Howard Hughes”.

Buying Howard Hughes?

After doing a Deep Dive, and considering the Management and reading the Annual Report or 13k? This is a great company that is being discounted in the Market because of the fact it is a Real Estate Development company. All my research told me it’s going to be a great investment. Little did I know in later in February? Famous Investor Joel Greenblatt made the same call. And posted inside the Value Investors Club website, which I am a member of, that he too has taken a large position in this undervalued Company. After learning this? I knew I was on to something. I guess it does help that Bill Ackman is the Chairman of the Board. This was another deciding factor. 100%

Insight Enterprises

I have been a long time Investor in the Company Insight Enterprises. So it would seem nautural that I would add this incredible little IT company to my Portfolio’s foundation. The companies management are genuinely “Truly Fantastic!” and I revere the Brothers who started as Entrepreneurs and built this incredible Company. Fact. The continued value of this company speaks for itself. And I am pretty sure just like Berkshire Hathaway it will be foundation for many Investment Portfolios to IT Professionals Retirement Accounts. It’s just that damn good. The end.

Pershing Square Hedge Fund

Im pretty sure everyone knows by now “How much I admire Bill Ackman as a good man and community leader.” I was going through a very dark time when I watched Bill’s Father’s “Larry” Career Leadership Award Ceremony and listened to Bill and Larry talk about life as a Entrepreneur and more importantly. Larry’s entrepreneurial Journey as a Mortgage Broker in New York City. It really brought some direction to my Emotional turbulence as a Entrepreneur during that time. I was really going through just terrible things from my illness. Made me question my sanity and my direction as a Entrepreneur. But! Larry and Bill straightened me right out. And for the fact Bill has personally been very generous with me? Pershing Square was a Buy! I really did not care about the value. I just knew I had to Support Bill. I am glad I did. Bills Fund is a Value Investing Powerhouse this year. If I may leave you with one thought? Invest in the People you genuinely Adore as Mentors and Community Leaders. The good faith will always come back to do nothing but good things. Live by the Golden Rule.

Blackstone Group

Next on my list of Investments that I have been invested in for a few years is Blackstone Group. It’s abundantly clear Mr. Schwarzman and President Jon Gray and the Team are building a phenomenal Business. Even during the Interest Rates and Inflation Crisis early this year? It was clear Blackstone’s Portfolio was more than capable of handling the bumps in the road. I should add, Jon, and Mr. Joe Dowling has personally been very generous with me personally. So Blackstone? Was a no brainer. It must be in my new Portfolio. So I invested. I owe all these Guys on this Investment list Success. And I am gonna give it to them.

Palantir | Artificial Intelligence for the Future

Did you know when I was deep inside Politics I flew across the country and brought certain Community Leaders who are Running for US Congress to a small office in Washington D.C. that was Peter Theil’s Club for Growth PAC? It was a-lot of fun. And I thank the Club for Growth team for being very generous with me.I never spent much time with Mr. Peter Theil except one time at a conference about Tech and AI. And that was before I began my role as Club For Growths guy out in the field. LOL The only reason I bought Palantir for this Investment Portfolio is becuase I can see the good it it doing with AI. It’s a incredibly undervalued Company in the Tech/AI space. And Dr. Alex Karp and team are doing incredible work. I am certain the way this team is collecting contracts from Allied Governments this small investment will pay off very well during the next decade. It’s that simple. During the 3rd Fiscal Quarter Palantir earning were so good? The market rewarded the Company for it’s growth. If I can mention someone else I truly like is Joe Lonsdale. His views are no nonsense and are very close to my own. The fact that Joe, Peter, and Dr. Alex Karp teamed up for Palantir? Makes this company a winner.

Inverse ETF’s and X3 Leverage.

It’s only fair for me to share that on occasion I did experiment with certain speculative ETF’s that were x2 and x3 inverse levered on certain days. For the most part. I had mixed results. And although my results were more Positive than negative. More in depth? Meaning I did sustain 6 days of loss minimal loss during 2 months using this method of speculation. I won’t be using any of these ETF’s with inverse leverage moving forward. But I am grateful for the experience. Buffett was right. No need to use leverage.

During December we saw 15% growth in the Market

During December when the Market was off to the races and rising near Christmas, I felt it prudent to rebalance. My actions were more Defensive than speculative. The rising prices in the market just did not seem sustainable and felt a little overvalued. So I did implement some harvesting of Profits and Rebalanced this Conservative portfolio. I am glad I did. I am happy to report I did not lose anything by this action. And remained true to Gharam’s and Buffet’s rules of “Never lose money!”

Conclusion to 2023

The list of Value Investors who I feel have influenced me the most is growing yearly. But it’s a small group. All have taught me to share in a Annual Letter. So here I am. I would like to Thank, Warren Buffett, Li Liu, Tim C., Bill Ackman, Howard Marks, Guy Spier, Mohnish Pabrai, William Green, Rick Reider, Stanley Druckenmiller, Jon Templeton, Jim Rogers, Bill Gross, Lauren Templeton, and many more. Thank you for the lesson and teaching me a fantastic frame work of how to express myself and share a professional investment philosophy, to sharing the many business decisions I have made throughout the year.

Howard Marks has taught me much through his Annual Letters and Memo’s and interviews online. But there is one Quote that I feel sums up a direction for all of us while Investing during turbulent markets. And if you listen closely he is often heard sharing this quote again and again. During the 2008 financial crisis. When the world was burning. And everyone had thought that all is lost. Mr. Marks said a little qoute that is fitting for all of us during those times we feel uncertain in our investments. And that quote is?

“Keep Calm and Invest On!”.

If you are still reading. I think I know what your saying?.. “This guys writing sucks!” LoL Admittedly Yes. I am not the best writer. I apologize in advance if this is hideous and embarrassing writing. I am not the best at many things in life. I could probably use a professional writer to screen my posts and first annual letter. But since I am just a upstart? I am forced to just keep marching forward without a professional team to help me. So I do feel that does account for something.

I feel the same thing will apply to this years new Investment Portfolio. I am giving it my best! And in conclusion I would like to leave you with 2 thoughts. During 2023 there were many ups and downs. The market was hysterical at times. And was greedy at times. But I kept my focus and kept learning while doing deep dives on many companies. In the end my new personal Investment Portfolio did clear a healthy 19.9% Real Return after inflation. And if I include my other Portfolio? The Return rises for both Brokerage Accounts at just under 24.5% for the Year. That is a fact. If you would like to see the report images? I can email them to you directly.

If I can leave you with my last thought for this years Annual Letter? I would like to share a Post by Guy Spier. Guy shares. 2024: Begin. Just Begin. Put your pen to paper. Fire up that laptop. Put on the running shoes. Say that thing. Call that person. Write that note. Open that book. Just begin. The rest will be history. Thank you.

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, Index Investing, Investing, Value Investing

Index Investing is More Art Than Science

I am about to share some Value Investing information that will make your jaw drop. If your anything like myself and the gang of us on Twitter who are Value Investors? You are a Junkie for information so you can put your research to work for the purpose of outperforming your latest Investment Portfolio’s compounding unrealized gains. Today’s Post is special for Investment Professionals.

You know that S&P 500 Growth Index your about to invest in? It’s likely there is a better index option with higher returns. FACT! By the way THIS IS NOT A SALES PITCH. NOR INVESTMENT ADVICE.

Hear me out! Thank you. I would like to introduce a well known Investment Advisor who has focused his career on Institutional Investing in the North East, and for the last 10 years has lived and practiced in Tucson Arizona, I listen to his fantastic Podcast while I work at night driving around town listening to his Podcast, “Money for the rest of us“.

Mr. Stein has a gift explaining complex and sophisticated Financial Products, and Investing Topics that make it very easy to compute. Furthermore one of the Episodes he recorded recently was fundamentally explosive for me as a fellow Investor. He went on to explain that not all Index Investing is created equal. Now I do see this will begin to shift opinions with what I am about to share. But before I begin addressing the Questions you may have about this Morally Hazardous Claim. First I have to share why we came to this conclusion.

Data Mining Index Markets on to a Software Application

Mr. Stein and his small Investment Team and a few Software Developers and Architects of Digital Computer Programs recently released a secret project that details charts and tons of Data of Index’s across the globe in different Markets. They measured different ETF’s, Value Index’s, Growth Index’s, Growth ETF’s, ETN’s, Japan Index’s, UK Index’s, US S&P Index’s and tons more.

What did they find?

They found that not all Index Investing is the same. A very valid argument for Investment Advisers and Money Managers can be made that with this new DATA? The old practice of Value Investing is very much alive and out performing it’s counter part of Growth Funds. This post is general findings I heard on the podcast. However I suspect if you listen to the exact episode I listened to you will find it fascinating all the data and inflection points to that Index Investing is a Art not a Science. The following points of interest and listed topics will keep you on topic as you listen to Mr. J. David Stein share some incredible Data about “how to make your Index Research interesting? And how you should begin looking at data with his latest Software Application for Investing. This is what you will learn?

Index Providers divide the stock universe into large and small, growth and value.

The Difference Between the price to earnings ratio and earnings yield and which is better?

How earnings volatility can impact annual earnings growth and what to use to estimate future earnings?

How value stocks often grow earnings faster than growth stocks

How value has outperformed growth in the last three years?

Click the Photo below for Access to the Episode about Asset Camp and the Points and Topics shared above.

If your like me and would like to see these Data and Research Points? I would recommend sign up for the Data Suite Software for Investment Advisors and Sophisticated Professional Investors Asset Camp

Listen to the Episode with J. David Stein

https://moneyfortherestofus.com/443-surprising-stock-index-insights/

Thank you for reading, I am very happy to share this. You will learn a few amazing topics that make Value Investing hard to beat as a Investor.

Godspeed
JS

Investing

Math All Finance Professionals Should Master

Today’s Post will be a ongoing project that is focused on Math All Finance Professionals need to master. I feel I do need to share this next part. This Post is not meant to be a Mathematicians Whiteboard. Not the best written. Just the way I communicate. TIA.

This page is ongoing so please check back periodically for more math.

The First Calculation I would like to introduce is “Total Return”.

Total Return

Let’s complete a Formula on Total Return,

One Thousand shares of P&G are purchased at $32 dollars per share and Sold back into the Market at $28 dollars per share. A Cash dividend was paid to you the investor of $3 annually. What is your Total Return?

Take $32 – $28 = -4

Then we will take our -$4 and then add our Dividend of $3 which Equals = $1

Then We take our $1 and divide by / our original $32 which equals? = 0.03125

For Keeping things simple we also need to take our answer of 0.03125 and multiply by 100 for our answer.

Equals? = Negative -3.12% is our Total Return. ” You Lost Money”

Easy Enough? Good!

Current Yield

Current Yield is what you take Home vs. What you spent on the Bond Investment.

Let’s say you buy 1 one 8% Insight Corp. Corporate Debenture / Bond, it’s trading at 102. (YOU SHOULD KNOW ALL BOND’s START AT PAR. PAR=$1000 investment) So that means you spent $1000 on your bond.

The Bond is trading at 102 on the Secondary Market.

Your Annual Coupon (Annual Coupon = Yearly Payment for buying Bond) is $80.

Annual Coupon 80 then we divide by our 102 (102 = PAR plus 20: 1020) 1020.

Our Current Yield is?

80/1020 = (7.8%)current yield

SHARPE RATIO

Named after American economist, William Sharpe, the Sharpe Ratio (or Sharpe Index or Modified Sharpe Ratio) is commonly used to gauge the performance of an investment by adjusting for its risk.

The higher the ratio, the greater the investment return relative to the amount of risk taken, and thus, the better the investment. The ratio can be used to evaluate a single stock or investment, or an entire portfolio.

Sharpe Ratio Formula

Sharpe Ratio = (Rx – Rf) / StdDev Rx

Where:

Rx = Expected portfolio return
Rf = Risk-free rate of return
StdDev Rx = Standard deviation of portfolio return (or, volatility)

To Be Continued…..JS

Investing, Investment Adviser Arizona

Pooled Investments: What you need to know?

Today’s post will be fairly quick about Pooled Investments, Unit Investment Trusts “UIT’s”, Open End Funds, Closed End Funds, thier Management companies, ETF’s Exchange Traded Funds and REIT’s.

On my road to obtaining my Series 65 Investment Advisors License I have been learning and polishing my skills within Investment Funds. Today’s post is a quick need to know for Investors who have been curious and have been search for more detailed information about Pooled Investments? What are their uses, and how they work and more? Today’s post is what you have been searching for!

Unit Investment Trusts

In U.S. financial law, a unit investment trust is an investment product offering a fixed portfolio of securities having a definite life. Unlike open-end and closed-end investment companies, a UIT has no board of directors. A unit investment trust UIT is one of three basic types of investment companies. The other two types are open-end funds (usually mutual funds) and closed-end funds. Exchange-traded funds (ETFs) are generally structured as open-end funds, but can also be structured as UITs.

Open End Funds

Open End Funds are usually recognized as “Mutual Funds” and used as Pooled Investments. According to the SEC Website:

Mutual funds generally sell and purchase their shares on a continuous basis, although some funds will stop selling when, for example, they reach a certain level of assets under management.
Investors purchase shares in the mutual fund from the fund itself, or through a broker for the fund. Investors cannot purchase the shares from other investors on a secondary market, such as the New York Stock Exchange or Nasdaq Stock Market. The price that investors pay for mutual fund shares is the fund’s current net asset value (NAV) per share plus any fees that the fund may charge at purchase, such as sales charges or loads.
Mutual fund shares are redeemable. This means that when mutual fund investors want to sell their fund shares, they sell them back to the fund or to a broker acting for the fund. Investors sell their shares at the current NAV per share, minus any fees the fund may charge at redemption, such as deferred sales loads or redemption fees.
Mutual funds are registered with the SEC and subject to SEC regulation. In addition, the investment portfolios of mutual funds typically are managed by separate entities known as investment advisers that are also registered with the SEC.

Mutual Funds are also SEC Registered Securities and traded on the Open Primary Stock Market.

Closed End Fund

Closed End Funds are also known as Closed End Investment Management Companies like Blackstone, Morgan Stanley, Vanguard typically offer their funds to Accredited Investors and Institutional Investors. According to the SEC Website:

There are many varieties of closed-end funds. Each may have different investment objectives, strategies, and investment portfolios. They also can be subject to different risks, volatility, and fees and expenses. Fees reduce returns on fund investments and are an important factor that investors should consider when buying shares.

Exchange Traded Funds ETF’s

The SEC Investor Website classifies ETF’s as

Exchange-traded funds (ETFs) are SEC-registered investment companies that offer investors a way to pool their money in a fund that invests in stocks, bonds, or other assets. In return, investors receive an interest in the fund. Most ETFs are professionally managed by SEC-registered investment advisers.

Some ETFs are passively-managed funds that seek to achieve the same return as a particular market index (often called index funds), while others are actively managed funds that buy or sell investments consistent with a stated investment objective.

ETFs are not mutual funds. But, they combine features of a mutual fund, which can only be purchased or redeemed at the end of each trading day at its NAV per share, with the ability to trade throughout the day on a national securities exchange at market prices. Before investing in an ETF, you should read its summary prospectus and its full prospectus, which provide detailed information on the ETF’s investment objective, principal investment strategies, risks, costs, and historical performance (if any).

REAL ESTATE INVESTMENT TRUSTS or REIT’s

REIT’s are also pooled investments. Real Estate Investment Trusts are a “EQUITY SECURITY” and the Shares are whole shares and never fractional shares. However REIT’s are not classified like Mutual Funds. As the Investors of REIT’s typically only receive “INCOME” from their investment in the form of Rent and Mortgage Income. REIT’s are traded in the Open Stock Markets. That Tax is attractive to most and REIT’s usually have low management fee’s since they are Passively managed Assets.

Pooled Investments are all required to offer investors access to a Prospectus. And Pooled Investments are Regulated under the Securities Act of 1933 and the following Securities Act of 1934. Some are Private Investments and some are Initial Public Offerings. However this post today will not dive deeper into these topics. Later on I will writer more about IPO’s and Private Placement Memorandums and more. Stay tuned I will also be “NET ASSET VALUE” the formula to calculate Net Asset Value per share and more.

Becoming a Investment Advisor Arizona & Kansas City

I do hope you learned a little today by reading up on Pooled Investments, I am working hard towards obtaining my Series 65 NASAA Investment Advisors License and feel it’s my duty to educate other Investors and qualified individuals about the different investment opportunities out in the market place.

Thanks for stopping by and reading some of my required Investment Advisor Information I must digest. Godspeed.
JS

Business Articles

FINRA Series 65 Exam Registered Investment Advisor

It’s time for me to go get the FINRA Series 65 Registered Investment Advisors Exam out of the way. Im all in.

It’s Sunday July 31st 6am, Have you seen the incredible fall in the Markets? Are we in a recession or are we not in a recession? It seems the current Administration that decides Fiscal Policy is unable to agree. I genuinely hope you are capitalizing on the correction in the markets as we continue to spiral into a recession.

Goals Keep The Talented, Strong & Courageous Seeking Excellence

Interestingly Ive decided since I find myself devouring content and books about the Series 65 Exam? And after looking at the challenge and rewards? Its time I take the initiative and have the courage to prove to the awesome Mr. Marty Bicknell CEO of Mariner Capital Management. That I can crush the the Series 65 Exam. Becoming a licensed and registered Investment Advisor Representative like himself. Marty is the leader of a very special Financial Services Firm in Overland Park, Kansas.

The really interesting thing about Marty Bicknell and Partner Cheryl Bicknell? They are Entrepreneurs like myself who Consolidated the Money Management sector. I genuinely admire their Grit and Commitment to their mission. They have made a name for themselves. And that track record is impressive.

You find that those who have passed the Series 65 are a cut above most entrepreneurs and this adds a level of sophistication and professionalism that Investors take seriously. It can do nothing except improve my life at this time.

What is the Series 65 Exam?

According to Kaplan Financial,

The Series 65 license, known as the Uniform Investment Adviser Law Examination, qualifies individuals to provide investing and general financial advice to clients. Passing the Series 65 exam qualifies individuals as Investment Advisor Representatives (IARs).

Obtaining the Series 65 license is important for representatives who provide advice on ERISA-regulated retirement accounts.

Why I decided to add Investment Advisor to my list of Qualifications?

Along my journey of Mergers and Acquisitions, and also learning to become a detailed oriented Value Investor like Warren Buffett and building a track record of positive 39.1 % in annual growth. I find myself being asked questions about Investing and money by many Tradesman like Roofing Contractors, Electricians, and even many White Collar Professionals.

“How should we invest for the Future? And “How can I grow my money?”

All incredibly important questions. Legally I am disqualified and unable to provide Investment Advice for Payment without first passing the Series 65 exam and registering with the State and SEC. But first we need to do a bit of educating and bringing you up to speed about Financial Literacy.

I have found 95% of Americans have absolutely no clue what I am talking about when I get in the details of Corporate Finance, and financial strategies inside Investing? It’s like I am talking Greek. But Good News. I find it very interesting to sit and listen to peoples financial plans and futures. That develops into some very interesting Coffee Talk. It’s incredibly clear underperforming assets are on the mind of Investors and Wealth Mangers alike.

Since these Professionals are calling on me and asking for direction to serve them on future investments or ideas? I find, I might as well make myself useful in the name of Community Service and take the Series 65 Exam and build a Financial Services Firm or business from my growing experiences in Investing, and Corporate Finance. In all honesty? I could always use the cash to fund Community service Projects as a Non Profit. Or grow my own Investment Fund. Which is the goal.

A Registered Investment Advisor is your Strategic Investment Partner and Financial Services Firm Professionals

Wealth Management

When we look at the growing opportunities within the Credit Markets, S&P Index Funds, or New York Stock Exchange? We see lots of opportunities for Professionals to invest and leverage the growth for their Retirement options. After all strategically investing to receive a Monthly Payment from a Mutual Fund, or Customized Strategic Investment is very smart.

More individuals, Professional Tradesman like Electricians, Contractors, Professional Basketball Players, Baseball, Football, and even Attorneys who can start preparing accounts that can grow organically from the Stock Markets rise and fall. It’s important to point out and zero in on this point. If you are having doubts about investing in the Stock Market? You absolutely SHOULD!!! For to long Asset Management Firms have become so large and lazy the just do not care about maximizing the investments they hold for you.

However with a personable trustworthy relationship with Investment Advisor Representative managing your families wealth or strategically investing assets? You will have an edge when Investing. You have your own personal customized investment professional who can use experience and strategy to build a future of Portfolio Earnings and Gains without suffocating tax penalties that follow most investments. Investing in a private placement fund or strategically investing in a Index is an idea many add to a strategic portfolio. But before I am able to elaborate? I must first pass the Series 65 to have these conversations and establish a professional relationship with anyone.

When your thinking about your future? You need to know what are some of the choices you have for investing. This short list is some of the most common investment vehicles Registered Investment Advisors use to grow your principle investment.

Types of Investments

Stocks.
Bonds.
Mutual Funds and ETFs.
Bank Products.
Options.
Annuities.
Retirement.
Saving for Education.

In conclusion? Many people I have talked to who have passed the Series 65 Exam tell me “It’s difficult! And I barely passed.” All things considered? I do not work for a Financial Services Firm. Which makes the reason I want to take the test all that much more interesting. I want to pass this test because Id like the opportunity to expand my professional skills. And serve the community professionally. Yes I am a Entrepreneur. However I feel I have alot to give. And getting this test out of the way? Does create more opportunities for me as a entrepreneur and as a servant to the community. I plan on taking the test ASAP. And before the FALL. The sooner the Better.

Being passionate about Finance and Investing is an advantage. I plan on using my Geeky curiosity to benefit my Family, Friends, and Community and build a business along the way. Thank you for reading. Im absolutely positive I will have fantastic news to report very soon from taking the FINRA Registered Investment Advisor Series 65 Exam.

Godspeed.