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jerryking : prospectuses   6

How to funnel capital to the American heartland
April 15, 2019 | Financial Times | by Bruce Katz.
* The Innovation Blind Spot, by Ross Baird.
* Ways must be found to rewire money flows in order to reverse the export of wealth
* A federal tax incentive intended to entice coastal capital into the heartland may end up helping to keep local capital local.

Over the past year, economically distressed communities across the US have been engaged in an intense discussion about mobilising private capital. Why? As mayors, governors, real estate developers, entrepreneurs and investors have learnt, buried in the 2017 Tax Cuts and Jobs Act was a provision that created a significant tax incentive to invest in low-income “opportunity zones” across the country......the law’s greatest effect, ironically, has been to unveil a treasure trove of wealth in communities throughout the nation. Some of the country’s largest investors are high-net-worth families in Kansas City, Missouri, and Philadelphia; insurance companies in Erie, Pennsylvania, and Milwaukee; universities in Birmingham, Alabama, and South Bend, Indiana; philanthropists in Cleveland and Detroit; and community foundations and pension funds in every state.

These pillars of wealth mostly invest their market-oriented equity capital outside their own communities, even though their own locales often possess globally significant research institutions, advanced industry companies, grand historic city centres and distinctive ecosystems of entrepreneurs. The wealth-export industry is not a natural phenomenon; it has been led and facilitated by a sophisticated network of wealth management companies, private equity firms, family offices and financial institutions that have narrow definitions of where and in what to invest.

The US, in other words, doesn’t have a capital problem; it has an organisational problem. So how can capital flows be rewired to reverse the export of wealth?

Three things stand out:

(1) Information matters. The opportunity zones incentive has encouraged US cities to create investment prospectuses to promote the competitive assets of their low-income communities and highlight projects that are investor-ready and promise competitive returns.

(2) norms and networks matter. The opportunity zone market will be enhanced by the creation of “capital stacks” that enable the financing of community products such as workforce housing, commercial real estate, small businesses (and minority-owned businesses in particular) and clean energy, to name just a few. Initial opportunity zone projects are already showing creative blends of public, private and civic capital that mix debt, subsidy and equity.

(3) institutions matter. Opportunity zones require cities to create and capitalise new institutions that can deploy capital at scale in sustained ways. Some models already exist. The Cincinnati Center City Development Corporation, backed by patient capital from Procter & Gamble, has driven the regeneration of the Over-the-Rhine neighbourhood during the past 15 years.

More institutional innovation, however, is needed. As Ross Baird, author of The Innovation Blind Spot, has argued, the US must create a new generation of community quarterbacks to provide budding entrepreneurs with business planning and mentoring, matching them with risk-tolerant equity. These efforts will succeed if they unleash the synergies that flow naturally from urban density. New institutions will not have to work alone, but hand-in-glove with the trusted financial firms that manage this locally-generated wealth.
books  capital_flows  cities  coastal_elites  community  economic_development  economically_disadvantaged  economies_of_scale  high_net_worth  howto  industrial_policies  industrial_midwest  industrial_zones  institutions  investors  match-making  midwest  municipalities  networks  network_density  P&G  PPP  packaging  place-based  private_equity  property_development  prospectuses  Red_States  rescue_investing  rust_belt  tax_codes  venture_capital 
april 2019 by jerryking
What You Need to Know to Pick an IPO
April 7, 2019 | WSJ | By Andy Kessler.
Dig up dirt on the competition and board members, and buy to hold long-term.......How do you know which IPOs to buy? No, not to trade—you’d never get it right. Lyft priced at $72, traded at $85 on its first day, then closed at $78, only to fall to $67 on its second day. It’s now $74. I’m talking about buying and holding for a few years. Yes I know, how quaint.

The trick is to read the prospectus. What are you, crazy? That’s a couple hundred pages. Well, not the whole thing. But remember, where the stock trades on its first day is noise....... So understanding long-term prospects are critical. Here are a few shortcuts.

(1) First, glance at the underwriters along the bottom of the cover. On the top line are the banks putting their reputation on the line. If the one on the far left is Goldman Sachs , Morgan Stanley or JPMorgan , you’re probably OK.
(2) open the management section and study the directors. Forget the venture capitalists or strategic partners with board seats—they have their own agendas. Non-employee directors are the ones who are supposed to be representing you, the public investor. And their value depends on their experience.
(3) OK, now figure out what the company does. You can watch the roadshow video, look at prospectus pictures, and skim the offering’s Business section. Now ignore most of that. Underwriters are often terrible at positioning companies to the market.......when positioning companies, only three things matter: a monster market; an unfair competitive advantage like patents, algorithms or a network effect; and a business model to leverage that advantage. Look for those. If you can’t find them, pass. Commodities crumble........read the Management’s Discussion and Analysis. Companies are forced to give detailed descriptions of each of their sectors and products or services. Then flip back and forth to the Financials, looking at the items on the income statement and matching them up with the operations being discussed. Figure out what the company might look like in five years. And use my “10x” rule: Lyft is worth $25 billion—can they make $2.5 billion after-tax someday? Finally there’s the Risk section, which is mostly boilerplate but can contain good dirt on competition.
(4) Put the prospectus away and save it as a souvenir. Try to figure out the real story of the company. Do some digging.
(5) My final advice: Never, ever put in a market order for shares on the first day of an IPO.
10x  advice  algorithms  Andy_Kessler  boards_&_directors_&_governance  business_models  competitive_advantage  deception  due_diligence  howto  IPOs  large_markets  long-term  Lyft  network_effects  noise  patents  positioning  prospectuses  risks  stock_picking  think_threes  Uber  underwriting  unfair_advantages 
april 2019 by jerryking
Incognito
October 2003 | Report on Business Magazine | by Doug Steiner.

"...He always seemed a step ahead, and he did it by working harder, thinking harder and trading harder—and in ways that the competition couldn't quite grasp."

Steiner's 10 rules for making serious money:

1. Economists say investing is a zero-sum game It isn't. Money moves to smart hands quickly, and lazy investors pay a price. Tiger Woods became the been golfer by practising a lot. How many prospectuses have you read in bed after the news?
2. Really good investors rarely crow. If there is $5 to be made from a trade, there will be loss than $2.50 after you've blabbed about how smart you are. There are traders who quietly take home $10 million a year. They live beside you in a modest house and drive a beat-up Nissan.
3. The best follow rules and they‘re patient. They may not invest for months. One great trader I know wanted to buy a house in a fancy neighbourhood. He spent more than a week in the registry office on his vacation, searching the title on each property in the neighbourhood to find what buyers paid and how much of that was mortgaged, going back 20 wars. He got a good deal. He does the same amount of homework investing.
4. Sharp traders never add to losing positions. Too many headaches.
5. Smart investors. when puzzled about when to sell. wonder if they should buy more. If they don’t think they should buy more,they sell.
6. The most information wins. If you like a company, phone some people who work there. Apply for a job. Try their products. Phone the shipping dock to find out if they're busy.
7. Get a Bloomberg terminal. Bloombergs have more information in them than you can use, but smart people use a lot of it.
8. Following really smart traders around the market is hard. Most have more money to invest in a position than the arbitrage or opportunity can handle. They leave few tracks.
9. Great investors an: like great athletes—they see opportunities that others don’t. Often you don't realize that what they've made the most money on is even fungible.
10. If you can't do it yourself, find someone who likes the foldouts in annual reports more than anything. Their management fees are usually worth it. And they usually don't have slick marketing brochures.
absorptive_capacity  arbitrage  Bay_Street  Bloomberg  dedication  Doug_Steiner  hard_work  hedge_funds  humility  idea_generation  investment_advice  investing  investors  money_management  obscurity  opportunities  overlooked_opportunities  patience  perception  primary_field_research  prospectuses  rules_of_the_game  self-discipline  sleuthing  slight_edge  smart_people  traders  training  unfair_advantages  zero-sum_games 
december 2013 by jerryking
Meet Bay St.'s new breed of deal makers
April 4, 2007 | G&M pg. B10 | by Jacquie McNish.

Days after Ottawa's Halloween clampdown on income trusts, a team of Bay Street dealmakers flew to New York to alert a handful of private equity funds to potential Canadian trust takeovers.

Investment bankers pitch deals to ravenous private equity buyers all the time, but this group was unique because they were lawyers.

Canadian firms can no longer be complacent about private equity deals. As traditional Canadian corporate clients fall on the takeover battleground, Canada’s major firms are moving quickly to grab their share of private equity deals.

Some law firms are wooing private equity funds by aggressively promoting deals, while most are starting to share risks by taking fee cuts on unsuccessful takeovers and pocketing fee premiums on deal victories.

A few are so eager to represent the powerful acquirers that a single firm will act for multiple buyers vying for the same target.

The deal frenzy is shifting legal M&A away from long-term relationships to a more transaction-oriented practice that is seeing firms hop in and out of deals with an ever-changing group of buyers and sellers.

Stephen Donovan, co-head of Torys’ Private Equity Group, adds, "It is no longer enough to just know the law. There is a much more deliberate effort to bring deals to clients."
deal-making  dealmakers  lawyers  law_firms  Bay_Street  private_equity  prospectuses  complacency  crossborder  M&A  risk-sharing  transactions  relationships  transactional_relationships  rescue_investing  pitches  proactivity  entrepreneurial  opportunistic 
january 2013 by jerryking
Facing Budget Gaps, Cities Sell Parking, Airports, Zoos, Other Assets - WSJ.com
AUGUST 23, 2010 | Wall Street Journal | By IANTHE JEANNE DUGAN.

The privatization trend is being spurred by a cottage industry of consultants, lawyers and bankers. Allen & Overy, a New York law firm, dubs it "rescue investing" and recently provided investors a booklet on "jurisdictions of opportunity"—municipalities whose laws, budget woes and credit ratings make them most likely to make deals [jk: unexploited_resources ].

"More public-private partnerships for public infrastructure in the U.S. have reached commercial and financial close than during any comparable period in U.S. history," the booklet says.
airports  assets  austerity  cities  cottage_industries  cutbacks  deal-making  dealmakers  divestitures  entrepreneurial  fallen_angels  infrastructure  investors  law_firms  lawyers  municipalities  opportunities  opportunistic  parking_lots  pitches  PPP  privatization  prospectuses  rescue_investing  unexploited_resources  vulture_investing 
august 2010 by jerryking
reportonbusiness.com: Gimme much more
April 25, 2008 G&M column by DOUG STEINER

We all want more information about everything. Yet we often can't get the precious data we need to make good financial decisions, or we don't bother. ...."ANALYZE BEFORE YOU INVEST." We agreed that we didn't heed that advice often enough. But to ABYI, you need hard data, and few companies have ever been eager to disclose it......In 1930's Ontario, companies were only required to table their financial results at their annual meeting, so managers held the meeting in an out-of-the-way place. In 1945, the Ontario Securities Act finally required any company selling shares to the public to provide full and plain disclosure of key financial information in its prospectus.

It wasn't until 1958 that Ontario required companies to file prompt reports of any "material change" in their business. Insider trading on the basis of information not available to the public wasn't outlawed until 1966.....regulators only enforce rules or draw up new ones after problems arise. To act pre-emptively would be hellishly unproductive, and might prompt companies and capital markets to move elsewhere........Better disclosure can help both investors and executives....Even without disclosure rules, you can dig up lots of information about the executives of companies in your portfolio. Last year, U.S. academics David Yermack and Crocker Liu published a study that compared the size and prices of houses bought by CEOs with their companies' share prices. The duo used the excellent U.S. real estate site Zillow.com and other public sources to gather data. On average, the bigger and pricier the home purchased, the worse the subsequent share price performance.

I like to invest in companies where I know the senior managers, and I'm lucky to know many of them. In some cases, much of the information about their character appears in the media. I prefer executives who don't have big photos in their offices of themselves with politicians and other notables. I like CEOs who drive older cars, work all the time and have no hobbies. Boring, focused and cheap.
data  Doug_Steiner  disclosure  '30s  insider_trading  CEOs  mundane  prospectuses  cost-consciousness  focus  unglamorous  boring  investors 
february 2009 by jerryking

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