You might notice some small changes on the right sidebar. (Like there is a left one! Sorry, it has been a long week.) I plan to eventually add an entry to the More Sites section for each blog which appears as a recommendation here. I'm looking at some other minor changes as well, but there won't (shouldn't?) be anything to be alarmed by. Just doing a bit of pruning. I want to make this a blog I would visit all the time, because that's why I originally started doing this.
In the near future, look for a new net worth update, and some other hopefully tasty morsels.
Until next time...
Tuesday, April 10, 2007
Monday, April 09, 2007
Grain Market Bounce
I found a pair of articles at Bloomberg and the WSJ (here and here [sub req'd]) dealing with corn. The WSJ bit is about rising food prices worldwide due to the demand for biofuels (mostly corn based in the US) as a result of rising oil prices. The Bloomberg piece is talking about the recent price declines in the corn market.
Whom to believe.
All I can say at this point that there is still no saving my wheat options. Unless we continue seeing price action like this daily through the end of the week, its a lost cause. This is the price of being too early. As all that farmland gets converted to corn growing, its going to squeeze out wheat and eventually you'll start seeing prices on other grains heading higher (again) too. Unfortunately, I won't be riding that move. I'll just close out my account and call it a learning experience. Once I have some time in the future, I can come back to the commodities markets and really learn how to trade in them. But not now.
There's always the software business. Right?
Until next time...
Whom to believe.
All I can say at this point that there is still no saving my wheat options. Unless we continue seeing price action like this daily through the end of the week, its a lost cause. This is the price of being too early. As all that farmland gets converted to corn growing, its going to squeeze out wheat and eventually you'll start seeing prices on other grains heading higher (again) too. Unfortunately, I won't be riding that move. I'll just close out my account and call it a learning experience. Once I have some time in the future, I can come back to the commodities markets and really learn how to trade in them. But not now.
There's always the software business. Right?
Until next time...
Saturday, April 07, 2007
AHM Cuts Quarterly and Annual Forecasts
A funny thing happened on the way to buy some shares in American Home Mortgage - they reduced their quarterly and annual earnings forecasts AND cut their quarterly dividend to $0.70 from $1.12. See here and here (WSJ sub req'd).
AHM is the company that most of the financing for my real estate ventures has been with. They are the company I am looking at structuring my first independent deal with. Along with my partners, we plan to use one of their programs for another house in Baltimore. Now, this may not necessarily be a problem in and of itself, from the RE investor perspective, but it is worth keeping an eye on. As for picking up some shares with the proceeds of my XLP sale, we'll have to see how that goes. Looks like gold may be moving back to the top of the list after all.
The dividend is the really upsetting part, only because of the yield. The yield on AHM has been sick. I'm glad I didn't go rushing into the stock the other day. I see a better entry point on this stock in the future. The entire situation is made even funnier by the fact that XLP has been going up fairly consistently since I sold. Guess I was bit early on that one, but I'd rather have the cash now, as I expect opportunities to deploy that cash in the not-too-distant future.
Until next time...
AHM is the company that most of the financing for my real estate ventures has been with. They are the company I am looking at structuring my first independent deal with. Along with my partners, we plan to use one of their programs for another house in Baltimore. Now, this may not necessarily be a problem in and of itself, from the RE investor perspective, but it is worth keeping an eye on. As for picking up some shares with the proceeds of my XLP sale, we'll have to see how that goes. Looks like gold may be moving back to the top of the list after all.
The dividend is the really upsetting part, only because of the yield. The yield on AHM has been sick. I'm glad I didn't go rushing into the stock the other day. I see a better entry point on this stock in the future. The entire situation is made even funnier by the fact that XLP has been going up fairly consistently since I sold. Guess I was bit early on that one, but I'd rather have the cash now, as I expect opportunities to deploy that cash in the not-too-distant future.
Until next time...
Wednesday, April 04, 2007
Ken Griffin profile at the NY Times
Today's NY Times has a nice piece about Ken Griffin of Citadel Investment Group. A quick yet awesome read! Just the wake up I needed.
Tuesday, April 03, 2007
Latest News
I'm not sure I brought this up, since so much has happened recently, but I finally filed the papers for my personal LLC. This will be the vehicle for my personal real estate investments, as some things just don't fit within the partnership. Right now I'm working on acquiring a portfolio, or pieces of a portfolio, of properties in the Prince George's and Montgomery counties in Maryland. We'll see how that works out. I'm just taking it slowly right now, so there hasn't been any movement to speak of. Hopefully tonight I'll be able to work on the EIN application so I can get the first bank account opened by week's end. There's an out of state project coming up that I want to be prepared to move on. Even if that rehab doesn't work out, I anticipate that there will be others very shortly.
I just called my commodity futures broker today and found that my guy, who initially solicited me, has left the INDUSTRY! Fugg me! Guess all those bogus wheat trades finally got to him, never mind what they did to his clients. Well, there will be more losses to push forward for tax time in the future, then I'll close that account. It just takes too much time to manage that with all the stuff I have going on. That will just be one less area I need to devote attention too, so I'm not too mad. It won't have extensive impact on my overall financial situation. It was an interesting experiment with money I would have preferred not to lose but that isn't hurting me for being gone.
I liquidated my XLP holdings on Monday. I wanted to have some cash on hand for other things, either some options or small stock plays. Right now, I'll just sit and wait until something interesting comes along. The consumer staples weren't doing a whole lot, mostly because of Wal-Mart I imagine. It was good for a small gain, taxable at 15% for long term capital gains. Maybe I'll add some gold to the portfolio. Now I just have to complete the equity options application already.
I don't think I have any more expenses which I can cut back on. My USENIX+SAGE membership expires in August and I don't see a renewal in my future. I'm going to simplify my financial life to its barest essence. I keep poring over my spreadsheet looking for every expendable expense, or areas in which I can reduce my committed capital. My net worth is on the cusp of 6 figures; now I just need to drag it over the line and keep it there.
In the middle of all of this, I had the realization (again) that the biggest impediment to getting rich is my J.O.B. Dammit!
Until next time, gentle readers...
I just called my commodity futures broker today and found that my guy, who initially solicited me, has left the INDUSTRY! Fugg me! Guess all those bogus wheat trades finally got to him, never mind what they did to his clients. Well, there will be more losses to push forward for tax time in the future, then I'll close that account. It just takes too much time to manage that with all the stuff I have going on. That will just be one less area I need to devote attention too, so I'm not too mad. It won't have extensive impact on my overall financial situation. It was an interesting experiment with money I would have preferred not to lose but that isn't hurting me for being gone.
I liquidated my XLP holdings on Monday. I wanted to have some cash on hand for other things, either some options or small stock plays. Right now, I'll just sit and wait until something interesting comes along. The consumer staples weren't doing a whole lot, mostly because of Wal-Mart I imagine. It was good for a small gain, taxable at 15% for long term capital gains. Maybe I'll add some gold to the portfolio. Now I just have to complete the equity options application already.
I don't think I have any more expenses which I can cut back on. My USENIX+SAGE membership expires in August and I don't see a renewal in my future. I'm going to simplify my financial life to its barest essence. I keep poring over my spreadsheet looking for every expendable expense, or areas in which I can reduce my committed capital. My net worth is on the cusp of 6 figures; now I just need to drag it over the line and keep it there.
In the middle of all of this, I had the realization (again) that the biggest impediment to getting rich is my J.O.B. Dammit!
Until next time, gentle readers...
Saturday, March 31, 2007
I'm Back
Now that my vacation is over, I'll be working on getting back to a regular schedule. At least, until my next trip. If all works out, I'll be able to jump with a band for St. Thomas Carnival in a few weeks. I'll keep you posted.
I also plan to work on some changes to the overall blog format. Not of posts, per se, but layouts and some of the information in the margins. Just stay tuned as I start implementing those changes. We'll see how it goes.
Until next time...
I also plan to work on some changes to the overall blog format. Not of posts, per se, but layouts and some of the information in the margins. Just stay tuned as I start implementing those changes. We'll see how it goes.
Until next time...
Wednesday, March 28, 2007
Janus' Modern Portfolio Construction
Over at All About Alpha there is a recent piece on Janus' Modern Portfolio Construction (MPC). Its an interesting take on portfolio construction, and the article is worth a read. I don't know, but when I read about a "Tactical" bucket, I think beyond just ETFs and the other vehicles mentioned. Maybe that's just due to personal experience, and Janus does have a typical investment company mandate focused on long-only investing. I'm not sure how ETFs, equity options, commodities futures/options, etc. would play in this MPC world. Anyway, its an interesting piece from the always informative All About Alpha and worth checking out.
Until next time...
Until next time...
Private equity conglomerates and the focus problem
How did this one get so big?
I'm not trying to debate this point. It seems pretty clear that conglomerate is the most accurate description for the top tier PE firms. So where do they go from here?
I've argued for some time that the PE model won't translate well into the technology world, as most of my readers know. The biggest reason for this failure, in my opinion, is precisely the type of generalized corporate management that conglom...I mean private equity firms...are best at.
Small and focused is the order of the day. Now, small may be a relative term. It may 500, 5000 or 50000 employees depending on the business in which the enterprise operates. What is most important is that enterprise is well adapted to its particular purpose, without the distractions of other disparate, or even tangential, business activities. Generalized management techniques are not designed to address these problems. Are Steve Schwarzman, Henry Kravis or Leon Black really going to roll up their sleeves and get into the nuts and bolts of why one of the tech firms in their portfolio isn't performing to plan? Are David Bonderman and Steve S. really going to delve into the operational benefits and pitfalls of upgrading process technology at a Freescale fab, or whether the fab should be shutdown? Do they have the background to provide leadership in this area? I doubt they do.
(Don't misunderstand. No disrespect is intended. But let's be friggin' real here! You know I'm right.)
Let's not even get into the leverage issues and LIPOs and the potentially (ultimately?) crippling effect they will have on many of the acquired firms. (The WSJ appears to think Leon Black is the king of the LIPO. Subscription req'd.)
From a pure management standpoint, enterprises need to be slimming down and focusing their operations squarely on performance in their core businesses. This is not the game of a conglomerate; by definition, conglomerates are about scale and the (perceived?) efficiencies it grants. (An oversimplification, I know, but humor me.) This slimming is exactly the reason that Motorola shed the Freescale business - because it sucked up resources from MOT's chosen core businesses.
Weren't the original conglomerates discredited, GE notwithstanding? How many non-PE conglomerates are there anymore? Not as many as there used to be - GE, Textron, Berkshire Hathaway and Tyco? (The latter being gripped in death throes as it tears itself into its 3 constituent parts.)
So anyway, from my (admittedly limited) vantage point, it seems that the trend is toward smaller, more efficient and less diversified enterprises. I'm all for this. More employers serving more people - consumers, other businesses, government, whomever requires those specialized services. Financial engineering, in and of itself, is not a strategy for growth. Yes, there will always be mergers, divestitures, spin-offs, leveraged recaps, and all manner of other operations. However, they should serve the interests of the enterprise and its stakeholders - the customers, the employees, the shareholders and even the creditors.
Then again, I guess, in a PE transaction, a LIPO does *exactly* that, doesn't it? At least for the shareholders.
*sigh*
I'm not trying to debate this point. It seems pretty clear that conglomerate is the most accurate description for the top tier PE firms. So where do they go from here?
I've argued for some time that the PE model won't translate well into the technology world, as most of my readers know. The biggest reason for this failure, in my opinion, is precisely the type of generalized corporate management that conglom...I mean private equity firms...are best at.
Small and focused is the order of the day. Now, small may be a relative term. It may 500, 5000 or 50000 employees depending on the business in which the enterprise operates. What is most important is that enterprise is well adapted to its particular purpose, without the distractions of other disparate, or even tangential, business activities. Generalized management techniques are not designed to address these problems. Are Steve Schwarzman, Henry Kravis or Leon Black really going to roll up their sleeves and get into the nuts and bolts of why one of the tech firms in their portfolio isn't performing to plan? Are David Bonderman and Steve S. really going to delve into the operational benefits and pitfalls of upgrading process technology at a Freescale fab, or whether the fab should be shutdown? Do they have the background to provide leadership in this area? I doubt they do.
(Don't misunderstand. No disrespect is intended. But let's be friggin' real here! You know I'm right.)
Let's not even get into the leverage issues and LIPOs and the potentially (ultimately?) crippling effect they will have on many of the acquired firms. (The WSJ appears to think Leon Black is the king of the LIPO. Subscription req'd.)
From a pure management standpoint, enterprises need to be slimming down and focusing their operations squarely on performance in their core businesses. This is not the game of a conglomerate; by definition, conglomerates are about scale and the (perceived?) efficiencies it grants. (An oversimplification, I know, but humor me.) This slimming is exactly the reason that Motorola shed the Freescale business - because it sucked up resources from MOT's chosen core businesses.
Weren't the original conglomerates discredited, GE notwithstanding? How many non-PE conglomerates are there anymore? Not as many as there used to be - GE, Textron, Berkshire Hathaway and Tyco? (The latter being gripped in death throes as it tears itself into its 3 constituent parts.)
So anyway, from my (admittedly limited) vantage point, it seems that the trend is toward smaller, more efficient and less diversified enterprises. I'm all for this. More employers serving more people - consumers, other businesses, government, whomever requires those specialized services. Financial engineering, in and of itself, is not a strategy for growth. Yes, there will always be mergers, divestitures, spin-offs, leveraged recaps, and all manner of other operations. However, they should serve the interests of the enterprise and its stakeholders - the customers, the employees, the shareholders and even the creditors.
Then again, I guess, in a PE transaction, a LIPO does *exactly* that, doesn't it? At least for the shareholders.
*sigh*
Blog Recommendation - Baltimore Housing Blog
This is another one of my must read blogs, given that all of my RE investing efforts are targeted in Baltimore, MD at the moment. I consider this blog to be the 5000 foot level of observation. The writer, Nikki, has some very insightful analysis, although not all of it is directed at Baltimore. (She covers the Baltimore metro area in great detail.) I find this an invaluable resource for an overall feel of the Baltimore market, though my partners and I are still "on the ground". We can't be everywhere at once, however, and that's where this blog comes in. I hope you find it as interesting as I do!
Tuesday, March 27, 2007
New Real Estate Worldview
This is just something that jumped into my head while I was working on valuations for a set of properties that one of my partners came across. I'll probably expound on this idea at some point in the future, once I have more to go on. For this brief note, suffice it to say that valuing real estate on comparables is the dumbest friggin' thing in the world. If whoever thought of it is still living, they should be put down like a diseased animal. If I get a chance this week, I plan to work on a new valuation model that I've been considering for some time. We'll see how that works out. But this comparables shite is for the birds. Damn!
Until next time...
Until next time...
House #4 Closed
Finally! What a cluster fuck that turned out to be. Maybe it was because the wholesaler we were dealing with was new, or shady, or whatever his problem was, but that closing was more complex than it had any right to be. At last it is done, and we can start integrating it into our portfolio. And I sure hope this means the last of financing properties in someone's personal name. The LLC should be able to finance something, a bloody pack of chewing gum - SOMETHING - now.
Note to the wholesalers in the state of Maryland who happen to be reading this - make sure your seller knows the full story in advance. Let him know that you are assigning the deal. The guy we dealt with decided to keep this little nugget of truth a secret until we hit the title company's office. So we're in the office trying to find out the best way to break the news to the seller about what size check he needed to write to the wholesaler without scuttling the deal. Fugg me! Considering that I'm still dealing with the nuclear fallout of lies in my personal life, this one didn't sit right with me at all. Thankfully my partners and I were able to connect with the seller on a few different levels and get him to be comfortable with us. (The guy attends the same church as one of my partners. Additionally, he and I share the same birthday, 20 years apart.) Somehow the wholesaler figured out some good words to seal the deal, and all was well.
Now we have another rental in beautiful Baltimore. Slowly the portfolio is coming together. Now its just a matter of building back my credit score, because all the daggone inquiries are eating me alive. I'm glad I sat in on this tele-class about credit repair that was held by my RE investment club. Some really useful information came out of that about the credit industry in the US, so I plan to put that to use ASAP!
Alright, until next time, by which time I hope to be caught up on the goings on in the business world. Maybe I'll also have run into a hedge fund manager or 2 by then.
Peace.
Note to the wholesalers in the state of Maryland who happen to be reading this - make sure your seller knows the full story in advance. Let him know that you are assigning the deal. The guy we dealt with decided to keep this little nugget of truth a secret until we hit the title company's office. So we're in the office trying to find out the best way to break the news to the seller about what size check he needed to write to the wholesaler without scuttling the deal. Fugg me! Considering that I'm still dealing with the nuclear fallout of lies in my personal life, this one didn't sit right with me at all. Thankfully my partners and I were able to connect with the seller on a few different levels and get him to be comfortable with us. (The guy attends the same church as one of my partners. Additionally, he and I share the same birthday, 20 years apart.) Somehow the wholesaler figured out some good words to seal the deal, and all was well.
Now we have another rental in beautiful Baltimore. Slowly the portfolio is coming together. Now its just a matter of building back my credit score, because all the daggone inquiries are eating me alive. I'm glad I sat in on this tele-class about credit repair that was held by my RE investment club. Some really useful information came out of that about the credit industry in the US, so I plan to put that to use ASAP!
Alright, until next time, by which time I hope to be caught up on the goings on in the business world. Maybe I'll also have run into a hedge fund manager or 2 by then.
Peace.
Monday, March 26, 2007
Its been a long time
I'll have more to say later in the day after I return from dinner. I just wanted to let you all know that I haven't disappeared for good. I arrived in St. Thomas, US Virgin Islands on Saturday and have been trying to take in the experience as much as I can (given the shoddy state of my life right now). House 4 closed on Thursday, finally, after much stupidity and lateness. I'll go into that more as well. So far, things are alright here. The will be more to come.
Later.
Later.
Tuesday, March 20, 2007
My Problem with Private Equity
This is exactly it! (WSJ - subscription req'd)
Financial engineering is a tool, and useful one at that. But if it is the entire modus operandi of the big buyout firms, it is a dead end proposition.
Maybe I'm just on my compassionate capitalism kick again, but where is the corporate responsibility here? Why is there such blatant excess being exercised against the acquired firms? Don't that have anything better to do with their funds than to pay dividends to their sponsors? What about actually growing the business? Hell, RUNNING the business profitably might be worthwhile.
My problem isn't with the fact that the cash flows support this kind of transaction (for now). My problem is that the funds should be supporting the business, and once all the operational objectives have been funded, then the sponsors should be able to take a little more off the table. Its the same kind of analysis as Roger Ehrenberg at Information Arbitrage made for Apple developing a VC strategy two weeks ago.
Leon Black has the right to make his money, no doubt. But throw off the dividends once the sustainability and profitability are in place. Not before. That's all I ask.
Financial engineering is a tool, and useful one at that. But if it is the entire modus operandi of the big buyout firms, it is a dead end proposition.
Maybe I'm just on my compassionate capitalism kick again, but where is the corporate responsibility here? Why is there such blatant excess being exercised against the acquired firms? Don't that have anything better to do with their funds than to pay dividends to their sponsors? What about actually growing the business? Hell, RUNNING the business profitably might be worthwhile.
My problem isn't with the fact that the cash flows support this kind of transaction (for now). My problem is that the funds should be supporting the business, and once all the operational objectives have been funded, then the sponsors should be able to take a little more off the table. Its the same kind of analysis as Roger Ehrenberg at Information Arbitrage made for Apple developing a VC strategy two weeks ago.
Leon Black has the right to make his money, no doubt. But throw off the dividends once the sustainability and profitability are in place. Not before. That's all I ask.
House 4 Update
Closing is set for Thursday. It would be nice to have a regular time for it, but as hectic (mismanaged?) as this process has been, I'll be happy just to have it done. The deal was a wholesale deal. At least the appraisal came back in at a reasonable number, about 4K above our purchase price including the assignment fee of 4K to the wholesaler. This one already has a tenant in it so it should be a nice straightforward holding for the portfolio. Not great cash flow, but reasonable considering the tenant hasn't paid her portion of the rent in 4 bloody years. (Its a Section 8 property.) Its definitely a winning deal in a market that hasn't offered many of those. Even without raising the rent, it will throw off some cash, and with a few minor repairs, we can probably get a little bit more out of a future tenant should this one not be cooperative with the rent payments.
Right about now, I'm inclined to just sit back and wait for the market to slow down more. Every investor and their grandmother was working this beat. I'd prefer to just sit back, stack some cash and wait for the real opportunities to start emerging. I am waiting for a call from another investor about unloading some of his properties in the DC area. It makes me salivate just thinking about it! I'll have to talk to some people about putting together funds to acquire those in various ways. I guess its also time to start my personal LLC, since I doubt I will put all of these in the partnership.
And dammit, more eyelashes are falling out of my left eyelid. Fugg me! Maybe I need more sleep. I can't wait until I get to St. Thomas! Some sun will do me good, I think. And more time to workout than I can gather here. This being "middle class" (if that's what I am) is for the birds. I need time for me, dammit!
3 years and 4 months left. Can't come soon enough.
Until next time...
Right about now, I'm inclined to just sit back and wait for the market to slow down more. Every investor and their grandmother was working this beat. I'd prefer to just sit back, stack some cash and wait for the real opportunities to start emerging. I am waiting for a call from another investor about unloading some of his properties in the DC area. It makes me salivate just thinking about it! I'll have to talk to some people about putting together funds to acquire those in various ways. I guess its also time to start my personal LLC, since I doubt I will put all of these in the partnership.
And dammit, more eyelashes are falling out of my left eyelid. Fugg me! Maybe I need more sleep. I can't wait until I get to St. Thomas! Some sun will do me good, I think. And more time to workout than I can gather here. This being "middle class" (if that's what I am) is for the birds. I need time for me, dammit!
3 years and 4 months left. Can't come soon enough.
Until next time...
Monday, March 19, 2007
Stress
In the last week, about half of the eyelashes on my right eyelid have fallen out. The rate is increasing for the eyelashes on my left eyelid too.
All due to stress. Personal life stress mostly. Mind you, the situation is of my own creation and thus my own undoing, but its amazing how despondent one can become when they lose people they love. G. says I shouldn't just dive into working as a refuge from the pain, but my other friends don't want me to take on other self-destructive behavior such as heavy drinking either. What's a depressed person to do?
Until recently, the net worth was making some decent strides. Now, given the increase in market action to the downside, its not at all surprising that I haven't crossed 100K yet. Thankfully I'm able to save about 20 - 25% of my monthly net income into a high yield savings account. I also killed most of my credit card debt this past week, so that drag is gone. But damn if it isn't annoying to watch the balances stay stagnant. And I still owe G. $1000 for the laptop I bought from him. We'll see how things look after payday this week.
On the positive side, I've been able to pocket some consulting revenue recently. Not a lot, not even close, but I'm not one to argue with income. I'm not seeking to grow the consulting business; it only really generates spending money.
Nice to see we finally have some positive movement in the May wheat futures. Talk about getting shellacked! I'll keep watching this because there's only a few weeks until expiration on those contracts. I don't think I can get out of the trade anywhere close to whole as things stand.
Anyway, more updates to come. There have been some interesting developments on the RE front and hopefully I'll be able to put in some time working on the back end server infrastructure for the start up venture this week.
Until next time...
All due to stress. Personal life stress mostly. Mind you, the situation is of my own creation and thus my own undoing, but its amazing how despondent one can become when they lose people they love. G. says I shouldn't just dive into working as a refuge from the pain, but my other friends don't want me to take on other self-destructive behavior such as heavy drinking either. What's a depressed person to do?
Until recently, the net worth was making some decent strides. Now, given the increase in market action to the downside, its not at all surprising that I haven't crossed 100K yet. Thankfully I'm able to save about 20 - 25% of my monthly net income into a high yield savings account. I also killed most of my credit card debt this past week, so that drag is gone. But damn if it isn't annoying to watch the balances stay stagnant. And I still owe G. $1000 for the laptop I bought from him. We'll see how things look after payday this week.
On the positive side, I've been able to pocket some consulting revenue recently. Not a lot, not even close, but I'm not one to argue with income. I'm not seeking to grow the consulting business; it only really generates spending money.
Nice to see we finally have some positive movement in the May wheat futures. Talk about getting shellacked! I'll keep watching this because there's only a few weeks until expiration on those contracts. I don't think I can get out of the trade anywhere close to whole as things stand.
Anyway, more updates to come. There have been some interesting developments on the RE front and hopefully I'll be able to put in some time working on the back end server infrastructure for the start up venture this week.
Until next time...
Thursday, March 15, 2007
The Hedge Fund Blog discusses the role of 2 and 20
I strolled on over to Hedge Fund Blog this morning to find this latest piece of writing from Mr. Allen. A nice explanation of how and why the hedge fund compensation structure works. Well done.
Wednesday, March 14, 2007
Code is Go!
Finally! We have managed to get our code signed, downloaded and running on 2 platforms. This is what I call progress. I'll be working on the server side configuration stuff for the next few days so I can stay ahead of my partner. All I have is my money making ventures now that my personal life has imploded, so this is good news. Unfortunately, I have been caught up with these personal issues and didn't get around to filing the Subchapter S election form. Fugg it. Taking venture money would convert us into a C corp anyway so it doesn't matter too much. Along with that, my MacBook Pro is up and running. Guess I'm now 2 for 8 so far this week. Woo woo!
Through the Storm
I'm going to apologize to my readers in advance. I may be AWOL in the coming days and weeks as I sort out some HUGE personal problems. My entire life appears to be crashing down around me. I'll be back. Not the same. Hopefully better. But I'll be back.
Monday, March 12, 2007
Blog Recommendation - The Bonddad Blog
This is one I've had in my RSS reader for a little while. I don't know how I stumbled across it, but I'm happy I did. A nice mix of market and economic commentary and a bit of analysis of the financial/economic news of the day. Its a quick read which gets me up to speed when I've been out of the loop for while. Enjoy!
Marc Faber Interview at Bloomberg
Finally! Since it is a slow night, I decided to take some time to check out this interview (via Mish) with Marc Faber which appeared on Bloomberg TV about 2 weeks ago. I'm glad I did. I'm gonna watch it again right now. Some really good stuff in here. Check it out if you haven't already. Dr. Faber may be known for gloom, boom and doom, but he should also be known for reason, logic and good sense.
Friday, March 09, 2007
Why PE should leave technology alone
Again, I can't make any claim to being an expert on the subject, but I've made the argument before that PE and technology companies do not mix. As I was showering the other night in preparation for my J.O.B., the primary reason for this state of affairs came to me. I would also like to thank Equity Private for the insight shared with me by e-mail a few nights ago, for this helped crystallize the logic in my mind.
Private equity should be about operations. Squeezing operational efficiencies out of mature businesses (or business models). Expanding into new markets. New leadership. Adjusting the capital structure. Acquiring customers (and competitors). Reducing costs. Involving stakeholders. That's what it *should* be about. Taking a poorly performing enterprise and making it...well...perform.
At least, that's my (somewhat high minded) theory.
It would appear that in the last few years, the performance piece of the puzzle has been lost (intentionally?). Yes, there is plenty of levering and capital structure machinations, but not much else.
I don't think selling off assets (EOP) or the traditional "corporate raider" model can be applied in technology. The technology space never rests. There is always some innovation occurring; tis the nature of the beast. Even the lowly hard drive, courtesy of tech PE darling Seagate Technologies, is evolving constantly. Higher densities are the primary way, but interface technology is also changing. Witness the growth in Serial ATA (SATA) and SAS interconnects. In networking, we have the same thing. Never mind all the dark fiber that was buried and has subsequently been written off by network providers. We've got 10 Gb Ethernet here, and even faster modes on the way. You can peel off tons of lambdas over a given strand of fiber. The race is unending.
This is why technology companies do not (now) make good PE targets. When the basis of your business is innovation, research and development, and your window to get to market and make back the investment grows increasingly shorter, there is no way for even large tech companies to rest on their laurels and collect rivers of cash. Levering is largely, if not exclusively, about being able to service debt. (Commercial real estate shares this property, and it is an equally simple business at the most basic levels.) However, the interest payments on the leverage employed in taking out a technology company cannot be guaranteed to be serviceable based on the standard market fluctuations in technology. Things change too fast to count on that constant cash flow.
Recently, Investment Dealer's Digest had a bit about the new-ish emphasis on bringing operators into PE shops - rockstar CEOs, as the saying goes - with lots of connections, hands-on experience and wisdom. THIS, to my mind, is the essence of the proposition. Financial engineering can only take a business so far. That isn't to fault the VPs and rainmakers, but seriously at some point, the enterprise has to be able to consistently MAKE money.
Last week I was sitting in on a conversation between my business partner and my second cousin's wife who works for IBM. My cousin's wife was making the point that the bean counters have taken over the company and their solution to every problem is to cut - something, anything, just make costs go away. This is not a long term solution to the problem. If you've got a business pipeline that will fund operations profitably, but your staff is already overworked, you can't just leave the staffing where it is. You have to be able to add people and resources to do the work faster and better. Under such circumstances, refusing to add headcount, or even worse, to try to remove it, is absurd. Quality of service delivery will suffer, which will impact the brand and eventually the commitment of those customers to continue to pay for the services. At least, they will probably seek to spend that money elsewhere. The same point applies to IBM as it does to PE shops looking to take out a technology company. Innovation is the name of the tech game.
Now, I can see some exceptions, and as I may have previously mentioned, there are some operators that seem to know where the intersection of technology and private equity lies. Or at least they are closer to finding it than others. Seagate and Flextronics would seem to be too good examples, and both were Silver Lake deals. Silver Lake is much more of the exception however, because technology is all they do. Both of these were manufacturing heavy companies which probably had outdated processes and facilities, and are operating in fields with razor thin margins. There was probably a lot of upside to these deals because they are operating at the intersection of the "real", tangible world and the technology world. That will be less the norm in the future, as fewer companies will be engaged in creating hardware products and even more development is channeled into software. I don't know that the same kind of benefits can be engineered in a software company that have been engineered with Seagate. You can always reduce headcount and spin off divisions, bring in new managers, recapitalize and reorganize, but at some point, you'll need new product which means new ideas, new research, new development, new engineering, plus all the other stuff (QA, documentation, support, distribution, security, sales, etc.).
At the end of the day, the company has to be able to perform. Private equity should be a vehicle, and I have no problems with it being a well compensated vehicle, for increasing corporate performance. Create. Innovate. Execute. Wash, rinse, repeat. All of that takes of precious cash that most of the current generation of PE firms would rather have flow to them, as management/consulting fees or dividends. Technology companies have to be able to move fast, and debt is a burden preventing that kind of dynamism. If you're not moving, you're dead, and a tech company weighed down by debt is well...figure it out.
Private equity should be about operations. Squeezing operational efficiencies out of mature businesses (or business models). Expanding into new markets. New leadership. Adjusting the capital structure. Acquiring customers (and competitors). Reducing costs. Involving stakeholders. That's what it *should* be about. Taking a poorly performing enterprise and making it...well...perform.
At least, that's my (somewhat high minded) theory.
It would appear that in the last few years, the performance piece of the puzzle has been lost (intentionally?). Yes, there is plenty of levering and capital structure machinations, but not much else.
I don't think selling off assets (EOP) or the traditional "corporate raider" model can be applied in technology. The technology space never rests. There is always some innovation occurring; tis the nature of the beast. Even the lowly hard drive, courtesy of tech PE darling Seagate Technologies, is evolving constantly. Higher densities are the primary way, but interface technology is also changing. Witness the growth in Serial ATA (SATA) and SAS interconnects. In networking, we have the same thing. Never mind all the dark fiber that was buried and has subsequently been written off by network providers. We've got 10 Gb Ethernet here, and even faster modes on the way. You can peel off tons of lambdas over a given strand of fiber. The race is unending.
This is why technology companies do not (now) make good PE targets. When the basis of your business is innovation, research and development, and your window to get to market and make back the investment grows increasingly shorter, there is no way for even large tech companies to rest on their laurels and collect rivers of cash. Levering is largely, if not exclusively, about being able to service debt. (Commercial real estate shares this property, and it is an equally simple business at the most basic levels.) However, the interest payments on the leverage employed in taking out a technology company cannot be guaranteed to be serviceable based on the standard market fluctuations in technology. Things change too fast to count on that constant cash flow.
Recently, Investment Dealer's Digest had a bit about the new-ish emphasis on bringing operators into PE shops - rockstar CEOs, as the saying goes - with lots of connections, hands-on experience and wisdom. THIS, to my mind, is the essence of the proposition. Financial engineering can only take a business so far. That isn't to fault the VPs and rainmakers, but seriously at some point, the enterprise has to be able to consistently MAKE money.
Last week I was sitting in on a conversation between my business partner and my second cousin's wife who works for IBM. My cousin's wife was making the point that the bean counters have taken over the company and their solution to every problem is to cut - something, anything, just make costs go away. This is not a long term solution to the problem. If you've got a business pipeline that will fund operations profitably, but your staff is already overworked, you can't just leave the staffing where it is. You have to be able to add people and resources to do the work faster and better. Under such circumstances, refusing to add headcount, or even worse, to try to remove it, is absurd. Quality of service delivery will suffer, which will impact the brand and eventually the commitment of those customers to continue to pay for the services. At least, they will probably seek to spend that money elsewhere. The same point applies to IBM as it does to PE shops looking to take out a technology company. Innovation is the name of the tech game.
Now, I can see some exceptions, and as I may have previously mentioned, there are some operators that seem to know where the intersection of technology and private equity lies. Or at least they are closer to finding it than others. Seagate and Flextronics would seem to be too good examples, and both were Silver Lake deals. Silver Lake is much more of the exception however, because technology is all they do. Both of these were manufacturing heavy companies which probably had outdated processes and facilities, and are operating in fields with razor thin margins. There was probably a lot of upside to these deals because they are operating at the intersection of the "real", tangible world and the technology world. That will be less the norm in the future, as fewer companies will be engaged in creating hardware products and even more development is channeled into software. I don't know that the same kind of benefits can be engineered in a software company that have been engineered with Seagate. You can always reduce headcount and spin off divisions, bring in new managers, recapitalize and reorganize, but at some point, you'll need new product which means new ideas, new research, new development, new engineering, plus all the other stuff (QA, documentation, support, distribution, security, sales, etc.).
At the end of the day, the company has to be able to perform. Private equity should be a vehicle, and I have no problems with it being a well compensated vehicle, for increasing corporate performance. Create. Innovate. Execute. Wash, rinse, repeat. All of that takes of precious cash that most of the current generation of PE firms would rather have flow to them, as management/consulting fees or dividends. Technology companies have to be able to move fast, and debt is a burden preventing that kind of dynamism. If you're not moving, you're dead, and a tech company weighed down by debt is well...figure it out.
House #4
For all of those who may be interested (or had even forgotten), the real estate business is starting to make moves again. While I don't think there is enough turmoil to take advantage of right now, this deal was too good to pass up.
The property is a rowhouse, similar to two of the other properties we already own. The stunning part of the deal (or at least the first stunning part) was the fact that the seller wanted such a pittance for the house. Off the bat, we should cash flow a nice small amount. There's a Section 8 tenant already in place at an agreeable rent. (Otherwise, we wouldn't have agreed.) With a bit of repairs, the house could be worth 15 - 20K more than our purchase price. My valuation spreadsheet absolutely loved this property when I ran the numbers. It shares a lot of similar traits to our best performing property.
The second great thing about this deal is the financing package. Since the sales price is so low, and we have a line of credit with another lender, we were able to go to our preferred guy and get a nice 10 year fixed pay option ARM. 10 year fixed! At a low rate. Un-fuggin-believable! Yeah, yeah, I can hear all the voices now. However, if we own this property for 10 years, it will be a minor miracle. As far as the option ARM piece goes, it is a very investor specific loan. Do I generally like or feel comfortable with this concept in general? No. However, it helps us achieve a certain goal that as a group of investors, we have sought to achieve. I take that discomfort as a sign of growth, in this case. We have all chosen to be investors and put our own resources on the line in pursuit of our goals.
Anyway, I spent a fair amount of today providing documentation for things I'd already provided documentation of a few months back. I'm going to make sure 120 days haven't passed since the last time, because digging up new versions of all of this shite is really not the best use of my time. There's even more stuff to try to dig up and send off tomorrow. What a friggin' pain. Just moving paper from point A to point B.
Anyway, there is more to come soon. Keep watching...
The property is a rowhouse, similar to two of the other properties we already own. The stunning part of the deal (or at least the first stunning part) was the fact that the seller wanted such a pittance for the house. Off the bat, we should cash flow a nice small amount. There's a Section 8 tenant already in place at an agreeable rent. (Otherwise, we wouldn't have agreed.) With a bit of repairs, the house could be worth 15 - 20K more than our purchase price. My valuation spreadsheet absolutely loved this property when I ran the numbers. It shares a lot of similar traits to our best performing property.
The second great thing about this deal is the financing package. Since the sales price is so low, and we have a line of credit with another lender, we were able to go to our preferred guy and get a nice 10 year fixed pay option ARM. 10 year fixed! At a low rate. Un-fuggin-believable! Yeah, yeah, I can hear all the voices now. However, if we own this property for 10 years, it will be a minor miracle. As far as the option ARM piece goes, it is a very investor specific loan. Do I generally like or feel comfortable with this concept in general? No. However, it helps us achieve a certain goal that as a group of investors, we have sought to achieve. I take that discomfort as a sign of growth, in this case. We have all chosen to be investors and put our own resources on the line in pursuit of our goals.
Anyway, I spent a fair amount of today providing documentation for things I'd already provided documentation of a few months back. I'm going to make sure 120 days haven't passed since the last time, because digging up new versions of all of this shite is really not the best use of my time. There's even more stuff to try to dig up and send off tomorrow. What a friggin' pain. Just moving paper from point A to point B.
Anyway, there is more to come soon. Keep watching...
Thursday, March 08, 2007
Apologies
I have to apologize for the delays in posting. I've actually been working on some longer posts that require a bit more thought and proofreading. However, the primary reason I've been so absent is that I'm up to my eyeballs in to do items. Whether its real estate, or the new business, or tax stuff, there's always something new. I'd really like to get my taxes over and done with, but last year was some damn complicated that it is taking up far more time than I imagined or hope. And WTH is this with the accountant not being able to open a QuickBooks file? Isn't that what you get paid to do - open QuickBooks files all day? Good lord!
*sigh*
Anyway, look for some good stuff soon, once I have a chance to sit down and re-read through the stuff.
Until next time...I am still alive...
*sigh*
Anyway, look for some good stuff soon, once I have a chance to sit down and re-read through the stuff.
Until next time...I am still alive...
Monday, March 05, 2007
Apple VC
Simply put, this is generally a good idea. Funding start ups which are creating applications, particularly those exclusive to the Mac, would be a powerful move from Cupertino. Backing innovative developers who work exclusive on MacOS X with the tools, systems, cash, contact with Apple internal developers, debugging assistance and distribution would be HUGE. New applications, especially those which can't be found on other platforms, would help drive the Mac into new niches. (And the Mac is the ultimate niche platform, but add enough niches together and you have a real market.)
Even bigger though, and with a bit less headache, would be just to seed application developers.
As the BusinessWeek piece mentions, plenty of small developers (and large ones too) do not release Windoze and MacOS X versions of their apps simultaneously. The biggest reason is that the development costs involved in development, QA, documentation, distribution and all the other functions of software creation comprise a much larger portion of the potential revenue to be generated, at least on the Mac. There just aren't as many systems in the field to amortize the development costs over.
Apple could be using strategic investments in the $5M - $50M range to seed development of a wide range of apps from developers large (Adobe and Microsoft) and small (Delicious Monster).To me, the most critical issue would be to fund developers to port applications that only run on other platforms to the Mac. In the case of apps that run on Solaris, HP-UX or other commercial *nix variants, this could be enormous. The Mac is THE Unix platform to develop on. Apple has the momentum, the cash, the installed base and the platform to allow finance, visualization, and scientific/engineering/mathematical developers even broader outlets for their applications. That's some real value add, IMO.
The point is to increase the size of ecosystem and to build better developer relations with the members of that ecosystem. Apple has historically been very bad about this, and that tone continues even to this day for some God-awful, unknown reason.
People buy computers because of what they can do with the machine. Simple. So the more things that can be done on the Mac, the larger the potential customer base. I for one would love to have a real, complete Visio running natively on MacOS X. Hopefully Apple will learn this lesson and start seeding developers who are creating apps that people want to run on MacOS X. This is a mistake SUNW made back when they had a war chest, and the results are pretty obvious.
Whether creating a VC arm is the best use of Apple's cash is debatable. However, putting some of that cash to work in developers who can expand the user base of the Mac platform is a no brainer. I just wonder why it hasn't happened yet.
Even bigger though, and with a bit less headache, would be just to seed application developers.
As the BusinessWeek piece mentions, plenty of small developers (and large ones too) do not release Windoze and MacOS X versions of their apps simultaneously. The biggest reason is that the development costs involved in development, QA, documentation, distribution and all the other functions of software creation comprise a much larger portion of the potential revenue to be generated, at least on the Mac. There just aren't as many systems in the field to amortize the development costs over.
Apple could be using strategic investments in the $5M - $50M range to seed development of a wide range of apps from developers large (Adobe and Microsoft) and small (Delicious Monster).To me, the most critical issue would be to fund developers to port applications that only run on other platforms to the Mac. In the case of apps that run on Solaris, HP-UX or other commercial *nix variants, this could be enormous. The Mac is THE Unix platform to develop on. Apple has the momentum, the cash, the installed base and the platform to allow finance, visualization, and scientific/engineering/mathematical developers even broader outlets for their applications. That's some real value add, IMO.
The point is to increase the size of ecosystem and to build better developer relations with the members of that ecosystem. Apple has historically been very bad about this, and that tone continues even to this day for some God-awful, unknown reason.
People buy computers because of what they can do with the machine. Simple. So the more things that can be done on the Mac, the larger the potential customer base. I for one would love to have a real, complete Visio running natively on MacOS X. Hopefully Apple will learn this lesson and start seeding developers who are creating apps that people want to run on MacOS X. This is a mistake SUNW made back when they had a war chest, and the results are pretty obvious.
Whether creating a VC arm is the best use of Apple's cash is debatable. However, putting some of that cash to work in developers who can expand the user base of the Mac platform is a no brainer. I just wonder why it hasn't happened yet.
Wednesday, February 28, 2007
Couldn't Have Said It Better
And just when I was about to try, the always acerbic (in a good way) Equity Private reads my mind.
We're glad to see you back in action, EP! We missed ya!
K
We're glad to see you back in action, EP! We missed ya!
K
PE Churn
I thought of subtitling this post "distressed was ALWAYS the place to be". I'm not sure what to make of this one, but that won't stop me from trying something.
You know, fundamentally, I like the private equity business model. (Maybe I should prepare a CV and apply for that PE job that keeps calling me.) However, if anything, I see more long range opportunity for the distressed guys, especially the hedge funds, in the aftermath of all of the credit expansion that has enabled this tear in the private equity business.
Starting with the absurdity of the "new" private equity model which seems to have little to do with restructuring, it occurs to me that the end game for many of these newly re-IPOed (LIPOed, in the parlance of Equity Private) firms will be a credit crunch, followed by a liquidity crisis and eventually bankruptcy and asset sales. Overexpansion always yields collapse, it seems. (Or so history appears to say.)
Maybe I have my order wrong. I'm no financial historian. But just as the housing market in the US made no sense, neither does the belief that these companies will magically work once they are again public. I mean, the didn't work before, and it appears that far too little changes inside many of these firms by the time they go public again. Its almost equivalent to broker account churning, right? Buy and sell the same battered assets over and over, never adding any real value. Hell, Blackstone has sold off a significant number of the EOP properties, and the deal only closed on the 9th of February. What's the point of doing the deal if you can't put something significant into the firm that wasn't there prior?
While on the face of things, it resembles the corporate raider mentality, it would be nice if these PE guys would at least admit that's the plan. Plunder and pillage, 21st century style.
This whole issue sounds very familiar to me, now that I think about it.
I don't know if this argument makes sense to anyone besides myself. I have been a bit sleep deprived recently. But watching all these deals close, while obvious benefiting the current shareholders, you just can see the ugly future approaching. Might as well be positioned to pick up the pieces, I figure. But that doesn't make it any less of a tragedy, or even simply a waste of investor capital. (Not that the investors mind, I'm sure, as long as they make their numbers. I'm looking at things from a big picture, compassionate capitalism kind of view. I think I'm the only person I know who embraces such a view.)
Can private equity (or capitalism for that matter) really be compassionate? Can it serve the interest of investors, of markets, of customers, and all the other stakeholders, and the Universe itself, while still being efficient, even ruthless when warranted? Or is it some fantasy I'm living in? I guess that's a discussion for another post.
You know, fundamentally, I like the private equity business model. (Maybe I should prepare a CV and apply for that PE job that keeps calling me.) However, if anything, I see more long range opportunity for the distressed guys, especially the hedge funds, in the aftermath of all of the credit expansion that has enabled this tear in the private equity business.
Starting with the absurdity of the "new" private equity model which seems to have little to do with restructuring, it occurs to me that the end game for many of these newly re-IPOed (LIPOed, in the parlance of Equity Private) firms will be a credit crunch, followed by a liquidity crisis and eventually bankruptcy and asset sales. Overexpansion always yields collapse, it seems. (Or so history appears to say.)
Maybe I have my order wrong. I'm no financial historian. But just as the housing market in the US made no sense, neither does the belief that these companies will magically work once they are again public. I mean, the didn't work before, and it appears that far too little changes inside many of these firms by the time they go public again. Its almost equivalent to broker account churning, right? Buy and sell the same battered assets over and over, never adding any real value. Hell, Blackstone has sold off a significant number of the EOP properties, and the deal only closed on the 9th of February. What's the point of doing the deal if you can't put something significant into the firm that wasn't there prior?
While on the face of things, it resembles the corporate raider mentality, it would be nice if these PE guys would at least admit that's the plan. Plunder and pillage, 21st century style.
This whole issue sounds very familiar to me, now that I think about it.
I don't know if this argument makes sense to anyone besides myself. I have been a bit sleep deprived recently. But watching all these deals close, while obvious benefiting the current shareholders, you just can see the ugly future approaching. Might as well be positioned to pick up the pieces, I figure. But that doesn't make it any less of a tragedy, or even simply a waste of investor capital. (Not that the investors mind, I'm sure, as long as they make their numbers. I'm looking at things from a big picture, compassionate capitalism kind of view. I think I'm the only person I know who embraces such a view.)
Can private equity (or capitalism for that matter) really be compassionate? Can it serve the interest of investors, of markets, of customers, and all the other stakeholders, and the Universe itself, while still being efficient, even ruthless when warranted? Or is it some fantasy I'm living in? I guess that's a discussion for another post.
Bad Timing
As Robin Harris used to say "ain't THAT a bitch!" On Monday, a long/short fund announced their closing and then we get yesterday. I wonder how that feels. Tood bad they couldn't hold our for just a few hours longer; the "disruptive change" they sought finally came.
Maybe I should add a comedy tag, because that's hilarious!
Maybe I should add a comedy tag, because that's hilarious!
Blog Recommendation - FiNTAG
I don't know how I originally stumbled upon FiNTAG but you have to love it. Great commentary on the day's hedge fund news from the princial commentator named - of course - Fintag. I'll be keeping an eye on some of the other business endeavors taken with this site as well, when I have a bit more time. However, the remarks alone are worth the visit.
Anyway, time for me to get caught up on my reading, starting here. The last few days have been draining.
Until next time...
Anyway, time for me to get caught up on my reading, starting here. The last few days have been draining.
Until next time...
Saturday, February 24, 2007
Net Worth Update
It has been a while since I've done one of these, so its time to get caught up.
Good news abounds for this net worth update. We'll start with the bonus from my J.O.B. that I was completely not expecting. I won't rehash the details of my failed consulting gig, but after returning to my current company, I figured I had no hope of getting the bonus that was promised to employees who stayed with the company. (It was an acquisition of my old company by the new company.) I left shortly after the acquisition closed only to return a few weeks later and found that most traces of my existence had been obliterated. So naturally I thought I'd end up being the red headed stepchild of the bonus pool. Not so. I guess my performance finally got noticed. (It only took 3.5 years and a resignation.) That was very beneficial to the bottom line.
Also helpful was the slight (and I do mean slight) "merit" (ha!) increase I received. Not enough to bother calculating really; I think it means an extra $100 per month take home, if I'm lucky. Most of that will get funneled to emergency savings. However, I won't argue with money. Nope, not me. I think there is a enough flexibility to max out my 401(k) contributions now too. (I had been at 14% and now the limit is 15% - woo hoo!)
I have (unfortunately?) done some consulting work recently which will help bulk up my account balances. Nothing large, as I don't charge most of my clients anywhere near market rates (2 out of 3; the last one does pay market, and on time too!). Every dollar helps though. I'm not complaining.
All told, factoring in the most recent increases in most of my accounts, I have finally surpassed $90,000 in net worth. Actually, the numbers work out to about $95,000. Quite a substantial jump from where I was expecting to land. If things continue like this, I should be at 100K within 2 months. The annual goal is 150K. Very aggressive, but not outside the realm of possibility. I'll keep you posted.
Until next time...
Good news abounds for this net worth update. We'll start with the bonus from my J.O.B. that I was completely not expecting. I won't rehash the details of my failed consulting gig, but after returning to my current company, I figured I had no hope of getting the bonus that was promised to employees who stayed with the company. (It was an acquisition of my old company by the new company.) I left shortly after the acquisition closed only to return a few weeks later and found that most traces of my existence had been obliterated. So naturally I thought I'd end up being the red headed stepchild of the bonus pool. Not so. I guess my performance finally got noticed. (It only took 3.5 years and a resignation.) That was very beneficial to the bottom line.
Also helpful was the slight (and I do mean slight) "merit" (ha!) increase I received. Not enough to bother calculating really; I think it means an extra $100 per month take home, if I'm lucky. Most of that will get funneled to emergency savings. However, I won't argue with money. Nope, not me. I think there is a enough flexibility to max out my 401(k) contributions now too. (I had been at 14% and now the limit is 15% - woo hoo!)
I have (unfortunately?) done some consulting work recently which will help bulk up my account balances. Nothing large, as I don't charge most of my clients anywhere near market rates (2 out of 3; the last one does pay market, and on time too!). Every dollar helps though. I'm not complaining.
All told, factoring in the most recent increases in most of my accounts, I have finally surpassed $90,000 in net worth. Actually, the numbers work out to about $95,000. Quite a substantial jump from where I was expecting to land. If things continue like this, I should be at 100K within 2 months. The annual goal is 150K. Very aggressive, but not outside the realm of possibility. I'll keep you posted.
Until next time...
Wednesday, February 21, 2007
Securitizing Insurance
There's an interesting article in today's Wall Street Journal about the growing market for investment products backed by insurance (subscription required). Very interesting. This article is focused on personal insurance as opposed to catastrophe bonds or other products linked to property insurance. Still, it makes for fascinating reading. What will they think to securitize next?
Tuesday, February 20, 2007
A Profile of Yale's Money Man
This is noble! Very cool stuff. A great money manager who hasn't lost touch with his humanity. (And humanity is not a word I use often.) Much respect.
I'd love to think one day that a guy of similar mind to David Swensen could be running the endowment at my alma mater. What a nice thought. Of course, as Paul Vixie once said to me, I'm cautiously pessimistic.
I'd love to think one day that a guy of similar mind to David Swensen could be running the endowment at my alma mater. What a nice thought. Of course, as Paul Vixie once said to me, I'm cautiously pessimistic.
Ups and Downs
What a week!
Being employed sucks. I kinda miss being unemployed last year, even though it was only for 3 weeks. Strangely liberating. Time to get back to that.
Just ran an analysis for a new real estate deal one of my partners ran by me. I need to learn some advanced Excel tricks. That might be the only good reason to get an MBA. My valuation model needs some work. I plan to sit down one day and sketch that out. Now if I can find a nice source of valuation information that has a programmable Web services API! That would be sweet. I think I may have found something similar, but I'll have to look at it a bit more. If you have any good resources for learning how to master the power that is Microsoft Excel, please share! I hate Microsoft, but I LOVE Microsoft Excel!
I like this house though. Its already rented and not far from another one we already own. (Our best deal to date, actually.) The numbers are very reasonable and it should be able to cash flow pretty well. My personal goal is to bring in 5 properties to the group this year. I need to ramp up the prospecting.
*sigh*
I know there are some folks out there who want to know more about "The Business". Well, things are coming together now. I FINALLY managed to get my certificate from VeriSign last Friday, 16 February. A better way to end what was generally a crappy week. Then I tried to install the cert, and everything fell apart. Seems for all the fighting I had done to push the thing through, I managed to generate the wrong kind of data for the wrong kind of cert. VeriSign sells Java code signing certs as well as the ubiquitous SSL web server certs. I had generated data for the latter, when what I needed for the former. Thankfully, after a call to VeriSign yesterday (which was returned within 2 hours although the voicemail message told me to expect 24 hour turnaround), I was able to get the confusion cleared up. I was also informed that I could replace the already-issued certificate with a new one for free, since I was still within 30 days of issuance.
Schweet!
So I have a new code signing cert application in and the process is moving, albeit a bit glacial for my tastes. I'll follow up with them after I call my cousin about legal services.
My partner is making GREAT headway it seems. She's too cool, man! Too fuggin' cool.
Anyway, my thoughts are very random and scattered right now. I'm still recovering from Friday night's festivities. As I said, since I couldn't get myself to Trinidad, I brought Trinidad to me (as much as possible). More on that in a later post.
Until next time...
Being employed sucks. I kinda miss being unemployed last year, even though it was only for 3 weeks. Strangely liberating. Time to get back to that.
Just ran an analysis for a new real estate deal one of my partners ran by me. I need to learn some advanced Excel tricks. That might be the only good reason to get an MBA. My valuation model needs some work. I plan to sit down one day and sketch that out. Now if I can find a nice source of valuation information that has a programmable Web services API! That would be sweet. I think I may have found something similar, but I'll have to look at it a bit more. If you have any good resources for learning how to master the power that is Microsoft Excel, please share! I hate Microsoft, but I LOVE Microsoft Excel!
I like this house though. Its already rented and not far from another one we already own. (Our best deal to date, actually.) The numbers are very reasonable and it should be able to cash flow pretty well. My personal goal is to bring in 5 properties to the group this year. I need to ramp up the prospecting.
*sigh*
I know there are some folks out there who want to know more about "The Business". Well, things are coming together now. I FINALLY managed to get my certificate from VeriSign last Friday, 16 February. A better way to end what was generally a crappy week. Then I tried to install the cert, and everything fell apart. Seems for all the fighting I had done to push the thing through, I managed to generate the wrong kind of data for the wrong kind of cert. VeriSign sells Java code signing certs as well as the ubiquitous SSL web server certs. I had generated data for the latter, when what I needed for the former. Thankfully, after a call to VeriSign yesterday (which was returned within 2 hours although the voicemail message told me to expect 24 hour turnaround), I was able to get the confusion cleared up. I was also informed that I could replace the already-issued certificate with a new one for free, since I was still within 30 days of issuance.
Schweet!
So I have a new code signing cert application in and the process is moving, albeit a bit glacial for my tastes. I'll follow up with them after I call my cousin about legal services.
My partner is making GREAT headway it seems. She's too cool, man! Too fuggin' cool.
Anyway, my thoughts are very random and scattered right now. I'm still recovering from Friday night's festivities. As I said, since I couldn't get myself to Trinidad, I brought Trinidad to me (as much as possible). More on that in a later post.
Until next time...
Marketocracy Funds go live
Caught this over at VentureBeat that Marketocracy has finally launched mutual funds based on the picks of its top 4 stock pickers. A nice interview with the top performing guy, Chris Rees, is included with the VentureBeat article. Very cool.
I wonder how much overlap there was/is between his portfolio and the portfolio of Steven A. Cohen. Reportedly, Cohen's returns since 1992 have averaged over 40% annually, although I don't have the exact number handy. It would be cool to compare Rees' portfolio since 1992 with Cohen's. Just an interesting thought exercise.
I have a portfolio over at Marketocracy. I think the last time I looked at it was some time last year. I just don't have the time to focus on stock picking like I would like to (or be able to), especially while trying to hold down a full time job and build a startup, nevermind all the other things I'm doing concurrently.
I wonder how much overlap there was/is between his portfolio and the portfolio of Steven A. Cohen. Reportedly, Cohen's returns since 1992 have averaged over 40% annually, although I don't have the exact number handy. It would be cool to compare Rees' portfolio since 1992 with Cohen's. Just an interesting thought exercise.
I have a portfolio over at Marketocracy. I think the last time I looked at it was some time last year. I just don't have the time to focus on stock picking like I would like to (or be able to), especially while trying to hold down a full time job and build a startup, nevermind all the other things I'm doing concurrently.
Sunday, February 18, 2007
Friday, February 16, 2007
Brilliant!
I'll be following the story of the EOP purchase very carefully. Looking for lots more press on Jon Gray.
However, I may be alone on this one, but it seems stupid to be the business trying to achieve "milestones". I'll take the money, please, thank you. The cap rate is sick, and not in a good way. Definitely sounds like a trophy acquisition for Blackstone. Talk about an area to stay away from - any commercial real estate investment, especially those which trade on markets (REITs). I think time will show that Steve Roth at Vornado made the best decision - whether by choice or circumstance - by withdrawing from the EOP bidding.
Until next time...
However, I may be alone on this one, but it seems stupid to be the business trying to achieve "milestones". I'll take the money, please, thank you. The cap rate is sick, and not in a good way. Definitely sounds like a trophy acquisition for Blackstone. Talk about an area to stay away from - any commercial real estate investment, especially those which trade on markets (REITs). I think time will show that Steve Roth at Vornado made the best decision - whether by choice or circumstance - by withdrawing from the EOP bidding.
Until next time...
Thursday, February 15, 2007
So Sad
NOTE: This post has little to do with money or alpha, so if you have no interest in such topics, change channels now. And...this bitch is long.
So here I am, back in the house my parents have lived in for the last 18 years, in Maryland. I'm not supposed to be here. I'm supposed to be in Trinidad. The story of why I am here as opposed being in San Fernando, Trinidad is a long, winding and disappointing one. Somehow, I get the feeling that God didn't want me to go to Trinidad, and that saddens me. While I'm still evaluating options, to quote my high school friend Damon, "things look bleak for the home team".
I originally made these reservations in early December, and got a reasonably good deal considering how late in the cycle I did all this. (Thanks American Express Platinum Travel! I love you guys.) $638 round trip to Trinidad 1 week before Ash Wednesday and returning the last day of February. So everything was in order and then...
I remembered that my J.O.B. (Just Over Broke, for anyone not familiar with T. Harv Eker's writings, and boy is that accurate) only gives me 2 weeks of vacation. So I'm looking at burning up all of vacation time on 2 weeks in Trinidad. While I love Trinidad, I can't do what I did last year, when I was unemployed during my time in Trinidad. (Which is why the J.O.B. only gives me 2 weeks instead of the 3 I would have if they had re-instated my seniority when I returned from the failed consulting gig with Unisys. But I'm not bitter.)
I've been weighing this for the last few weeks. Do I go and burn up all the time, or do I stay and piecemeal it out over the course of the year? Fugg me! In mid - late January, I decided to cancel. So I e-mailed the friends I would be staying with and let them know. I justified this decision by saying that I should be here to get things in order with the business, continue pushing forward, all that kind of thing. And I do believe that. But I also promised myself to go to Trinidad Carnival every year from now until I die. This commitment weighed on my conscience; to fail at it so soon was unnerving.
In the last week, however, a few things happened which re-kindled both the hope and the possibility of going to Trini. First, I found out that my friends at Basement Knokers weren't going to throw an event this Saturday night Having been adopted by Trini friends that I went to college with, this was nothing short of sacrilege. No Saturday night fete!?!?!? I was livid. Being reduced to partying only on Friday night, even though I had planned to go with friends and bring Trinidad to DC, was still not "right". Then on Monday I text messaged one of my friends, a real Trini soldier, and asked him when he planned to leave. Friday morning was the answer. So we spoke and he cleared up some things for me. Please allow me to diverge, to provide some context.
Last year, I went to Trinidad very stressed. Stressed due to relationship issues. Stressed due to my job loss, which was the first time in my employed life - 9 years - that I was ever let go from a job when I had avoided it for longer than many other people in my line of work and industries. Stressed just because that's the kind of personality I have. I'm high strung. My original plan was to go for 12 days. Now, people who know me know I'm a nice guy. (People who don't know me seem to fear me, but that's a different story.) So, on the Sunday my girlfriend and I were scheduled to leave, I offered to give up our seats to some people who desperately wanted (needed?) to get back to the US. I mean, I was unemployed anyway. Staying in Trinidad wasn't going to hurt my earnings terribly, even though I had begun the process of returning to my old (and now current) J.O.B. So I gave up the seats, on a promise from Continental Airlines that I would be on *the* next flight that day. Well, airline promises aren't worth a damn, so that fell through. Long story short, I ended up buying first class tickets on BWIA back to DC for that Thursday. I have to admit that, after getting over my initial upset and anger, I enjoyed myself greatly for those remaining 4 days. Enough to determine that I needed to stay at least 2 weeks the next time I came down. That is what I planned for back in December 2006.
So, coming back to the present, after my conversation on Monday morning, it occurred to me that I had created this illusion of a "perfect" trip that had to be at least 2 weeks long. It was completely unrealistic under the circumstances, so I decided to quit instead. (As UGK once said - "ain't no need for me to finish if I ain't comin' out first".) However, the experience - of seeing my friends whom I haven't seen since last year, of going to all the fetes I missed last year (the Sunny Side Up Breakfast Fete and Insomnia being the critical ones), and of just getting away from all the bullschitt at my J.O.B. - was worth the trip, even if only for a week.
The linchpin to this story is that although I had already told people I wasn't going to Trinidad, I had not yet cancelled my tickets. Since my departing flight was scheduled for 9:20 AM EST on Wednesday, 14 February, I figured I would hold off until the 13th "just in case". I'm glad I did, because I was able to make an adjustment to the tickets and - voila! - a one week trip instead of two, with the original departure date intact.
Then nature struck.
(Whew! I told you this would be a long bloody post.)
Maybe I'm not supposed to go to Trinidad. I mean, a huge winter storm mucks up the works on the morning I am flying to Trinidad. I get a call at 4:25 AM from my shuttle company telling me that my 4:55 AM shuttle is canceled. (Damn!) So now that I know I'm not making the 9:20 flight, I go online to check the flight status. Canceled. (Brilliant!) Call American and they are able to get me on the 10:45 AM flight. (This could work after all!) I proceed to call the biggest cab company in my area, and they proceed to tell me that they can't get their cars on the road. Its sooo not happening. (Damn!) I have to drive. I wanted to avoid this because I didn't want to pay the exorbitant parking rates that every airport charges, but it appears unavoidable. Call it an expense, and I am happy to pay it after returning from Trinidad. So I get on the road around 8:30 AM, fighting off a Sickle Cell crisis induced by the overexertion of cleaning off the car compounding my chronically sleep deprived state. (Love Demerol! Don't medicate and drive, kids!) Once I reach National Airport (I'll be damned if I call it Reagan National), I find that every flight from every airline going to Miami (my connecting city) is canceled. (Perfect!) Once inside the terminal, I'm frantically trying to find out about getting my bag checked. I use the TSA approved locks, I'm not worried about that. But dammit, WTF don't the kiosks allow international travelers to check in!?!?!? WTF thought this was a good idea???? WTF!?!?!?
(This is why I fly JetBlue to California! I hate the major airlines with a passion. Of course, I didn't sit on the tarmac in NYC for 8 hours either.)
Now I'm waiting in a line that LITERALLY did not move for 45 minutes. I'm standing in the self-service line on the off chance that I can get someone's attention long enough to plead my case to check my bag. I'm doing anything I can think of short of throwing shit. (They still shoot Black people in DC, and enjoy it.) I finally get some modicum of a response from this one agent, obviously overworked and harried, around 10:15 AM. (Reminder the flight time. Scroll back if you need a refresher.) After about 10 - 15 minutes of silence, she says she's going on her break. HELLO? WTF about me? You did say you would see what you could do to help me? How does taking a break help me? Can you at least hand me off to someone else? Fugg me! Another agent, this time a guy, starts working with me but when the exercise ends in defeat, he gives me the obligatory phone number to call to make the impossible changes to my itinerary.
At this point, the memories kind of fade into a blur. I'm sure you're all happy, because this is a long ass post and I need to wrap it up soon. Hell, I'm getting tired of typing. Once I finally get back into the line, it speeds up, taking only 30+ minutes to an agent instead of 45+. So I start telling my story, keeping in mind that I have listened in on or overheard every DC -> Miami cancellation story American has to offer. (Why the hell did they fly the 10:45 but not the 12:20? Huh?) So I'm asking for a flight - any flight, on any airline - to Miami. Nothing. While standing in line, I call the phone number the previous agent gave me and start trying to find something. No go. I call Platinum Travel and they scrounge something together through the Bahamas leaving at 2 something PM. (Should have written that flight number down, because the Bahamian woman in front of me in line was starting the Milton routine. Boy was she unhappy.) For various reasons, I found none of the options too appealing so I wrote them all off except one, which I put on hold. American gives me a voucher made from the remains of my ticket. (Do NOT loose not a single hair off the heads of all 4 tickets, otherwise the whole deal is null and void. Great! That's the same reason I didn't get through Intro to Programming back in 2005.) The woman behind me, heading to a second honeymoon in the Keys with her husband, starts breaking down - badly. Its just ugly.
After getting out of the line, walking through the terminal, I call Platinum Travel and put on hold a flight through the Bahamas on Thursday. (That would be today for everyone who hasn't kept up). Schweet! Now I just need a co-signer in the form of my partner who is opening his house to me. Call him up, and although he sounds upset about it, he signs on. Nice. Progress is being made. I call Platinum Travel back and confirm. We're on! So I make my way back to my parent's house in PG County, so I can be *that* much closer to the airport. After a nap and more crisis pain, I call AmEx back with the intention of locking in the new itinerary. At this point, the agent reads it back, and its missing a leg. Huh? What happened to my flight to Nassau. Oh, it was canceled. Fugg me! Ok, lets put a new one together. After however long, she comes up with a flight through Nassau on Friday. All the same details as the previous itinerary, except the ONLY seat on the plane is first class. Now, I love first class, so its not like she's got to sell me on that bit. Just get me onto the bloody island and I'm happy. But what's the cost? $2064, including the return flight on Delta which carried over from the failed itinerary.
He're's where the trouble starts. See, I don't mind paying the money. That 2K gets me to Trinidad in time for some nice fetes. I've done it before, I'll do it again. If I have a choice of burning time or money, money will win almost every time. But how much is it really worth? I start calling my partner from Monday back, and once I finally get him on the phone, it gets clearer. The 2K buys me 2 nights of parties, but since I'm not in a band for Monday and Tuesday, I end up being a spectator. Fair enough. There's always Jouvert, right? But if I go with the available flight on Sunday, I miss all the hot parties and only have access to the jump up, which I'm only going to watch anyway. But I save 2K. Hmmm. Ain't this a bitch? After some consultation, and another sad story of a failed connection to Miami by another Trini solider who was unfortunate enough to buy ALL his tickets in advance, I decide against the Friday flight.
So here I am. Its 3:13 AM on Thursday, 15 February. I'm at my parents house in Maryland, not San Fernando. Its cold in this bitch. There's black ice outside. The power went out for an hour earlier. Every so often, you hear the ice-laden branches being whipped up (down) by the winds gusting to 40 miles per hour. I wouldn't have to turn the heat up to 80 degrees F if I were in Trinidad right now.
*sigh*
But on the upside, I received e-mail from one of my favorite bloggers tonight. How cool! Already replied. He asked about "the business". We'll see how things go.
And now I think I'm ready for bed. It's been real.
Until next time...stay warm...think Trinidad..."Jumbie" for Road March!
So here I am, back in the house my parents have lived in for the last 18 years, in Maryland. I'm not supposed to be here. I'm supposed to be in Trinidad. The story of why I am here as opposed being in San Fernando, Trinidad is a long, winding and disappointing one. Somehow, I get the feeling that God didn't want me to go to Trinidad, and that saddens me. While I'm still evaluating options, to quote my high school friend Damon, "things look bleak for the home team".
I originally made these reservations in early December, and got a reasonably good deal considering how late in the cycle I did all this. (Thanks American Express Platinum Travel! I love you guys.) $638 round trip to Trinidad 1 week before Ash Wednesday and returning the last day of February. So everything was in order and then...
I remembered that my J.O.B. (Just Over Broke, for anyone not familiar with T. Harv Eker's writings, and boy is that accurate) only gives me 2 weeks of vacation. So I'm looking at burning up all of vacation time on 2 weeks in Trinidad. While I love Trinidad, I can't do what I did last year, when I was unemployed during my time in Trinidad. (Which is why the J.O.B. only gives me 2 weeks instead of the 3 I would have if they had re-instated my seniority when I returned from the failed consulting gig with Unisys. But I'm not bitter.)
I've been weighing this for the last few weeks. Do I go and burn up all the time, or do I stay and piecemeal it out over the course of the year? Fugg me! In mid - late January, I decided to cancel. So I e-mailed the friends I would be staying with and let them know. I justified this decision by saying that I should be here to get things in order with the business, continue pushing forward, all that kind of thing. And I do believe that. But I also promised myself to go to Trinidad Carnival every year from now until I die. This commitment weighed on my conscience; to fail at it so soon was unnerving.
In the last week, however, a few things happened which re-kindled both the hope and the possibility of going to Trini. First, I found out that my friends at Basement Knokers weren't going to throw an event this Saturday night Having been adopted by Trini friends that I went to college with, this was nothing short of sacrilege. No Saturday night fete!?!?!? I was livid. Being reduced to partying only on Friday night, even though I had planned to go with friends and bring Trinidad to DC, was still not "right". Then on Monday I text messaged one of my friends, a real Trini soldier, and asked him when he planned to leave. Friday morning was the answer. So we spoke and he cleared up some things for me. Please allow me to diverge, to provide some context.
Last year, I went to Trinidad very stressed. Stressed due to relationship issues. Stressed due to my job loss, which was the first time in my employed life - 9 years - that I was ever let go from a job when I had avoided it for longer than many other people in my line of work and industries. Stressed just because that's the kind of personality I have. I'm high strung. My original plan was to go for 12 days. Now, people who know me know I'm a nice guy. (People who don't know me seem to fear me, but that's a different story.) So, on the Sunday my girlfriend and I were scheduled to leave, I offered to give up our seats to some people who desperately wanted (needed?) to get back to the US. I mean, I was unemployed anyway. Staying in Trinidad wasn't going to hurt my earnings terribly, even though I had begun the process of returning to my old (and now current) J.O.B. So I gave up the seats, on a promise from Continental Airlines that I would be on *the* next flight that day. Well, airline promises aren't worth a damn, so that fell through. Long story short, I ended up buying first class tickets on BWIA back to DC for that Thursday. I have to admit that, after getting over my initial upset and anger, I enjoyed myself greatly for those remaining 4 days. Enough to determine that I needed to stay at least 2 weeks the next time I came down. That is what I planned for back in December 2006.
So, coming back to the present, after my conversation on Monday morning, it occurred to me that I had created this illusion of a "perfect" trip that had to be at least 2 weeks long. It was completely unrealistic under the circumstances, so I decided to quit instead. (As UGK once said - "ain't no need for me to finish if I ain't comin' out first".) However, the experience - of seeing my friends whom I haven't seen since last year, of going to all the fetes I missed last year (the Sunny Side Up Breakfast Fete and Insomnia being the critical ones), and of just getting away from all the bullschitt at my J.O.B. - was worth the trip, even if only for a week.
The linchpin to this story is that although I had already told people I wasn't going to Trinidad, I had not yet cancelled my tickets. Since my departing flight was scheduled for 9:20 AM EST on Wednesday, 14 February, I figured I would hold off until the 13th "just in case". I'm glad I did, because I was able to make an adjustment to the tickets and - voila! - a one week trip instead of two, with the original departure date intact.
Then nature struck.
(Whew! I told you this would be a long bloody post.)
Maybe I'm not supposed to go to Trinidad. I mean, a huge winter storm mucks up the works on the morning I am flying to Trinidad. I get a call at 4:25 AM from my shuttle company telling me that my 4:55 AM shuttle is canceled. (Damn!) So now that I know I'm not making the 9:20 flight, I go online to check the flight status. Canceled. (Brilliant!) Call American and they are able to get me on the 10:45 AM flight. (This could work after all!) I proceed to call the biggest cab company in my area, and they proceed to tell me that they can't get their cars on the road. Its sooo not happening. (Damn!) I have to drive. I wanted to avoid this because I didn't want to pay the exorbitant parking rates that every airport charges, but it appears unavoidable. Call it an expense, and I am happy to pay it after returning from Trinidad. So I get on the road around 8:30 AM, fighting off a Sickle Cell crisis induced by the overexertion of cleaning off the car compounding my chronically sleep deprived state. (Love Demerol! Don't medicate and drive, kids!) Once I reach National Airport (I'll be damned if I call it Reagan National), I find that every flight from every airline going to Miami (my connecting city) is canceled. (Perfect!) Once inside the terminal, I'm frantically trying to find out about getting my bag checked. I use the TSA approved locks, I'm not worried about that. But dammit, WTF don't the kiosks allow international travelers to check in!?!?!? WTF thought this was a good idea???? WTF!?!?!?
(This is why I fly JetBlue to California! I hate the major airlines with a passion. Of course, I didn't sit on the tarmac in NYC for 8 hours either.)
Now I'm waiting in a line that LITERALLY did not move for 45 minutes. I'm standing in the self-service line on the off chance that I can get someone's attention long enough to plead my case to check my bag. I'm doing anything I can think of short of throwing shit. (They still shoot Black people in DC, and enjoy it.) I finally get some modicum of a response from this one agent, obviously overworked and harried, around 10:15 AM. (Reminder the flight time. Scroll back if you need a refresher.) After about 10 - 15 minutes of silence, she says she's going on her break. HELLO? WTF about me? You did say you would see what you could do to help me? How does taking a break help me? Can you at least hand me off to someone else? Fugg me! Another agent, this time a guy, starts working with me but when the exercise ends in defeat, he gives me the obligatory phone number to call to make the impossible changes to my itinerary.
At this point, the memories kind of fade into a blur. I'm sure you're all happy, because this is a long ass post and I need to wrap it up soon. Hell, I'm getting tired of typing. Once I finally get back into the line, it speeds up, taking only 30+ minutes to an agent instead of 45+. So I start telling my story, keeping in mind that I have listened in on or overheard every DC -> Miami cancellation story American has to offer. (Why the hell did they fly the 10:45 but not the 12:20? Huh?) So I'm asking for a flight - any flight, on any airline - to Miami. Nothing. While standing in line, I call the phone number the previous agent gave me and start trying to find something. No go. I call Platinum Travel and they scrounge something together through the Bahamas leaving at 2 something PM. (Should have written that flight number down, because the Bahamian woman in front of me in line was starting the Milton routine. Boy was she unhappy.) For various reasons, I found none of the options too appealing so I wrote them all off except one, which I put on hold. American gives me a voucher made from the remains of my ticket. (Do NOT loose not a single hair off the heads of all 4 tickets, otherwise the whole deal is null and void. Great! That's the same reason I didn't get through Intro to Programming back in 2005.) The woman behind me, heading to a second honeymoon in the Keys with her husband, starts breaking down - badly. Its just ugly.
After getting out of the line, walking through the terminal, I call Platinum Travel and put on hold a flight through the Bahamas on Thursday. (That would be today for everyone who hasn't kept up). Schweet! Now I just need a co-signer in the form of my partner who is opening his house to me. Call him up, and although he sounds upset about it, he signs on. Nice. Progress is being made. I call Platinum Travel back and confirm. We're on! So I make my way back to my parent's house in PG County, so I can be *that* much closer to the airport. After a nap and more crisis pain, I call AmEx back with the intention of locking in the new itinerary. At this point, the agent reads it back, and its missing a leg. Huh? What happened to my flight to Nassau. Oh, it was canceled. Fugg me! Ok, lets put a new one together. After however long, she comes up with a flight through Nassau on Friday. All the same details as the previous itinerary, except the ONLY seat on the plane is first class. Now, I love first class, so its not like she's got to sell me on that bit. Just get me onto the bloody island and I'm happy. But what's the cost? $2064, including the return flight on Delta which carried over from the failed itinerary.
He're's where the trouble starts. See, I don't mind paying the money. That 2K gets me to Trinidad in time for some nice fetes. I've done it before, I'll do it again. If I have a choice of burning time or money, money will win almost every time. But how much is it really worth? I start calling my partner from Monday back, and once I finally get him on the phone, it gets clearer. The 2K buys me 2 nights of parties, but since I'm not in a band for Monday and Tuesday, I end up being a spectator. Fair enough. There's always Jouvert, right? But if I go with the available flight on Sunday, I miss all the hot parties and only have access to the jump up, which I'm only going to watch anyway. But I save 2K. Hmmm. Ain't this a bitch? After some consultation, and another sad story of a failed connection to Miami by another Trini solider who was unfortunate enough to buy ALL his tickets in advance, I decide against the Friday flight.
So here I am. Its 3:13 AM on Thursday, 15 February. I'm at my parents house in Maryland, not San Fernando. Its cold in this bitch. There's black ice outside. The power went out for an hour earlier. Every so often, you hear the ice-laden branches being whipped up (down) by the winds gusting to 40 miles per hour. I wouldn't have to turn the heat up to 80 degrees F if I were in Trinidad right now.
*sigh*
But on the upside, I received e-mail from one of my favorite bloggers tonight. How cool! Already replied. He asked about "the business". We'll see how things go.
And now I think I'm ready for bed. It's been real.
Until next time...stay warm...think Trinidad..."Jumbie" for Road March!
Carbon Credit Markets
Looks like this market is starting to take off in the US, just as it did in Europe. It will be interesting to watch the developments.
I love this kind of stuff!
I love this kind of stuff!
Monday, February 12, 2007
Update on the Biz
I'll take a moment to update anyone who might be interested on how things are coming.
There isn't a whole lot to report. Just the usual - fighting with vendors, waiting for mail, that kind of thing.
The vendor this time is Verisign. Good lord, it shouldn't be this fuggin' difficult! WTF is the problem with VeriSign!?!?!?! For the love of God, I have tried for 2 weeks to get them a document and every time they receive it, they have a problem with it. Anyone who holds an aversion to cursing should skip the next paragraph.
You know, if you're a startup, you might not be listed in the bloody phone book. We're a fucking startup! Its called stealth, you dumbasses! Just get the damn form, approve it, and give me my friggin' certificate. I don't see what's so difficult here. I'm willing to give you my money and you don't want to exchange it for something of value to me??? WTF?
I feel much better now.
On the other hand, my partner has been making some nice progress. Hopefully, by this Friday, we'll have even more supported platforms for our software. Now its time to find an attorney. I hope to have one locked up by now, but both of the people I wanted to work with have disappeared off the face of the planet. Sounds like a conspiracy to me. I mean, I'm willing to pay - and if I can't pay, compensate on some level, a mix of equity and cash - and still can't get people I know and trust. Very disheartening. Looks like I'll have to turn in the one direction I had least expected to turn, and had most avoided - family.
*sigh*
I swear there's probably something else to say, but my brain is slowly decaying in my skull. More tax forms to complete, a letter to FedEx to VeriSign (since faxes seem so difficult for them to handle, and don't get me started on e-mail), and other random shite.
Until next time....avoid VeriSign if you can...
There isn't a whole lot to report. Just the usual - fighting with vendors, waiting for mail, that kind of thing.
The vendor this time is Verisign. Good lord, it shouldn't be this fuggin' difficult! WTF is the problem with VeriSign!?!?!?! For the love of God, I have tried for 2 weeks to get them a document and every time they receive it, they have a problem with it. Anyone who holds an aversion to cursing should skip the next paragraph.
You know, if you're a startup, you might not be listed in the bloody phone book. We're a fucking startup! Its called stealth, you dumbasses! Just get the damn form, approve it, and give me my friggin' certificate. I don't see what's so difficult here. I'm willing to give you my money and you don't want to exchange it for something of value to me??? WTF?
I feel much better now.
On the other hand, my partner has been making some nice progress. Hopefully, by this Friday, we'll have even more supported platforms for our software. Now its time to find an attorney. I hope to have one locked up by now, but both of the people I wanted to work with have disappeared off the face of the planet. Sounds like a conspiracy to me. I mean, I'm willing to pay - and if I can't pay, compensate on some level, a mix of equity and cash - and still can't get people I know and trust. Very disheartening. Looks like I'll have to turn in the one direction I had least expected to turn, and had most avoided - family.
*sigh*
I swear there's probably something else to say, but my brain is slowly decaying in my skull. More tax forms to complete, a letter to FedEx to VeriSign (since faxes seem so difficult for them to handle, and don't get me started on e-mail), and other random shite.
Until next time....avoid VeriSign if you can...
Wednesday, February 07, 2007
Review of T. Harv Eker's "SpeedWealth"
I said I'd get it up here, and finally, here it is - my review of T. Harv Eker's "SpeedWealth - How To Make a Million in Your Own Business in 3 Years or Less".
First, its a simple book. Nothing at all complex about it. Less than 100 pages. While the advice is not unreasonable, I'm sure some will consider it too simple, just based on page count, to be worth any money. However, I tend to believe that good things need not be complex, and just because something is conceptually simple doesn't mean it is easy to execute in the real world. (Consistent trading strategies and discipline, anyone?)
The book talks about the 8 SpeedWealth principles. In order, these principles are [1] develop a SpeedWealth mindset, [2] deliver massive value, [3] timing - choosing the right business at the right time, [4] systemize, [5] duplicate, [6] leverage, [7] cashing out and [8] do it now! Like I said, simple. Having gone through various failed ventures over the last 10 years or so, I'd definitely agree that all of these are important. Admittedly, number 4 is my favorite just because it is the one I've had the most problems with in the past. I also think these principles hold value at the individual level, and I am all about automating things like investments and financial management (as much as reasonable, anyway).
Now, as for whether I would recommend this book. The answer is yes. Its not a long or difficult read. I read it the first time in about 90 minutes, and I read slowly. I know someone out there is complaining right now about something - either because Harv is the author, or they read it and didn't like it, or some other reason. I don't have anything to tell them. I don't think good knowledge or wisdom MUST be complex. Generally, I find complexity is used as a coverup by people who are extremely insecure. I can only speak for myself, and I am seriously considering buying as many copies of the book as make sense so I can give them away to people I know. Simple things which, if applied, can have huge impact in one's life. I like that.
Anyway, I think I rambled again. Fugg it, I'm done. I liked it. If you stumble across a copy, take a read. Hopefully, if you're working on building a business, the book will help you to find ways to address problems and build that business more quickly, effectively and to a larger scale. Or maybe you'll find applicability of the principles in your personal life.
Until next time...
First, its a simple book. Nothing at all complex about it. Less than 100 pages. While the advice is not unreasonable, I'm sure some will consider it too simple, just based on page count, to be worth any money. However, I tend to believe that good things need not be complex, and just because something is conceptually simple doesn't mean it is easy to execute in the real world. (Consistent trading strategies and discipline, anyone?)
The book talks about the 8 SpeedWealth principles. In order, these principles are [1] develop a SpeedWealth mindset, [2] deliver massive value, [3] timing - choosing the right business at the right time, [4] systemize, [5] duplicate, [6] leverage, [7] cashing out and [8] do it now! Like I said, simple. Having gone through various failed ventures over the last 10 years or so, I'd definitely agree that all of these are important. Admittedly, number 4 is my favorite just because it is the one I've had the most problems with in the past. I also think these principles hold value at the individual level, and I am all about automating things like investments and financial management (as much as reasonable, anyway).
Now, as for whether I would recommend this book. The answer is yes. Its not a long or difficult read. I read it the first time in about 90 minutes, and I read slowly. I know someone out there is complaining right now about something - either because Harv is the author, or they read it and didn't like it, or some other reason. I don't have anything to tell them. I don't think good knowledge or wisdom MUST be complex. Generally, I find complexity is used as a coverup by people who are extremely insecure. I can only speak for myself, and I am seriously considering buying as many copies of the book as make sense so I can give them away to people I know. Simple things which, if applied, can have huge impact in one's life. I like that.
Anyway, I think I rambled again. Fugg it, I'm done. I liked it. If you stumble across a copy, take a read. Hopefully, if you're working on building a business, the book will help you to find ways to address problems and build that business more quickly, effectively and to a larger scale. Or maybe you'll find applicability of the principles in your personal life.
Until next time...
Tuesday, February 06, 2007
The challenge of a financial product with religious dimension
I've heard a bit about sukuk in the past but I haven't kept up with it. Interesting concept. Sounds like preferred stock to me. Maybe I'm oversimplifying a bit, but structured like a bond except for the interest payment (which is disallowed under Islam). Instead, the company pays out profits.
Riiiiiiight. A preferred.
Better position in the capital structure, some guaranteed yield, but a preferred it is. No matter, as long as it works.
However, what struck me the MOST was this quote from the trader profiled in the article, Chris Steer:
I love it! Financial engineering actually uniting people, for once? Could it be, really??? Who'd have thunk!?!?
Riiiiiiight. A preferred.
Better position in the capital structure, some guaranteed yield, but a preferred it is. No matter, as long as it works.
However, what struck me the MOST was this quote from the trader profiled in the article, Chris Steer:
"It's quite simple really. What people don't know, they either don't like or mistrust. The more you find out about something, the more you understand it. It makes you more sympathetic to other religions and cultures."
I love it! Financial engineering actually uniting people, for once? Could it be, really??? Who'd have thunk!?!?
Lies I Tell You!
I have to take some serious issue with this article at the NY Post. The Ritz-Carlton Laguna Niguel is not terribly swanky! Its very unfortunate, too. Just because it shares the name, do not be confused. It was a disappointment compared to the other Ritzes I've stayed in. (I'm building a collection.) I do, however, like the beach front location. Even in March, a walk on the beach was a bit too cool for me, and I live in DC!
Oh well.
*sigh*
Oh well.
*sigh*
Water Redux
This cover story at CFO.com makes a nice complement to my earlier post about investing in water. While that post postulates about water futures as an investment vehicle (if they existed), this CFO article looks at it from public company perspectice. I'm not sure the model is exactly what I would choose, but the general investment thesis is solid. Definitely a space to keep watching.
Blog Recommendation - The Housing Bubble Blog
This one is almost as much a comedy entry as a serious business entry. You gotta love some of the comments re-posted on this blog. Classic! Such as this:
Hilarious!
And this:
I love this blog. A nice quick daily overview of the overall, ground level state of the real estate market, from all over the world (but obviously with a US bent).
Until next time...which shouldn't be too long from now...
"'If you are paying the negative amortization amount, you are looking at a small light at the end of a tunnel,' Smith said. 'It's connected to a locomotive that is going to smack you in the face.'"
Hilarious!
And this:
"'Didn't you read the newspapers? Property values are going down!'"
I love this blog. A nice quick daily overview of the overall, ground level state of the real estate market, from all over the world (but obviously with a US bent).
Until next time...which shouldn't be too long from now...
The Risks of Betting Big on ETFs
I'll have more to say about the risks of this strategy in a future post, inspired by some of Veryan Allen's musings on diversification and All About Alpha's thoughts on portable alpha.
Monday, February 05, 2007
Trading in Disaster
Fascinating stuff!
If only I was a player...
*sniffle*
Sounds like yields haven't compressed too much in one corner of the investment world. I wonder what the chance is that my PIMCO funds invest in cat bonds and similar? Hmmm. Probably very low. How disappointing. I'll have to go take a closer look at the portfolios in the near future.
If only I was a player...
*sniffle*
Sounds like yields haven't compressed too much in one corner of the investment world. I wonder what the chance is that my PIMCO funds invest in cat bonds and similar? Hmmm. Probably very low. How disappointing. I'll have to go take a closer look at the portfolios in the near future.
Saturday, February 03, 2007
Corporate Progress
Things are coming together slowly. I expect to receive the physical copies of the incorporation documents sometime this weekend, as well as getting some verification information notarized. By next week, I expect that this software will be running in its full glory without the restrictions that have plagued us so far. I'm sooo excited! I can't wait to see it actually work!
Shortly, I plan to have that long ago discussed review of T. Harv Eker's "Speedwealth". I'll start by briefly saying that it is a very quick read. I think it took me 60 - 90 minutes while I was waiting for a contractor to arrive at one of my real estate prospect sites. I read it so fast that I immediately knew I would need to re-read it to lock in the concepts. While they are fundamentally simple, they make a lot of sense and appear to be very powerful. I hope to implement many of them in building my software company. Anyway, please bear with me. Its coming after finish my re-read.
More to come...
Shortly, I plan to have that long ago discussed review of T. Harv Eker's "Speedwealth". I'll start by briefly saying that it is a very quick read. I think it took me 60 - 90 minutes while I was waiting for a contractor to arrive at one of my real estate prospect sites. I read it so fast that I immediately knew I would need to re-read it to lock in the concepts. While they are fundamentally simple, they make a lot of sense and appear to be very powerful. I hope to implement many of them in building my software company. Anyway, please bear with me. Its coming after finish my re-read.
More to come...
Wednesday, January 31, 2007
Taking an L on Corn Ethanol
G'day, all.
So I ran across this article on Bloomberg.com the other day which had me seriously thinking about the near term future of corn ethanol, and the long term prospects for cellulosic ethanol.
Basically, the corn folks may have it all wrong in the long term. Of course, I couldn't help but be frustrated that I don't live in the Caribbean, where there are ample supplies of sugarcane. But I digress.
The economics don't even make sense, in the intermediate term. While in the short term I would expect to continue seeing a bid, corn ethanol looks to be the natural gas of biofuels due to the volatility of the market. Corn demand up due to ethanol production (nevermind feeding people and animals), then substitution kicks in (yes, it can work both ways!) OR demand destruction. So the price drops again, until the ethanol producers back off, and the yo yo continues. (Market forces at work, baby!) Then there is the Sanford Bernstein estimate that corn ethanol is only profitable with oil above $70 per barrel!?!? Add to that the fact that, right now, a gallon of corn ethanol costs almost as much as as gallon of gasoline, with only 70% of the energy density of gasoline, and you have a pipe dream.
"To limit supplies and bolster prices, a 54 cent-a-gallon U.S. tariff on imports blocks shipments from countries outside the Caribbean and Central America."
One day, the market will be allowed to work instead of being manipulated in such daft ways. Clearly the American consumer isn't being protected here. Who thinks this shite up?
We can choose between corn for energy (which it doesn't appear to be good at) or corn for food (which it is good at). Hmmm. I wonder which use will win. On second thought, maybe I know already, unfortunately.
My question becomes "who is doing the research on making cellulosic ethanol viable?" Find that gem and, well, I think you can add some nice alpha to your portfolio. I think I'll start looking now.
After my con call...and after I check my commodities account.
Goodnight. Maybe.
So I ran across this article on Bloomberg.com the other day which had me seriously thinking about the near term future of corn ethanol, and the long term prospects for cellulosic ethanol.
Basically, the corn folks may have it all wrong in the long term. Of course, I couldn't help but be frustrated that I don't live in the Caribbean, where there are ample supplies of sugarcane. But I digress.
The economics don't even make sense, in the intermediate term. While in the short term I would expect to continue seeing a bid, corn ethanol looks to be the natural gas of biofuels due to the volatility of the market. Corn demand up due to ethanol production (nevermind feeding people and animals), then substitution kicks in (yes, it can work both ways!) OR demand destruction. So the price drops again, until the ethanol producers back off, and the yo yo continues. (Market forces at work, baby!) Then there is the Sanford Bernstein estimate that corn ethanol is only profitable with oil above $70 per barrel!?!? Add to that the fact that, right now, a gallon of corn ethanol costs almost as much as as gallon of gasoline, with only 70% of the energy density of gasoline, and you have a pipe dream.
"To limit supplies and bolster prices, a 54 cent-a-gallon U.S. tariff on imports blocks shipments from countries outside the Caribbean and Central America."
One day, the market will be allowed to work instead of being manipulated in such daft ways. Clearly the American consumer isn't being protected here. Who thinks this shite up?
We can choose between corn for energy (which it doesn't appear to be good at) or corn for food (which it is good at). Hmmm. I wonder which use will win. On second thought, maybe I know already, unfortunately.
My question becomes "who is doing the research on making cellulosic ethanol viable?" Find that gem and, well, I think you can add some nice alpha to your portfolio. I think I'll start looking now.
After my con call...and after I check my commodities account.
Goodnight. Maybe.
Tuesday, January 30, 2007
Quote of the Day
"Rich people have the option of acting poor. Poor people do NOT have the option of acting rich." - Khyron (e.g. me)
Monday, January 29, 2007
Grudge Match: PE vs. Tech
Umm, the answer is "no".
The question is whether private equity "gets" technology enough to make a successful go at buyouts in that arena.
I think the article lays out the reasons more clearly than I could. Now, why has Silver Lake been successful? I'd attribute it to Roger McNamee's background as a technology analyst and technology venture capitalist gave him above average knowledge of the industry. Now, that's not to say that the big name PE shops couldn't bring on specialists to help manage these investments. But I doubt they are likely to, because (and this is just my opinion/observation), they seem to be very ego driven. Each new buyout becomes another trophy, not an actual business problem to (re)solve. Add to that the fact that few PE shops these days are interested in the bread-and-butter work of corporate restructuring that was the original foundation of the industry, and I don't see how they would make a tech buyout work. They'd be too interested in levering the company, extracting dividends from the proceeds and re-IPO'ing the operation, to actually FIX it. Of course, as the article also points out, given the requirement to maintain cash flows to service the debt, and notorious advance of technology which seeks to stem those cash flows, that kind of shortsighted strategy can only end poorly.
I vote tech. PE will never figure out how to make these situations work, until they become dedicated to it like Silver Lake or Platinum Equity are. Tech is fundamentally a business, like any other, but one with very different requirements from the ones typical taken on by PE investors.
The question is whether private equity "gets" technology enough to make a successful go at buyouts in that arena.
I think the article lays out the reasons more clearly than I could. Now, why has Silver Lake been successful? I'd attribute it to Roger McNamee's background as a technology analyst and technology venture capitalist gave him above average knowledge of the industry. Now, that's not to say that the big name PE shops couldn't bring on specialists to help manage these investments. But I doubt they are likely to, because (and this is just my opinion/observation), they seem to be very ego driven. Each new buyout becomes another trophy, not an actual business problem to (re)solve. Add to that the fact that few PE shops these days are interested in the bread-and-butter work of corporate restructuring that was the original foundation of the industry, and I don't see how they would make a tech buyout work. They'd be too interested in levering the company, extracting dividends from the proceeds and re-IPO'ing the operation, to actually FIX it. Of course, as the article also points out, given the requirement to maintain cash flows to service the debt, and notorious advance of technology which seeks to stem those cash flows, that kind of shortsighted strategy can only end poorly.
I vote tech. PE will never figure out how to make these situations work, until they become dedicated to it like Silver Lake or Platinum Equity are. Tech is fundamentally a business, like any other, but one with very different requirements from the ones typical taken on by PE investors.
Alpha in University Endowments
While I'm sure most of my readers have already devoured this piece at The Economist, I want to take it from a different angle. (Thanks to Abnormal Returns for the lead in analysis that started me down this path.)
First, I have to say that I love this line:
"Perhaps they can stay solvent longer than the market can stay irrational."
We shall see.
Anyway, we all know the story of the big endowments. The Economist article throws out a few stats to help support that story - the big funds have the best returns from employing the best, most swashbuckling managers and occasionally even paying them well. (I'm sure Jack Meyer might disagree with that assessment, which is the cause of the "occasionally" in that sentence.)
But what about the smaller endowments, the ones not blessed with the girth of Harvard, Yale, Stanford, Duke or MIT? How are they looking on the alpha generation front? I imagine the picture is not as pretty.
I stumbled across this link while doing a search on the topic of the endowment of the university I attended (Howard University in Washington, DC). A few hundred million in your endowment does not provide access to the best resources, the best talent, or the best vehicles, clearly. So how does a small endowment go about generating returns even approaching those of the the largest endowments? Is it even possible? I mean, if Meyer's guys could take enough flak to make it more worthwhile to leave Harvard, how is a small private university, or an HBCU, supposed to attract the talent necessary to drive the returns of its endowment?
Now, of course, the answer is probably "it isn't supposed to". That leaves these institutions even more beholden to the well known public markets - equities, bonds (maybe, especially Treasuries), and the other usual suspects. However, participation in true alternative investment markets remains sorely lacking, I'm sure.
A small university endowment (< $1B) should have some flexibility to generate better absolute, risk adjusted returns, however, even if not being able to exploit the same level of alpha generation as the big boys. There are (unfortunately?) hedge funds in this size range. Maybe the optimal approach is the application of so-called "portable alpha" strategies? Maybe its about shelling out the extra compensation for the proper talent, even if it is a small group of individuals (ex-Amaranth traders, maybe)? Of course, the numbers could get big quickly, and if Harvard alumni had the temerity to protest the compensation of one of the best (THE best?) manager in the endowment universe, how can a small liberal arts school or HBCU even fathom hiring a team of such people. How much risk is there for a college or university president, at this level, of such a move?
Anyway, this is something that bothers me on a personal level. Although it fundamentally has little to do with alternative investments and access to them, that is a symptom of a much more pervasive problem. I don't believe it to even be a "race" issue (in the case of HBCUs). It is really a class and size issue. But I still don't like it.
Whew! Finally done. Until next time, gentle readers...
First, I have to say that I love this line:
"Perhaps they can stay solvent longer than the market can stay irrational."
We shall see.
Anyway, we all know the story of the big endowments. The Economist article throws out a few stats to help support that story - the big funds have the best returns from employing the best, most swashbuckling managers and occasionally even paying them well. (I'm sure Jack Meyer might disagree with that assessment, which is the cause of the "occasionally" in that sentence.)
But what about the smaller endowments, the ones not blessed with the girth of Harvard, Yale, Stanford, Duke or MIT? How are they looking on the alpha generation front? I imagine the picture is not as pretty.
I stumbled across this link while doing a search on the topic of the endowment of the university I attended (Howard University in Washington, DC). A few hundred million in your endowment does not provide access to the best resources, the best talent, or the best vehicles, clearly. So how does a small endowment go about generating returns even approaching those of the the largest endowments? Is it even possible? I mean, if Meyer's guys could take enough flak to make it more worthwhile to leave Harvard, how is a small private university, or an HBCU, supposed to attract the talent necessary to drive the returns of its endowment?
Now, of course, the answer is probably "it isn't supposed to". That leaves these institutions even more beholden to the well known public markets - equities, bonds (maybe, especially Treasuries), and the other usual suspects. However, participation in true alternative investment markets remains sorely lacking, I'm sure.
A small university endowment (< $1B) should have some flexibility to generate better absolute, risk adjusted returns, however, even if not being able to exploit the same level of alpha generation as the big boys. There are (unfortunately?) hedge funds in this size range. Maybe the optimal approach is the application of so-called "portable alpha" strategies? Maybe its about shelling out the extra compensation for the proper talent, even if it is a small group of individuals (ex-Amaranth traders, maybe)? Of course, the numbers could get big quickly, and if Harvard alumni had the temerity to protest the compensation of one of the best (THE best?) manager in the endowment universe, how can a small liberal arts school or HBCU even fathom hiring a team of such people. How much risk is there for a college or university president, at this level, of such a move?
Anyway, this is something that bothers me on a personal level. Although it fundamentally has little to do with alternative investments and access to them, that is a symptom of a much more pervasive problem. I don't believe it to even be a "race" issue (in the case of HBCUs). It is really a class and size issue. But I still don't like it.
Whew! Finally done. Until next time, gentle readers...
The Creative Pursuit of Alpha
I like this strategy for its inventiveness. Makes me wonder if there are any cases I can bring on behalf of the U.S. government. Of course, once you factor in the legal fees, Mr. Brickman's cut, and whatever other expenses I'm forgetting to mention, the take probably won't be too huge. But since this looks like an activist role - from the other direction - it should still end up being a win for Greenlight. We'll see how it plays out. Very interesting, though.
Schweet! It has been a very alpha newsworthy start to the week.
Alright, I'm (almost) off to bed...
Schweet! It has been a very alpha newsworthy start to the week.
Alright, I'm (almost) off to bed...
Now You, Too, Can Enter the World of 007 Finance
I can!?!? Fuggin' cool!
Ok, this is getting a bit ridiculous. Is it me or have "alpha-centric investing strategies" become the topic du jour of the MSFM? This worries me.
Ok, this is getting a bit ridiculous. Is it me or have "alpha-centric investing strategies" become the topic du jour of the MSFM? This worries me.
Spot the Investment Thesis!
Trends worth consideration. 1, 5, 7 and 8 are the most relevant to me.
1 is an indictment of the current U.S. government and the people who allowed it to remain in place. Uh. Oh. Yeah. Nevermind.
*sigh*
Moving on, 5 and 8 are purely investment theses. Hmmm.
As for 7, well, Dubai gets it. See what happens when emerging economies can't fall back on oil to corrupt their politicians and sell to the U.S.?
Thanks to Uncle Jack for this one.
1 is an indictment of the current U.S. government and the people who allowed it to remain in place. Uh. Oh. Yeah. Nevermind.
*sigh*
Moving on, 5 and 8 are purely investment theses. Hmmm.
As for 7, well, Dubai gets it. See what happens when emerging economies can't fall back on oil to corrupt their politicians and sell to the U.S.?
Thanks to Uncle Jack for this one.
Sunday, January 28, 2007
Is real estate the asset class most prone to bubbles?
Interesting question over at The Housing Bubble Blog. Food for thought.
Blood in the streets, baby, that's what I'm waiting for.
Blood in the streets, baby, that's what I'm waiting for.
Incorporation Process Started
I FINALLY got around to completing my application with BizFilings for the startup. Feels good to have it out of the way. I look forward to getting the paperwork in hand because there are some things that I need to get done which require proof of the corporation's existence. I love progress!
More to come...
More to come...
Friday, January 26, 2007
Pushing
Almost time for bed. I've just been trying to get a few last items worked out, sending e-mail to my real estate partners and financing thoughts to my software partner. Sometimes it feels like there is too much stuff going on.
*sigh*
On Friday's agenda is to finish up the new corporate registration materials, finish some posts that I've been working on for this site, cancel my trip to Trinidad, and do more reading.
And get more sleep.
Until next time...
*sigh*
On Friday's agenda is to finish up the new corporate registration materials, finish some posts that I've been working on for this site, cancel my trip to Trinidad, and do more reading.
And get more sleep.
Until next time...
Wednesday, January 24, 2007
Thinking about risk premiums
I was perusing this post at All About Alpha again when it occurred to me that if long only large cap mutual funds, and long only strategies in general, depend on risk premium (e.g. that's what encompasses the majority of their returns and thus should be used as the basis for compensating their managers). If that IS the case, markets would appear to be in for a bumpy ride in the near future. Risk premiums have been compressing and are fairly low among a range of asset classes these days (leading to levering up of bets and further afield searches for untapped asset classes). So if the risk premiums are dropping while the risks themselves are staying constant or increasing, at some point, the music has to stop and the situation normalizes. That sounds like a fairly painful event for someone. (Maybe you? Maybe me? Maybe we?)
Now, maybe I'm just thinking about this too simplistically. This just happened upon me while I was catching up on my reading. Fascinating stuff to consider though, and simultaneously very scary. I'll be mulling this over for a little while longer.
Now, maybe I'm just thinking about this too simplistically. This just happened upon me while I was catching up on my reading. Fascinating stuff to consider though, and simultaneously very scary. I'll be mulling this over for a little while longer.
Risk Appetites
Can't say there hasn't been ample warning.
The question is really who is going to take it up the a-- when and just how badly.
The question is really who is going to take it up the a-- when and just how badly.
Tuesday, January 23, 2007
Should Have Seen This Coming
Damn!
I had completely taken my eyes off SUNW while I've been working on this startup situation then they go and do this. And on the schedule that I was expecting too. I haven't even finished my options app yet! So much for buying any SUNW $6 calls in the near future. We'll see if they hang above that tomorrow during the day, because those calls are definitely in the money right now.
Damn!
Lesson Learned: Don't procrastinate on a good idea!
Lesson Learned: Thorough, thoughtful analysis can pay off. Do more of it.
It has been sort of like watching a public company that might otherwise be a CANSLIM candidate find its way to profitability. Granted, SUNW has been public for some time, but if I remember correctly, the "C" in CANSLIM means current earnings per share. Until now, SUNW hadn't had any of those for about 5 years. You could see them creeping closer though, especially after the "N" in CANSLIM - new CEO - took root. I was just a bit early, but the makings were there. So in that regard, I'm ecstatic. Now I just need to do more of that more regularly.
Until next time...
I had completely taken my eyes off SUNW while I've been working on this startup situation then they go and do this. And on the schedule that I was expecting too. I haven't even finished my options app yet! So much for buying any SUNW $6 calls in the near future. We'll see if they hang above that tomorrow during the day, because those calls are definitely in the money right now.
Damn!
Lesson Learned: Don't procrastinate on a good idea!
Lesson Learned: Thorough, thoughtful analysis can pay off. Do more of it.
It has been sort of like watching a public company that might otherwise be a CANSLIM candidate find its way to profitability. Granted, SUNW has been public for some time, but if I remember correctly, the "C" in CANSLIM means current earnings per share. Until now, SUNW hadn't had any of those for about 5 years. You could see them creeping closer though, especially after the "N" in CANSLIM - new CEO - took root. I was just a bit early, but the makings were there. So in that regard, I'm ecstatic. Now I just need to do more of that more regularly.
Until next time...
PLUS and minus
Found this short bit at MarketWatch, courtesy of Fierce Finance, about a new structured product for retail investors from Morgan Stanley called "Performance Leveraged Upside Securities". All I can say is "Wow!" I wonder who would buy one of these anyway? Who gets pitched this stuff? Sheesh!
Casinos Divide to Conquer
Interesting bit in today's WSJ (subscription req'd) about breaking casino companies into essentially their constituent parts - land companies and gaming companies, ala the hotel breakups of the recent past that turned Marriott and Hilton into managment companies as opposed to being necessarily operating companies. It started me thinking about why this may (or may not) work. These proposals seem to be based around the soaring property values on the Las Vegas Strip. However, I don't see how separating real estate from relationships is as easy as separating alpha from beta, at least in this business.
For one, and maybe I'm being the spoil sport here, but doesn't this create more overhead for the casino management companies? Say, for example, if MGM Mirage were to break off its real estate operations into a separate company which owned the actual physical land. MGM now has to pay reasonable, if not market, rates to the real estate company so that the real estate company can cover its costs. It gets worse if the debt stays with the real estate, as mentioned in the article, because the REIT, or whatever form the real estate operations take, has to have the cash flow for debt service.
Another point of concern is the licensing. This may not be as big of an issue, but it still something that needs to be considered. The hotel and resort operations are one piece, but the proper people have to be licensed to run the actual physical casinos. Presumably that is what the casino operating company would handle. Of course, I could be off base.
On the whole, I'd say that this kind of model doesn't seem to fit the casino business all that well. That's not to say some PE shop might not try it. However, the casino business is much more a relationship management business these days, as the article points out about the Harrah's buyout. Getting the regulars to come in and continue spending is the backbone, and the glitz and big spenders is an add-on. Separating the relationships from the facilities might look good on paper, but it sounds like a losing proposition to me.
Also, what happens when the leases come up for renegotiation? What if the REIT or whatever decides that it can get a better deal from a rival or startup operator? Would you feel the same about your favorite resort (mine is The Venetian, right now anyway) if it had to move to another location, a location that most likely would be off The Strip given the relative dearth of available land ON The Strip these days? What does that do to the hotel/casino operator's numbers when they get this kind of deal foisted upon them? I'm not saying its likely, and I'm sure (I hope) the leases are long enough to make it profitable during the term of the lease and provides options after the expiration of said lease. But the REIT could also decide to develop condos or apartments or something non-casino, and it would be well within its rights to do so. It just doesn't look like a winner to me.
But then, what do I know?
For one, and maybe I'm being the spoil sport here, but doesn't this create more overhead for the casino management companies? Say, for example, if MGM Mirage were to break off its real estate operations into a separate company which owned the actual physical land. MGM now has to pay reasonable, if not market, rates to the real estate company so that the real estate company can cover its costs. It gets worse if the debt stays with the real estate, as mentioned in the article, because the REIT, or whatever form the real estate operations take, has to have the cash flow for debt service.
Another point of concern is the licensing. This may not be as big of an issue, but it still something that needs to be considered. The hotel and resort operations are one piece, but the proper people have to be licensed to run the actual physical casinos. Presumably that is what the casino operating company would handle. Of course, I could be off base.
On the whole, I'd say that this kind of model doesn't seem to fit the casino business all that well. That's not to say some PE shop might not try it. However, the casino business is much more a relationship management business these days, as the article points out about the Harrah's buyout. Getting the regulars to come in and continue spending is the backbone, and the glitz and big spenders is an add-on. Separating the relationships from the facilities might look good on paper, but it sounds like a losing proposition to me.
Also, what happens when the leases come up for renegotiation? What if the REIT or whatever decides that it can get a better deal from a rival or startup operator? Would you feel the same about your favorite resort (mine is The Venetian, right now anyway) if it had to move to another location, a location that most likely would be off The Strip given the relative dearth of available land ON The Strip these days? What does that do to the hotel/casino operator's numbers when they get this kind of deal foisted upon them? I'm not saying its likely, and I'm sure (I hope) the leases are long enough to make it profitable during the term of the lease and provides options after the expiration of said lease. But the REIT could also decide to develop condos or apartments or something non-casino, and it would be well within its rights to do so. It just doesn't look like a winner to me.
But then, what do I know?
Monday, January 22, 2007
Back in the Game
Apologies for the lag. The last week has seen me sick, busy, traveling and generally all over the map. Now I'm again ready to play.
So far, things are pretty disappointing on the investment front. Just looking at the wheat charts puts me in tears. I've got 1 month before my March call expires. So far, I'm down. I'm not going to get into how much I'm down, just being down is bad enough. Might have to close this one out. This would appear to be my punishment for chasing performance. We'll see how much value I can salvage on that one.
*sigh*
Anyway, the trip to Cali was a success. I was able to sit down with one of my key advisors and get some good input on writing the business plan, putting together the financials, and other business related topics. On the technology side, I was able to procure some hardware to actually conduct testing of the product my partner is building. I feel good. We're working to have a running demo (that actually does something; at the moment the code runs but doesn't work through no fault of our own) by month's end.
Anyway, for those who are interested, Bill Gross has his January commentary posted over on the PIMCO website. Always worth a read, I think. On the same site, Paul McCulley has a convo with Morgan le Fay about the direction of the Fed Funds. As always, good stuff from the PIMCO crew.
Now that I'm getting back to my reading, I have to wonder how I missed this one over at FT.com (courtesy of Barry Ritholtz at TBP). Dollar decline, anyone? Yeah, I see a great future in this currency. Its never a problem until it is.
Anyway, coming soon will be a piece about alpha in the university endowment world, after I get a chance to read this in full.
Until next time...
So far, things are pretty disappointing on the investment front. Just looking at the wheat charts puts me in tears. I've got 1 month before my March call expires. So far, I'm down. I'm not going to get into how much I'm down, just being down is bad enough. Might have to close this one out. This would appear to be my punishment for chasing performance. We'll see how much value I can salvage on that one.
*sigh*
Anyway, the trip to Cali was a success. I was able to sit down with one of my key advisors and get some good input on writing the business plan, putting together the financials, and other business related topics. On the technology side, I was able to procure some hardware to actually conduct testing of the product my partner is building. I feel good. We're working to have a running demo (that actually does something; at the moment the code runs but doesn't work through no fault of our own) by month's end.
Anyway, for those who are interested, Bill Gross has his January commentary posted over on the PIMCO website. Always worth a read, I think. On the same site, Paul McCulley has a convo with Morgan le Fay about the direction of the Fed Funds. As always, good stuff from the PIMCO crew.
Now that I'm getting back to my reading, I have to wonder how I missed this one over at FT.com (courtesy of Barry Ritholtz at TBP). Dollar decline, anyone? Yeah, I see a great future in this currency. Its never a problem until it is.
Anyway, coming soon will be a piece about alpha in the university endowment world, after I get a chance to read this in full.
Until next time...
Tuesday, January 16, 2007
Blog Recommendation - Footnoted.org
Ok, I know I've been out of the loop but I've been trying to recover from my trip. Maybe I'll go into some detail about it later.
Right now, I'd like to introduce the unfamiliar to Footnoted.org, where they relish in exposing the hidden tidbits buried in the footnotes of corporate SEC filings. I find it a useful source when I am scouting investment ideas too, to see if anything has appeared in the dark, unexplored crevices of the financial statements. A handy resource! Thanks, Michelle.
As for me, I've been very busy with the usual stuff this week. I promise I'll return to my normal schedule of blogging now that things are starting to calm down a bit.
Until next time...I'm off to run some numbers on properties through the spreadsheet.
Right now, I'd like to introduce the unfamiliar to Footnoted.org, where they relish in exposing the hidden tidbits buried in the footnotes of corporate SEC filings. I find it a useful source when I am scouting investment ideas too, to see if anything has appeared in the dark, unexplored crevices of the financial statements. A handy resource! Thanks, Michelle.
As for me, I've been very busy with the usual stuff this week. I promise I'll return to my normal schedule of blogging now that things are starting to calm down a bit.
Until next time...I'm off to run some numbers on properties through the spreadsheet.
Thursday, January 11, 2007
Quattrone's Next Move?
I apologize for the lag in posting. I'm out here in California yet again, sitting down with one of my advisors for this new venture when I can get some of his time. I'll be back in DC on Sunday, so things will start returning to full-on normal then.
This is something I look forward to seeing - the next act of Frank Quattrone. While I never dealt with the man, his reputation is, of course, legendary. So if a man such as Frank Quattrone goes into private equity or builds a hedge fund, as is being widely (mistakenly?) speculated, what does this do for the world of technology finance? Silver Lake was the first really tech-focused PE shop (at least, on a large scale, that I can think of). Roger McNamee's Elevation Partners has garnered a bit of a name in this arena as well, even though they seem to be more media oriented, along the lines of Steve Ratner's Quandrangle Group or Allen & Co. So Silver Lake is kind of the big tech PE name.
So what does happen if Quattrone builds a hedge fund? Of course you'll see lots of people who worked with/for the man in their past lives move into his firm. From the sound of things, I don't think Frank is a hedge fund type of guy. IB is very relationship focused, and Quattrone was the quintessential tech banker. Private equity would appear to be more up his alley.
So how does this affect the world of technology finance? More competition for technology deals seems obvious. A worthy competitor for Silver Lake is pretty much a wrap too. Increased deal sizes. These (generally, if you can stomach the thought of leverage) seem to be good things. On the startup side of the technology equation, I don't think we see much change at all. It'll be the established companies that worry or cheer because Frank is back in the game. The rest of us will just keep on movin' forward.
This is something I look forward to seeing - the next act of Frank Quattrone. While I never dealt with the man, his reputation is, of course, legendary. So if a man such as Frank Quattrone goes into private equity or builds a hedge fund, as is being widely (mistakenly?) speculated, what does this do for the world of technology finance? Silver Lake was the first really tech-focused PE shop (at least, on a large scale, that I can think of). Roger McNamee's Elevation Partners has garnered a bit of a name in this arena as well, even though they seem to be more media oriented, along the lines of Steve Ratner's Quandrangle Group or Allen & Co. So Silver Lake is kind of the big tech PE name.
So what does happen if Quattrone builds a hedge fund? Of course you'll see lots of people who worked with/for the man in their past lives move into his firm. From the sound of things, I don't think Frank is a hedge fund type of guy. IB is very relationship focused, and Quattrone was the quintessential tech banker. Private equity would appear to be more up his alley.
So how does this affect the world of technology finance? More competition for technology deals seems obvious. A worthy competitor for Silver Lake is pretty much a wrap too. Increased deal sizes. These (generally, if you can stomach the thought of leverage) seem to be good things. On the startup side of the technology equation, I don't think we see much change at all. It'll be the established companies that worry or cheer because Frank is back in the game. The rest of us will just keep on movin' forward.
Wednesday, January 10, 2007
The Real Goldilocks
I was just checking in over at Minyanville the other day and found "The Real Goldilocks" by Kevin Depew. Classic!
Tuesday, January 09, 2007
Alpha in the Movie Biz?
This one should make Equity Private proud! Bloomberg has a front page piece on Ben Waisbren and his cohort Ryan Kavanaugh (subject of her poison pen here and here and probably a few other places too). While the article focuses on Waisbren's efforts to crack the Hollywood financing code, my Spidey sense went off shortly into the read. Sure enough, if you get deep enough in, you find the Kavanaugh name.
Wow. You really have to wonder why people think they can find some magic quant model to apply to the entertainment business. I imagine that smarter people than these guys have already run the numbers and thats why the major PE players have stayed out of the business. Bright lights, big city, I guess.
Delicious!
Viva EP!
-K
Wow. You really have to wonder why people think they can find some magic quant model to apply to the entertainment business. I imagine that smarter people than these guys have already run the numbers and thats why the major PE players have stayed out of the business. Bright lights, big city, I guess.
Delicious!
Viva EP!
-K
Monday, January 08, 2007
Marc Faber on Asset Mispricing
Am I a pessimist?
Nah! More like a realist, I think.
Okie, I go now. I have some reading to do, and hopefully a lunch meeting with an old boss. Startup fever, man!
(Maybe I'll sleep in there somewhere too.)
Until next time...
Nah! More like a realist, I think.
Okie, I go now. I have some reading to do, and hopefully a lunch meeting with an old boss. Startup fever, man!
(Maybe I'll sleep in there somewhere too.)
Until next time...
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