Capital Raising Services

Real Estate Credit Investments NAV rises to EUR1.69 per ordinary share

Mon, 09 May 2011 22:55:10 +0000

Real Estate Credit Investments NAV rises to EUR1.69 per ordinary share

Real Estate Credit Investments, the Cheyne Capital managed investment company formerly known as Queen’s Walk, has reported an increase in net asset value from EUR1.59 to EUR1.69 per ordinary share since its recent fundraising.

The company’s net profit was EUR3.1m for the quarter ended 30 September 2010, compared to a net profit of EUR2.8m for the quarter ended 30 June 2010. This represents the fifth consecutive quarter the company has recorded a profit.

The investment portfolio generated gross cash flows of EUR4.5m in the quarter compared with an estimate of EUR3.5m and EUR6.1m received in the previous quarter.

Subsequent to the extraordinary dividend of 14.5 cents per share already paid for the period 1 April 2010 to 15 September 2010, the company has not declared an ordinary dividend for the second quarter. The company has announced a preference dividend of 2.3p for the period 16 September 2010 to 31 December 2010 and currently intends to declare a second interim ordinary dividend in due course.

RECI is delivering on the objectives it laid out in September 2010. The EUR26.6m capital raising that was completed on 15 September 2010 has put the company in a position to invest in undervalued real estate debt.

As at 30 September, the real estate debt portfolio was valued at EUR37.4m, or 37 per cent of the investment portfolio, up from 31 per cent three months earlier.

RECI made EUR9.8m of new bond purchases in the three months to 30 September. From 1 October to 15 November 2010, the company has purchased a further EUR15.4m of bonds, increasing the overall fair value of the real estate debt portfolio to EUR52.9m or 45 per cent of the investment portfolio.

Tom Chandos, chairman of Real Estate Credit Investments, says: “It is a sign of the growing strength of Real Estate Credit Investments that it has delivered a fifth consecutive quarter of profit while laying the foundations for future growth with fresh investments in the real estate debt portfolio.”

Real Estate Credit Investments Limited (RECI) is a Guernsey-incorporated investment company listed on the main market of the London Stock Exchange.

Article from articlesbase.com

Octane Rating

Mon, 09 May 2011 07:28:54 +0000

Octane Rating

Measurement methods

Research Octane Number (RON)

The most common type of octane rating worldwide is the Research Octane Number (RON). RON is determined by running the fuel in a test engine with a variable compression ratio under controlled conditions, and comparing the results with those for mixtures of iso-octane and n-heptane.

Motor Octane Number (MON)

There is another type of octane rating, called Motor Octane Number (MON), or the aviation lean octane rating, which is a better measure of how the fuel behaves when under load as it is done at 900 rpm instead of the 600 rpm of the RON. MON testing uses a similar test engine to that used in RON testing, but with a preheated fuel mixture, a higher engine speed, and variable ignition timing to further stress the fuel’s knock resistance. Depending on the composition of the fuel, the MON of a modern gasoline will be about 8 to 10 points lower than the RON. Normally, fuel specifications require both a minimum RON and a minimum MON.[citation needed]

Anti-Knock Index (AKI)

In most countries, including all of those of Australia and Europe the “headline” octane rating shown on the pump is the RON, but in Canada, the United States and some other countries,[which?] the headline number is the average of the RON and the MON, called the Anti-Knock Index (AKI). It may also sometimes be called the Road Octane Number (RdON), Pump Octane Number (PON), or (R+M)/2.

Difference between RON and AKI

Because of the 8 to 10 point difference noted above, the octane rating shown in the United States is 4 to 5 points lower than the rating shown elsewhere in the world for the same fuel. See the table in the following section for a comparison.

Examples of octane ratings

The MON of n-heptane and iso-octane are exactly 0 and 100, by definition. The following table lists octane ratings for various other fuels.

Fuel

RON

MON

AKI

hexadecane

< -30

n-octane

-10

n-heptane (MON 0 by definition)

diesel fuel

1525

2-methylheptane

n-hexane

2-methylhexane

1-heptene

n-pentane

requirement for a typical two-stroke outboard engine

1-pentene

n-butanol

n-butane

“regular” gasoline in Canada and the US

9192

8283

“EuroSuper” or “EuroPremium”

8586

9091

“premium” gasoline in Indonesia

“premium” gasoline in the US

97-98

8889

“SuperPlus” in Germany, Great Britain and Slovenia

8990

9394

iso-octane (MON 100 by definition)

100

benzene

101

“BP Ultimate 102″

102

9394

9798

t-butanol

103

ethane

108

propane

110

toluene

111

103

E85 gasoline

100-105

xylene

117

isopropanol

118

108

ethanol

129

102

116

methanol

133

105

119

methane

135

122

129

hydrogen*

> 130

very low

*Hydrogen does not fit well into the normal definitions of octane number. It has a very high RON and a low MON, so that it has low knock resistance in practice, due to its low ignition energy (primarily due to its low dissociation energy) and extremely high flame speed. These traits are highly desirable in rocket engines, but undesirable in Otto-cycle engines. However, as a minor blending component (e.g. in a bi-fuel vehicle), hydrogen raises overall knock resistance. Flame speed is limited by the rest of the component species; hydrogen may reduce knock by contributing its high thermal conductivity[citation needed]

Effects of octane rating

It needs additional references or sources for verification. Tagged since August 2007.

It may require general cleanup to meet Wikipedia’s quality standards. Tagged since August 2008.

Higher octane ratings correlate to higher activation energies. Activation energy is the amount of energy necessary to start a chemical reaction. Since higher octane fuels have higher activation energies, it is less likely that a given compression will cause autoignition.

It might seem odd that fuels with higher octane ratings are used in more powerful engines, since such fuels ignite less easily. However, an uncontrolled ignition is not desired in an internal combustion engine. The fuel must be fired at a precise time. An ignition too early will cause the resulting forces to try to turn the crankshaft in the reverse direction. This will not cause the engine to rotate in the reverse direction because of the kinetic energy in the rotating assemblies and the flywheel, but will strain the crankshaft. This strain is the source of the characteristic ‘ping’ noise heard during detonation. This reduces power output, because much of the energy is absorbed as strain and heat in parts of the engine,[citation needed] rather than being converted to torque at the crankshaft.

A fuel with a higher octane rating can be run at a higher compression ratio without causing detonation. Compression is directly related to power (see engine tuning), so engines that require higher octane usually deliver more motive power. Engine power is a function of the fuel, as well as the engine design, and is related to octane rating of the fuel. Power is limited by the maximum amount of fuel-air mixture that can be forced into the combustion chamber. When the throttle is partially open, only a small fraction of the total available power is produced because the manifold is operating at pressures far below atmospheric. In this case, the octane requirement is far lower than when the throttle is opened fully and the manifold pressure increases to atmospheric pressure, or higher in the case of supercharged or turbocharged engines.

Many high-performance engines are designed to operate with a high maximum compression, and thus demand high-octane premium gasoline. A common misconception is that power output or fuel mileage can be improved by burning higher octane fuel than a particular engine was designed for. The power output of an engine depends in part on the energy density of its fuel, but similar fuels with different octane ratings have similar density. Since switching to a higher octane fuel does not add any more hydrocarbon content or oxygen, the engine cannot produce more power.

However, burning fuel with a lower octane rating than required by the engine often reduces power output and efficiency one way or another. If the engine begins to detonate (knock), that reduces power and efficiency for the reasons stated above. Many modern car engines feature a knock sensor a small piezoelectric microphone which detects knock, and then sends a signal to the engine control unit to retard the ignition timing. Retarding the ignition timing reduces the tendency to detonate, but also reduces power output and fuel efficiency.

Most fuel stations have two storage tanks (even those offering 3 or 4 octane levels), and you are given a mixture of the higher and lower octane fuel. Purchasing premium simply means more fuel from the higher octane tank. The detergents in the fuel are the same.

The octane rating was developed by chemist Russell Marker at the Ethyl Corporation c1926. The selection of n-heptane as the zero point of the scale was due to the availability of very high purity n-heptane, not mixed with other isomers of heptane or octane, distilled from the resin of the Jeffrey Pine. Other sources of heptane produced from crude oil contain a mixture of different isomers with greatly differing ratings, which would not give a precise zero point.

Regional variations

The selection of octane ratings available at the pump can vary greatly from region to region.

Australia, “regular” unleaded fuel is 91 RON, “premium” unleaded with 95 RON is widely available, and 98 RON fuel is also reasonably common. Shell used to sell 100 RON petrol from a small number of service stations, most of which are located in capital cities (stopped in August 2008).

Germany, big suppliers like Shell or Aral offer 100 RON gasoline (Shell V-Power, Aral Ultimate) at almost every fuel station.

Italy, 95 RON is the only compulsory gasoline offered (verde), only few fuel stations (Agip, IP, IES, OMV) offer 98 RON as the premium type, many Shell and Tamoil stations close to the cities offer also V-Power Gasoline rated at 100 RON

Indonesia Indonesia’s “premium” petrol has 88 RON which is the most consumed petrol as it is cheap (around 50 cents each liter). Other choices are “Pertamax” with RON 92 and the “Pertamax Plus” variant has RON 95, which is the highest octane in Indonesia.

Malaysia, the “regular” unleaded fuel is 95 RON, “premium” fuel is rated at 97 RON, and Shell’s V-Power is rated at 97 RON.

Netherlands, Shell V-Power is a 97 RON (labelled as 95 due to the legalities of only using 95 or 98 labelling), whereas in neighbouring Germany Shell V-Power consists of the regular 100 RON fuel.

New Zealand; 91 RON “Regular” and 95 RON “Premium” are both widely available. 98 RON is available instead of 95 RON at some service stations in larger urban areas.

Ireland, 95 RON “unleaded” is the only petrol type available through stations, although E5 (99 RON) is becoming more commonplace.

Russia and CIS countries, 80 RON (76 MON) is the minimum available, the standard is 92 RON, however, the most used type is 95 RON.[citation needed]

South Africa, “regular” unleaded fuel is 95 RON in coastal areas with most fuel stations optionally offering 97 RON. Inland (higher altitude) “regular” unleaded fuel is 93 RON, once again most fuel stations optionally offer 95 RON.

United Kingdom, ‘regular’ petrol has an octane rating of 95 RON, with 97 RON fuel being widely available as the Super Unleaded. Tesco and Shell both offer 99 RON fuel. BP is currently trialling the public selling of the super-high octane petrol BP Ultimate Unleaded 102, which as the name suggests, has an octane rating of 102 RON. Although BP Ultimate Unleaded (with an octane rating of 97 RON) and BP Ultimate Diesel are both widely available throughout the UK, BP Ultimate Unleaded 102 is (as of October 2007) only available throughout the UK in 10 filling stations, and is priced at about two and half times more than their 97 RON fuel. Also offered Shell V-Power, but in a 99 RON octane rating, and Tesco fuel stations also supply the Greenergy produced 99 RON “Tesco 99″.

United States, in the Rocky Mountain (high altitude) states, 85 AKI is the minimum octane, and 91 AKI is the maximum octane available in fuel. The reason for this is that in higher-altitude areas, a typical naturally-aspirated engine draws in less air mass per cycle due to the reduced density of the atmosphere. This directly translates to less fuel and reduced absolute compression in the cylinder, therefore deterring knock. It is safe to fill up a carbureted car that normally takes 87 AKI fuel at sea level with 85 AKI fuel in the mountains, but at sea level the fuel may cause damage to the engine. A disadvantage to this strategy is that most turbocharged vehicles are unable to produce full power, even when using the “premium” 91 AKI fuel. In some east coast states, up to 94 AKI is available . In parts of the Midwest (primarily Minnesota, Iowa, Illinois and Missouri) ethanol based E-85 fuel with 105 AKI is available . Often, filling stations near US racing tracks will offer higher octane levels such as 100 AKI. California fuel stations will offer 87, 89, and 91 AKI octane fuels, and at some stations, 100 AKI or higher octane, sold as racing fuel. Until summer 2001 before the phase-out of methyl tert-butyl ether aka MTBE as an octane enhancer additive, 92 AKI was offered in lieu of 91.

Generally, octane ratings are higher in Europe than they are in North America and most other parts of the world. This is especially true when comparing the lowest available octane level in each country. In many parts of Europe, 95 RON (90-91 AKI) is the minimum available standard, with 97/98 RON being higher specification (being called Super Unleaded). The higher rating seen in Europe is an artifact of a different underlying measuring procedure. In most countries (including all of Europe and Australia) the “headline” octane that would be shown on the pump is the RON, but in Canada, the United States and some other countries the headline number is the average of the RON and the MON, sometimes called the Anti-Knock Index (AKI), Road Octane Number (RdON), Pump Octane Number (PON), or (R+M)/2. Because of the 8 to 10 point difference noted above, this means that the octane in the United States will be about 4 to 5 points lower than the same fuel elsewhere: 87 octane fuel, the “regular” gasoline in Canada and the US, would be 91-92 in Europe. However most European pumps deliver 95 (RON) as “regular”, equivalent to 9091 US AKI=(R+M)/2, and deliver 98, 99 or 100 (RON) (93-94 AKI) labeled as Super Unleaded – thus regular petrol sold in much of Europe corresponds to premium sold in the United States.

In other countries “regular” unleaded gasoline, when available, is sometimes as low as 85 RON (still with the more regular fuel, 95, and premium, around 98, available).

Speculators May Cause Hikes in Uranium Prices

Sun, 08 May 2011 16:30:01 +0000

Speculators May Cause Hikes in Uranium Prices

Summary: TradeTech LLC Chief Executive Gene Clark talked with StockInterview about the uranium bull market, where his price models show uranium prices heading and when to expect the peak of the current upward cycle of the bull market. When will “hard” times again hit the uranium market, and how long will the trough last? And what does the future hold for the uranium price? An industry insider gives us his insights.

StockInterview: When the uranium bull market began, did you foresee /pound uranium, now that the spot price has risen above this level?

Gene Clark:
I don’t think any of us saw per pound coming. We had price projections at the time that indicated probably per pound, which would be a long term equilibrium price in constant dollar terms. But, I think it was a surprise the price went up so high. I think what’s going, the biggest factor right now, is the advent of the so called hedge funds or speculator fund and groups of people. The price started to go up, and they came into the market with the express purpose of buying for holding and then selling into the market later to realize the trading profit. In 2005, the hedge funds were responsible for purchasing about 10 million pounds of the 29 million pounds purchased. I think the market is now finally adjusting to the realities of primary supply and demand. It’s been a depressed market for 20 or 30 years, primarily from the draw down of excess inventories, and what we call secondary supply.

StockInterview: Will the speculators remain active in driving the spot uranium price higher?

Gene Clark:
I think there is still some room for further speculation activity. Uranium Participation Corporation, for example, is rumored to be about to come to the equities market again to raise funds for another purchase. They’re asking for authority to buy UF6, as well as U308, and different forms of uranium than they were locked into before. Whether it be at the 10 million pound level (size of purchase), I think it kind of depends on where the market goes. If it tends to flatten out, then I think there’s going to be obviously less interest on their part. When they were active in the market, they, of course, wanted the price to go up. Therefore, they weren’t too careful about what they paid for uranium. I think that’s a part of it. In the long run, it was due for a readjustment to reflect prices of the cost of new production facilities. But, the hedge funds came in and kind of overdrove the market. Eventually, what it’s going to wind up doing is, if they sell off, it could have the impact of driving prices back down below where they would otherwise have gone.

StockInterview: Did the speculators interfere with the trading efficiency of the uranium market?

Gene Clark:
In theory, speculators come in, tend to take the risk and smooth out market prices. But, it never really works out that way. They always come in and only take the risk, if there’s an opportunity to make money. So some people make a lot of money. It does tend to upset the market. If you get away from the primary users of uranium and primary producers of uranium as your market participants, then you tend to introduce more noise than you would like.

StockInterview: With that in mind, in which direction are your price projections going?

Gene Clark:
We’re actually updating our uranium price forecast right now. We haven’t decided on a reference case yet. The reference cases we’re looking at will peak at about to per pound in about three years, and will then drop off pretty drastically. It has to do with a selling of the speculator reserves, the uranium that’s being held (for speculative purposes). I can see it coming back down to , maybe below per pound. Then, in the long run – out through 2020 – getting easily back up over per pound.

StockInterview: Are you predicting a down cycle during the course of the uranium bull market?

Gene Clark:
Yes. It’s pretty consistent with everything we’re doing with the changes in requirements, in different cases of high, low, and medium demand. Our modeling system is projecting this. It has to do with the supply and demand balance and the cost on the margin. The way to describe it is that prices have come to a point now of higher than we would have projected them to be, such that the supply is going to evolve. The large low cost projects will reach a point where supply then overshoots demand for a few years, which causes the price to come back down. Then demand growth, in the long run, picks up and puts a lot of pressure on the supply market to be able to meet the demand. So you wind up with pressure toward the end of the period.
StockInterview: But the markets are finicky, filled with variables, and can frequently trick price models.

Gene Clark:
Here’s what it would take to shoot that down: We have a problem with small numbers, and there are some very large projects – Cigar Lake, for example. The expansion of Olympic Dam in Australia would be going from about 12 million pounds of production to over 30 million pounds, if they finish. If you shift that out by four or five years, or if the owner decides, “No, we’re not going to expand at all,” you have a drastic effect. Then you would wind up with 0 per pound uranium, I think.

StockInterview: What are your estimates on the peak price years and the bottom years?

Gene Clark:
A lot of things could change, but here is what we’re looking at. In one case scenario, the speculators are really going to stay out of the market and holding onto their stuff for a long time. If so, then we’re going to be at the peak by the end of this year. If they stay active in the market and buying, then that stretches it out further. Depending on the scenario, we see the peak possibly at 2008 or so. I would say we’re looking at a trough around the timeframe of 20011 to 2013. Then back up after that.

StockInterview: How do you arrive at your weekly numbers for the spot uranium price?

Gene Clark:
We get our data from all of the key sources: the utility fuel managers, sales staff and management of uranium producers and processors, and uranium traders, brokers and asset managers. Some are, of course, more cooperative than others, and whom we call depends on the type of information we are seeking. Since our price indicators are a judgment call, we often focus on the losers in particular recent transactions, as those will be the next to make offers in the market.

StockInterview: Let’s back up a bit. Why has uranium gone up past the levels of the “cost of production,” which would place the spot price between and /pound?

Gene Clark:
The biggest factor, in signaling the market, was when utilities went out for long term bid requests. They found they reached a period in which producers would have to build new facilities. Producers building those facilities felt, “I have to make at least enough profit to cover the construction costs for those facilities.” That was much higher than the market at the time. Basically, you reached a point where the chief stuff has been sold. Now, we have to actually spend some money, some capital, to build new facilities, new mines and new mills. That was, I think, the earliest signal of the price needing to adjust.

StockInterview: Isn’t there a ton of hype across all media channels about the “nuclear renaissance” and the demand for more nuclear energy?

Gene Clark:
First of all, all the hype about nuclear renaissance is really in the United States. The Chinese have had plans to expand for a long time. The Japanese have been steadily adding new capacity. Koreans have been adding new capacity. Indians have been adding new capacity all along, all the way through this, even before we started this discussion on nuclear renaissance. I think that phrase is really focused more in the United States., which really hasn’t ordered a plant since 1976 or something like that. There is a boom. Maybe it’s the uranium renaissance.

StockInterview: Is all of what we’ve been reading just plain hype?

Gene Clark:
There is some hype, but there is also some substance. A part of it is certainly a change in public attitude about nuclear power. If I was riding on an airplane, ten years ago, and someone asked me what I did for a living, I was guaranteed to have a lousy trip, arguing about nuclear power. When I mention it now, I get a positive response. There’s been a market shift in public attitude about nuclear power. From the standpoint of the utilities that would be ordering nuclear plants. To the extent that they need new capacity, looking at nuclear now is not off the drawing boards, partly because of public attitude. The industry has been moving through this trough period, preparing itself for a new era. It remains to be seen when the first order comes. But when the first actual order of a nuclear power plant, along with the license application does come, I think you’ll see several U.S. utilities following, probably five utilities very actively involved.

StockInterview: When will that actually happen?

Gene Clark:
I think it will come within the next five years, the ordering process. Of course it will be probably another eight years before we actually see the first power plant from that process. We’re talking probably about 13 years. That’s how long it takes. You can actually construct one in 48 months, but you have to have been through the licensing. If you don’t believe the anti-nuclear people are going to be psyched up to fight the first plant coming through, then you’d be very naïve. The first one is going to be more difficult and take more time, I think.

StockInterview: One anti-nuclear group told us they do not believe we’ll have more nuclear power plants in the United States.

Gene Clark:
That’s possible, but given the current circumstances, my guess is we will have more nuclear plants. We need the capacities, whether we’re going to build coal plants (or other types of power generating plants). I just came from California, moved here (to North Carolina) six months ago. They were talking about building gas-fired plants for base load generation, which is the most ridiculous thing you can imagine. The plants are cheap to build, but the fuel cost is exorbitant. I did a speech a couple of years ago, having looked at the Energy Information Administration’s projections of gas demand. All the growth and natural gas demand is going to be in the electric utility sector. We are going to be importing 60 percent of our gas supplies by 2020. Does that make any sense? No. We have a lot of coal, but there are lots of complaints about coal burning. In our state of North Carolina, the attorney general is actually suing the Tennessee Valley Authority (TVA) for the damage from coal burning of the TVA’s power plants in the adjacent state, in Tennessee. There’s going to be continued pressure on coal burning. I think nuclear has as good a shot as any in terms of new capacity.

StockInterview: Some critics have argued China and India will not be able to afford the massive nuclear power plant build up they’ve envisioned.

Gene Clark:
If you think the Chinese are going to have any problem financing things, you’d better think twice. Let’s focus on India. India is a clear case where, and it is a good rule of thumb, one percent growth in gross domestic product requires one percent growth in electricity requirement. For India to grow economically, it needs electric power. Where are they going to get it? They have coal plants there, as well. Once you use up all your hydro capacity, you really don’t have much to choose from, except coal, natural gas, and nuclear. To the extent that they can have economic growth and income, coming into their country, they would be able to finance nuclear power plants. My guess is they’re going to get the vendors of the nuclear plant to finance them.

StockInterview: Are you talking about the French?

Gene Clark:
Cogema and Primaton – the companies that construct the nuclear plants. Financing is generally part of the package. The first plants in China were basically financed by the French government. If the French go into India, you’ll see the same thing. The Russians have financed plants for developing countries. That’s not unusual for them to do. The United States may, or may not, get involved. I think there have been some types of guarantees in the past, but not at the same level as the Russians and French do it. I think those are the big choices. I wouldn’t be surprised to see the South Koreans involved in the reactor export market. They’ve pretty much developed their own technology now. They have the capability of building 100 percent of a nuclear power plant in South Korea: the pressure vessels, all the steel requirements. They can do it all. We really haven’t seen them export yet, because they’ve used up all their manufacturing capacity for their own program. At some stage, I wouldn’t be surprised to see that happen. And I think they would be able to finance reactor export sales.

StockInterview: How are the U.S. utilities going to fare in getting their “share” of uranium to fuel our domestic nuclear power plants in the context of the apparent overwhelming Asian demand?

Gene Clark:
In reality, the U.S. utilities, which tend to wait longer to contract, are going to be the ones on the losing end because the Chinese and the Indians will contract early. The implication is the Chinese and Indians are not going to be able to find enough uranium for their new plants. They are committing for supplies way out into the future. When the U.S. guys come to the market, they’re going to look around say, “Oh blankety- blank, what happened? Where’s the uranium?” They’ll be the ones that sat around. I think that is what’s going to happen unless things really change in the way contracting is done in the United States.

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When Should a Company Start Raising Venture Capital?

Sun, 08 May 2011 01:26:58 +0000

When Should a Company Start Raising Venture Capital?

Most entrepreneurs often feel that venture capital should be raised prior to or immediately at the onset of a business. However, this is not often the case. Venture capital, as discussed in previous articles, can be raised in several different stages. In order to finance your growing business, you can skip the steps regarding startup/seed capital and move directly into mezzanine capital. This is especially true if you business is operational, profitable, and has an extensive operating history.

When looking for venture capital it is often difficult to determine when and what type of capital is required. Again, the most advanced your business (and the more profitable) the easier it will be to secure an investment from a venture capital firm. In some instances, it may be appropriate to raise capital only when your business intends to undergo an aggressive expansion. This will not only ensure that you will have an easier time raising capital, but your business will also meet the growth criteria required by venture capitalists. However, this is not only the case. In regards to companies that have proprietary technology or a highly unique business model, it may be appropriate for you to being to raise venture capital prior to the onset of operations.

As has been a common theme throughout these articles, there is difficulty in obtaining private capital – and by having either an established business that is growing, proprietary technology, or a highly unique business plan – you will be in a much better position to acquire funding from private investment firms.

When determining when to raise capital, you may want to consult with your certified public accountant prior to entering this process. In our next article, we will discuss the general costs of raising capital.

Looking For Venture Capital is a specially designed website for entrepreneurs that are seeking to raise capital for their startups, small businesses, and expanding existing businesses. The focus of the site is on Venture Capital.

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Orchard Growth CEO challenges Shadow Minister John Penrose at London Stock Exchange AIM conference

Sat, 07 May 2011 10:28:14 +0000

Orchard Growth CEO challenges Shadow Minister John Penrose at London Stock Exchange AIM conference

Ash Mehta attended the recent AIM conference held at the London Stock Exchange with a keynote address from John Penrose, Shadow Minister for Business, providing the opportunity to challenge the opposition’s plans for small business regulation.

Orchard Growth’s CEO, Ash Mehta, recently attended the AIM conference held at the London Stock Exchange, during which keynote addresses were presented by Lord Drayson, Minister of State for Science and Innovation, and John Penrose, Shadow Minister for Business. Penrose outlined his concerns regarding the cost of complying with business regulation for SMEs, quoting a figure of £76 billion spent annually. In order to reduce this amount, the Shadow Minister for Business described plans to involve small businesses in a process of evaluating and ultimately voting for business regulations that should be kept in place. This idea prompted a challenge when questions were invited from the floor from Orchard Growth’s CEO that put Penrose on the spot. For more information, call 0845 3700 303 or visit www.orchardgrowth.com.

“When I listened to his ideas about how to improve the state of business regulation, I was rather shocked. It sounded like he wanted to create a bizarre kind of popularity contest, and I couldn’t let that go unchallenged,” explained Ash. “I asked him if he was aware that he was advocating reforming business regulation by turning it into an X-Factor style vote. I think that Her Majesty’s opposition should be producing greater challenge to the government and a more coherent vision for Britain’s future.” When asked how the Shadow Minister responded, Ash replied; “He was very uncomfortable, I genuinely think that the parallels between his proposed solution and a Saturday night entertainment show had never occurred to him.”

“I do think that the cost incurred by small businesses to comply with regulations is a serious issue, although I am curious about the source of the huge figure that was quoted in the speech,” Ash continued. “However, there are other factors that are also seriously damaging small businesses, and those changes in regulation have seriously reduced investment in small businesses. I would like to see a data-driven approach to creating the right business climate, akin to the way a financial director would examine performance in a company and how it is affected by changes in company policy and activity. A financial director would never change the direction of a company without examining the impact of that change, and then constantly evaluating results. As long as business policy is determined by party agendas,” Ash added, “I simply don’t see how the foundations of our business climate can be improved in any meaningful or sustainable fashion.”

Orchard Growth Partners provides extensive help to growing businesses that are seeking venture capital funding, or other types of small business fund raising. We have extensive connections with the business angel network and provide tailored help for growth businesses at all stages of the capital fund raising process. Our financial director services also assist owners with planning their business exit strategy and also prepare for initial public offerings. Orchard Growth Partners pride themselves upon providing the financial expertise to guide a business owner through the growing pains of business expansion, freeing them to concentrate on running their business.

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Steel Enterprises Overseas Exploration Must “see Quasi”

Fri, 06 May 2011 19:25:40 +0000

Steel Enterprises Overseas Exploration Must “see Quasi”

Widespread financial crisis, domestic steel companies are also increasing the pressure, but it seems they can not stop

Iron ore Enthusiasm for the acquisition of resources.

Steel enterprises into overseas M & A boom

12 18, Wuhan Iron and Steel Company has agreed to 180 million Australian dollars (about 127 million U.S. dollars) price, purchase CentrexMetals iron ore project in Australia 50% of the shares. Centrex said, according to the agreement, Wuhan Iron and Steel will be the implementation of a formal agreement to pay 59.5 million Australian dollars a week, a formal agreement is expected in the March 17 execution. And then again in March 2010 to pay 30 million Australian dollars, and in the production target has been achieved, to pay the remaining funds. Centrex also said that Wuhan Steel to 9.7 million Australian dollars will buy 15% stake in the company Centrex. The two sides agreed to Eyre Peninsula in South Australia

Cooperation Construction of a deep water export port.

“From the Wuhan Iron and the contract term, until some time after 2010 can be achieved, which is good, there are bad places.” Productivity in the business distribution center, said steel analyst Rong-Liang, Wuhan Iron and Steel As an enterprise, in itself need cash flow. Under the pressure of the financial crisis, many businesses face cash flow problems. Of course, long-term view of the steel industry, this time a contract can not be good, can not say bad, because the global

Iron ore price Still lacks a clear direction. But what is certain is that with next year’s International

Iron ore talks Prices decline, followed by a period of time is the acquisition time for the international iron ore resources better, low cost.

Fact, apart from Wuhan, China in recent years, many steel companies have set off a wave of overseas acquisitions. The most classic is the joint Alcoa Aluminum, spending huge sums to buy Australian iron ore giant Rio Tinto produced 12% of the shares. Not long ago, China Steel Group to offer access to 1.36 billion Australian dollars of Australian iron ore producer Midwest Corporation’s absolutely controlling. Statistical, said Chinese companies to acquire the global mineral resources within the capital has reached 18 billion U.S. dollars.

China should study the Japanese experience

Present, due to the financial crisis, falling commodity prices of iron ore, Rio Tinto shares plunged Chalco billions of dollars in the acquisition of Fukui. While statistics say Chinese companies overseas acquisitions in recent years has been loss of as much as much as 200 billion yuan, a huge lesson.

“I am now more inclined to buy domestic iron and steel mines abroad.” He Rong Liang said the Chinese steel companies to acquire overseas iron ore was a trend, but China should, like Japan, there are policies that support it. The strength of iron and steel enterprises in China is relatively small, overseas acquisitions bloated.

He Rong Liang analysis, coke and iron ore prices to China’s influence is different. China’s comparative lack of iron ore, so a global scale, iron ore prices rose a greater impact on China. From the current major steel producing countries in the world, China, Japan, South Korea Dengjun are relatively high dependence on foreign countries. Japan and South Korea’s external dependence were higher than China, Japan, 85% rely on overseas iron ore market, but international

Iron ore prices Situation, but iron and steel enterprises in China are more affected.

He Rong Liang said that the Japanese steel companies produced more high value-added products, high technology content, in pricing these products is very strong, by the iron ore prices have less effect. Meanwhile, as technology advanced, the utilization of Japan’s iron ore highest in the world. In this case, the iron ore price rise will be weakened or even squeeze some Chinese steel companies, the Japanese steel companies raise prices for steel and for huge profits.

“Actively promote overseas mineral exploration subsidy scheme to encourage foreign mining is the core of Japan’s strategy of global resources.” He Rong Liang said that the Japanese strategy of global resources is the main long-term, a large number of imports, and a planned reserve.

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Cap, Auction, and Trade: Auctions and Revenue Recycling Under Carbon Cap and Trade – Select Committee on Energy Independence and Global Warming – 2008-01-23 – Going Once, Going Twice . . . Select Committee to Examine Auction System in Climate Cap-and-Trade Bill. On Wednesday, January 23rd 2008, Chairman Edward Markey (D-Mass.) and the Select Committee on Energy Independence and Global Warming held a hearing entitled “Cap, Auction, and Trade: Auctions and Revenue Recycling Under Carbon Cap and Trade.” This hearing examined the potential role of auctioning tradable pollution allowances under a cap-and-trade system to reduce global warming pollution, instead of giving them away for free to polluters – and potential uses for the tens of billions of dollars that could be generated through such auctions. PANEL: Hon. Ian Bowles, Secretary of Energy and Environmental Affairs, Commonwealth of Massachusetts; Peter Zapfel, Coordinator for Carbon Markets and Energy Policy, European Commission – Environment Directorate General; Dallas Burtraw, Senior Fellow, Resources for the Future; John Podesta, President and Chief Executive Officer, Center for American Progress; Robert Greenstein, Executive Director, Center on Budget Policies and Priorities. Video provided by the US House of Representatives.
Video Rating: 1 / 5

EMERGING TRENDS IN CAPITAL STRUCTURE DECISSIONS

Fri, 06 May 2011 04:32:40 +0000

EMERGING TRENDS IN CAPITAL STRUCTURE DECISSIONS

INTRODUCTION:

Indian firms are generally known of depending heavily on institutional borrowing for funding business needs. This might cause major impediments for such investments since lenders particularly, the institutional funding from expanding its operations to new risky ventures until their dues are settled. Similarly, persistent use of high level of debt increases the fixed cost and in that process, return on equity suffers heavily. It would be difficult to raise equity finance with such poor track record for many companies.

In addition to these reasons, firms, which have allotted shares to institutional investors, face yet another constraint. Institutional investors may also insist the firms to pay liberal dividends and require firms to approach the market for funding new investments.

Hece, firms need to consider the long-term impact while borrowing capital from financial institutions or issuing equity to certain types of shareholders. Since these capital Providers can effectively put a block on the freedom of firms to spend capital, capital structure assumes importance for strategies that require large scale funding for implementation.

DETERMINANTS OF CAPITAL STRUCTURE

Capital structure is the composition of various sources of long term finance to the total capital employed of the company. The two primary sources of finance are owned funds and borrowed funds. The characteristics of the firm influence debt-equity choice and include parameters such as firm size relative to economy, profitability, value of collateral assets, non-debt tax shield, , market value to book value ratio, interest coverage ratio, price-earning ratio, bankruptcy cost and cash constraint.

1.SIZE OF THE FIRM:

Size represents the firm’s competence for financing and investment. It is also argued that smaller firms would have less long-term debt because of shareholders-lenders conflict. Firm size is also measured in terms of labor turnover. Firm size is also measured relative to economy. It indicates the firm’s capacity in terms of finance garnered from the economy. Larger the firm size in terms of the economy, more the chances of it being important within the industry. The variable is measured as a ratio of total assets to gross domestic product. Thus, an industry leader with ample avenues is more likely to go for debt financing. This measure is also used in this study to bring out effects, which may be due to the firm size relative to the economy.

2. POFITABILITY:

Profitability reflects the financial position of the firm with regard to its profit earning capacity. It is measured as the ratio of PBDIT to total assets.

According to the interest tax shield hypothesis, firms with high profits would employ high debt to gain tax benefits. Thus, higher the profitability, higher would be the firm’s capability to meet the debt obligations and hence debt becomes more affordable. As the profit earning capacity level moves higher, the firm will employ higher retained earning and less debt, and it enjoys more freedom in choosing its financing options.

3. COLLATERAL ASSETS VALUE:

It indicates the capacity of the firm to avoid or minimize asset-substitution problems. Higher the value of collateral assets, easier it is to obtain funds from sources other than the capital market. It is calculated as a ratio of next fixed assets to total assets .As the value of collateral assets increases, the motivation of a firm to go for non-traditional debt reduces.

4.NON DEBT TAX SHIELD:

The non-debt tax shield is also an important explanatory variable in a capital structure model. It refers to the benefits a firm can gain from options other than debt-interest that is the most prominent tax shield. Non-debt tax shield could be depreciation or amortization, or any other tax-benefit expense other than debt interest. A priori, the impact of non-debt-tax-shield on the demand for equity and retained earnings is not known. That is, for a given portfolio of liabilities, if the demand for debt falls, equity and/or retained earnings must rise, ceteris paribus. If at all possible, such a measure should encapsulate R&D and advertising expenditure as well as investments tax credits. Due to lack of data, most of the studies have used depreciation deductions over total assets as a measure of non-debt tax shields.

5. MARKET VALUE TO BOOK VALUE RATIO:

Investment opportunities represent a firm’s intangible value that does not have a collateral value. The intangible value is likely to be lost if financial distress takes place. The risk of under-valuation and resource diversion is quite high for firms with high intangible values; these arguments suggest a negative relationship between debt ratio and investment opportunities. But the agency problem may be lower for short-term debt than long-term debt. The financial statements do not reflect the future investment opportunities but the market value of shares reflects them.

Hence, market value to book value ratio is used as a proxy for the value of a firm’s future investment opportunities. It is measured as the ratio of sum of market capitalization of a firm, liquidation value of preferred stock and total debt to total assets. It follows that when the ratio is high, firms are less likely to go in for debt financing because of the potential under-investment problems.

6. INTERST COVERAGE RATIO:

It denotes the capacity of the firm to meet fixed interest charges. A larger ratio indicates that interest coverage is higher. The variable is measured in terms of the ratio of EBDIT to interest. The higher the ratio, the greater are the chances of the firm being able to go in for debt.

7.PRICE-EARNING RATIO:

The future earnings potential can also be measured in terms of price-earnings ratio. It reflects the financial performance of the firm in the capital market. When the price-earnings ratio is high, firms may prefer to use equity sources for financing than debt sources of funds.

8. BANKRUPTCY COST:

It indicates the financial standing of a firm. Higher the bankruptcy cost, higher is the risk taken by the firm. It is measured in terms of the variance of the annual operating inco

9. CASH RESTRICTIONS:

It highlights the financial position of a firm in terms of the cash availability. Higher the cash constraint, lower is the chance of the firm being able to exercise financial flexibility. Measured in terms of the ratio of dividend to total assets, it aids a firm in making a decision regarding debt issue, in which a firm with cash constraint may not be able to pay the interest charges and hence may not go for more debt.

CONCLUSION:

From the observations made, it is found that, Capital structure is the piece of music of various sources of long term finance to the total capital employed of the company. The two primary sources of finance are owned funds and borrowed funds. Most of the companies in India are using only these funds for profitable decisions. While taking capital structure decision, care must be taken on the choice of the amount of fixed interest bearing securities and variable income bearing securities namely Debt or Equity is made after the comparison of the relative merits and demerits related to companies operations.

Dr.R.SRINIVASAN is a Post graduate in commerce and Management. He received his doctoral degree from Alagappa University in 1997. He is now Working as an ASSOCIATE PROFESSORin Post graduate and Research Department of Corporate Secretaryship at Bharathidasan Government College for Women (Autonomous), Pondicherry University, Puducherry.He currently teaches Accounting ,financial management and Research Methodology Subjects. Before Joining BGCW, he was teaching in SNR College, Coimbatore, Sindhi college, Chennai& T.S.Narayanasamy College, Chennai for eight years. He was with the industry for a short term at Salzar Electronics Pvt. Ltd, Coimbatore. He has about 20 years of teaching experience and having research experience of 15 years. His interests are in Accounting and finance, Capital Market, Quantitative Methods. He underwent the Faculty Development Programme at Indian Institute of Management Ahmedabad during 2000-01. He has presented 20 papers in national and international conferences and has published twenty papers in the areas of Finance and Human resource Management in National Journals. Co-authored a book titled, ‘Investors Protection, published by Raj Publications, New Delhi He has delivered lectures in contemporary finance topics at Pondicherry University. He is involved in consultancy projects for Godrej Saralee, Chennai in the areas of Statistical Applications. He has supervised a number of research projects in the area of corporate finance and Human Resource Management. He is the Board of examiner in corporate Secretaryship and Management for the past two decades.
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Raising seed capital : Discover one thing that 70% of all investors want

Thu, 05 May 2011 13:25:39 +0000

Raising seed capital : Discover one thing that 70% of all investors want

After the crisis, a change occurred in the hedge fund industry. Investors became more doubtful about hedge fund abilities to make money. As a result, 70% of investors are asking more transparency from the managers, according to a SEI survey.

To raise your seed capital or to convince new investors, you need to be as clear as possible about your project or your fund. Explain your competitive advantage, your overall strategy, the fee structure, the legal structure, assets under management… The quality of these explanations will be a big factor in the prospect’s mind. Be prepared to answer question about valuation methodologies, risks, returns, ranking, human resources, management.

Having a good-looking power point presentation is almost indispensable. A picture is worth a thousand words. Sometimes, really good managers can’t express their ideas clearly. By preparing a presentation you make sure a lot of complex aspects of your hedge funds will be understood instantly.

Some investors will also call you a lot to know everything about you, your staff and your hedge fund.

In order to do that you will need marketing tools like a CRM (Customer relationship management) to stay in touch with you prospects. A growing numbers of investors need time to decide if they’re interested in what you have to offer. With a software like a CRM you can send them detailed reports on a regular basis. In those reports, you can talk about what changed recently, for example if you hired a new manager. You can also explain your management philosophy.

Investors will also do some research online. As a consequence, it’s really important to have an Internet presence. A website that explains your overall strategy can help prospects decide themselves quicker.

For a successful hedge fund marketing campaign you need to be as clear as possible about your fund and you need to build trust with your investors. It’s a lot easier to achieve that with powerful marketing tools.

My name is Mickael I’m a writer for http://www.listofhedgefunds.org/ make sure you read your marketing section to learn more about other indispensable hedge fund marketing tools.

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You Can Profit From the Current Economy

Wed, 04 May 2011 22:36:55 +0000

You Can Profit From the Current Economy

Normal 0

The current economy is in bad shape – at least that’s what all of the pundits tell us. The conventional wisdom in times like these is to put stop loss orders on everything, put everything you can into blue chips, or settle for the safe, low returns of Treasury securities.

I’m here to tell you that the conventional wisdom is foolish.

In the first place, the conventional wisdom is contradictory. You can’t have automatic trades to comply with stop loss orders going on constantly and maintain major holdings in blue chips. Even the blue chips – maybe especially the blue chips – are subject to market volatility. When the economy is bad, inflation becomes a major concern, and the market starts requiring a higher return on investment. At the same time, the bad economy drives sales downward, reducing corporate incomes and, by extension, return on stockholders’ investment. The result is market dissonance that exacerbates existing market volatility. The general trend is for prices to go down, and the easier a security is to trade the more precipitous its price decline tends to be. This is simply a function of supply and demand: more people want out than in, so supply exceeds demand and prices drop.

Supply and demand also accounts for what happens with bonds, notes, and commercial paper. In a difficult economy, fixed income securities are less appealing because of inflation concerns. Here again, people trying to get out of fixed income securities outnumber those trying to get in, so prices go down and both current yield and yield to maturity go up. At the same time, new debt issues of any kind are almost impossible to sell, and, with the rest of the credit market similarly tightened, companies are unable to borrow necessary cash at reasonable rates, forcing them to offer their debt placements at rather deep discounts. The bottom line is, they must raise cash to weather the economic storm, and they will pay handsomely to get it.

You’re seeing it today on every news channel: the prices of securities are declining virtually across the board. Your broker may be telling you to cover everything with stop loss orders and trade, trade, trade. That may be a case of your broker subscribing to the conventional foolishness, or it may be a case of your broker trying to protect his income: after all, commissions come from trades, and your broker lives on commissions. The question I have to ask is why would you want to sell now? It makes about as much sense as buying merchandise at Nieman Marcus to resell at Wal Mart. This is not, I repeat not, the time to sell. The economy is on an express elevator to the bargain basement, to be sure, but history tells us that when it comes to the stock market, what goes down must come up. Knowing that, this is the time to get in on the bargains. That “next Microsoft” that everyone is looking for might be trading for far less than its legitimate value right under your nose right now!

Growing up in Kansas, I was acquainted with a man who had amassed vast holdings of farm and ranch land. He was an eighth grade dropout, and I often wondered how he came to be so wealthy, so I finally asked. “Son,” he said, “Most of my land was bought back during the dust bowl, when farmers and ranchers were selling off their land or bankers were foreclosing and then trying to get what cash they could from the deal. I was just a farmhand back then, but I had a little money saved up, and when land dropped below twenty-five cents an acre I started buying. As the economy started to pick up, I used that land to borrow against and buy more land. By the time the drought was over, I owned almost ten sections [note: there are 640 acres in a section] and hadn’t spent ,000 to get it.” At the time that we had that conversation (about 1972), his ,000 investment made between 1930 and 1939 was worth over million, an annualized return on investment of around 25%.

Do you have “a little money saved up” that could be used to pick up the bargains available in the current markets? My friend knew that the drought that caused the dust bowl wouldn’t last forever, and he made a fortune from other people’s panic. Investors are in a panic now, but if you’re smart their panic is your opportunity.

Investments to Avoid

In a struggling economy, investors tend to make the same mistakes over and over, and those mistakes take two forms: running for “safe harbor” and becoming extremely active traders in anything that is going up.

The safe harbor crowd always runs to one of two places, blue chip stocks and Treasury securities. As we have already discussed, blue chips are probably the roughest safe harbor you can go to, rather akin to anchoring in Galveston Bay during Hurricane Ike. Market volatility tends to have a more pronounced effect on blue chips: add the fact that blue chip companies like General Motors, General Electric, and AIG are all fighting for life right now and a run for the blue chips is borrowing trouble rather than escaping it.

Treasury issues are, without a doubt, safe. After all, if the Treasury defaults the money is meaningless anyway. The problem is, this is a “safe” harbor full of purchasing power pirates. The return on Treasury securities rarely keeps pace with inflation in an economic downturn, so while your safe harbor investment may be earning you a return in nominal dollar terms, in real dollar terms you’re losing purchasing power. It doesn’t do much good to earn 3% on your money if prices are going up an average of 6%.

Sadly, many investors who don’t run for safe harbor become speculators, moving money constantly into anything that is going up at the moment. Since most of the market is going down, this all too often drives them to the derivatives market, especially in today’s economy where oil futures have, at times, exceeded 0 per barrel. The problem is, if you’re short at 0 per barrel and the spot market on the settlement date is 0 per barrel, you’ll have to either lose money on an offsetting long position, sell your short at a loss, or have 1,000 barrels of crude setting around that you can part with. On the other hand, if you have a long position for 0 and the spot price is 0, you get to lose money going short or selling the long position at a loss, or you get to take delivery of 1,000 barrels of crude that you’ll lose ,000 selling on the spot market if you can’t store it and wait.

Some investments, especially derivatives, will go into bubble mode early in an economic downturn, but don’t let that fool you into entering the bubble with them. As any kid who ever chewed bubble gum or blew soap bubbles can tell you, bubbles burst. If your money is in the bubble when it bursts, you can wave goodbye to it as it is scattered on the winds of economic caprice.

Investments to Make

Some companies and industries have proven themselves to be amazingly resilient. Like everything else, their securities are or soon will be selling at bargain basement prices, and if they appear to be struggling the discounts may be extra deep. Do your homework, make sure that they are positioned to bounce back, but if they are, buy while the price is low.

The current debacle started with a meltdown in the sub-prime mortgage market. The result is a large number of foreclosures, with lenders ending up holding real estate when they need cash. As a result, real estate prices are falling, so if you can, this is a good time to buy real estate or invest in companies that are investing in real estate. The prices will go back up, just as they did for my friend who invested in farm and ranch land during the dust bowl.

Many brokers and analysts have an innate fear of high yield (so called “junk”) bonds. Admittedly, some high yields have gone under and become no yields, but as a rule the returns have been in line with the risks, and sometimes a little higher. During an economic downturn, there tend to be two types of high yield bonds on the market: those with something behind them and those with nothing behind them. The former are usually issued by companies that want the capital to invest while the market is down, generally in either income real estate or leveraged buyouts. These tend to be pretty good bets for a sizeable profit in a relatively short period of time, and they offer your investment some diversification while providing at least partial collateral from the assets they invest your money into. The latter are usually issued by companies that are cash strapped and have credit problems, and they’re offering them to raise working capital: as a rule, they’re a bad investment and far more likely to default than the secured high yields.

The best bargains, however, may be in small cap (so called “penny”) stocks, initial public offerings (IPOs), and various kinds of notes, especially those backed with some kind of collateral. Some of these securities (especially the notes) can have some pretty creative terms, but if you understand the terms they can be a good, and often high yield, investment.

However, He Said . . .

While you’re doing all of this bargain basement buying, it doesn’t hurt to put a few safeguards into your portfolio. These can take several forms, as you’ll see.

After spending the first part of this article giving you all of the reasons to avoid the rush to blue chips and Treasury securities, I now need to backtrack just a bit. I’m not going into the famous politician’s gambit that “I was against it before I was for it.” I’m still adamantly opposed to loading your portfolio with volatile blue chips and low yield Treasuries, but having a portion of your portfolio in these securities isn’t a bad thing. The blue chips may recover a little more quickly than the market at large, and the Treasury issues will at least provide a good final position in the event of a major, long-term depression.

There are, of course, other ways to protect your portfolio. As you know, I’m against riding bubbles, especially in the derivatives markets. However, derivatives can be used to hedge your positions. Worried that a rise in interest rates will devalue that investment in mortgage notes? Just hedge the position with Treasury note or Treasury bond futures. For example, one long 10 year Treasury note contract can effectively insure one 0,000 10 year mortgage against excessive value loss due to rising interest rates. This doesn’t tie the two inextricably together, but as 10 years Treasury note rates rise toward the level of the long position, its value increases to cover the value lost by the mortgage note.

Another thing that can help your portfolio is investment grade bonds, especially if they can be converted to common stock. The conversion capability tends to buoy the price some, and the bond income can provide money to cover short-term losses in other areas or help your income weather the economic storm.

Of course, you can never go wrong with liquidity. A little reasonably ready cash, whether held in a bank or a mattress, is always a good idea.

There are other areas that you can investigate, such as precious metals, gemstones, and collectibles, but keep in mind that the value of most such items is dependent upon the demand for them, and since most are viewed as luxuries that demand tends to drop off precipitously in an economic downturn.

If you follow the crowd, a bad economy can leave you in dire financial straits. The real trick to making money is patience: buy when everyone else wants to sell, sell when everyone else wants to buy, and wait patiently in between. In the end, life will be a chicken dinner and you’ll be the kid with the drumstick.

A “serial entrepreneur” since the age of 8, Jay is well versed in all areas of business. Jay holds a Bachelor of Science in Business Administration with concentrations in accounting and finance as well as a Master of Business Administration, both from The University of Montana. Jay currently owns and operates Jay Wagner Enterprises, serves as executive director of Help Our Heroes and Mark 16:15 Ministries, and works as an accounting and finance tutor for Smarthinking, Inc.

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The Practice of Buying and Selling Real Estate Notes

Wed, 04 May 2011 07:25:52 +0000

The Practice of Buying and Selling Real Estate Notes

Real estate notes are used to record details of the sale or transfer of property. Each time property changes hands a new note must be executed and recorded through district courts. Note holders can sell their notes in whole or part or use them as collateral to secure financing for other investment properties.

Real estate notes are often used with mortgage loans to secure financing. They are also used with owner will carry contracts such as seller carry back trust deeds. In this type of transaction, property owners act as the mortgage financier. Buyers provide a down payment and the balance is paid in installments until the debt is satisfied. Future payments are an asset that can be sold to a note buyer for lump sum cash.

Another use for real estate notes is to purchase stocks held in a real estate investment trust. REITs are companies that own multiple pieces of real estate. Investors partner with others to buy properties and obtain ownership shares. Investors purchase stocks and combined funds are held within the trust.

It is common practice for investors to sell notes to obtain cash to purchase additional investment properties. While selling notes is a good way to quickly raise capital, this practice is not without risk.

Note buyers do not pay full face value for real estate notes. Note holders may be responsible for the cost of obtaining property appraisals or property title fees. Additionally, note buyers assess transaction fees.

When the note is secured by property being sold under owner will carry financing, the property owner can either sell to an investor or use as collateral to secure bank financing. Owner will carry is becoming a very popular strategy for buying residential and commercial properties.

Banks have tightened lending criteria and do not have the same level of funds available prior to the banking crisis. Many people who want to buy homes cannot qualify for bank financing. Entering into seller-financed contracts lets them engage in credit repair strategies while working toward buying the property.

Buying and selling real estate notes requires a comprehensive understanding of real estate laws, IRS regulations, and personal finance. It can be beneficial to obtain legal and tax counsel; especially when commercial properties are involved.

Investing in cash flow notes can be a lucrative business for those who take time to learn the ropes. The Internet is a good source for conducting research, but to get into the meat-and-potatoes requires networking with other investors and industry-experts. This can be accomplished by participating in online networking groups or joining local real estate clubs. One good source for locating local groups is Meet Up.

Another good spot for learning about real estate notes investing practices is public libraries. In addition to books and magazines, libraries often offer investing and personal finance courses on CD or DVD at no charge. Also peruse the Classifieds section of local newspapers to locate investors offering real estate investing classes.

Simon Volkov shares personal experiences with investing in real estate notes and real property. His investment library presents hundreds of articles about investment practices, buying distressed properties, providing owner will carry financing, and the art of buying and selling cash flow notes. Find out which options are best suited for you at www.SimonVolkov.com.

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