Consistency is critical in our business. When it comes to investment analysis, this “First Principle” – “What primary business opportunity is the issuer pursuing?” – is the first question successful investors apply in their consistent approach to company analyses. Have you adopted this principle? Identifying the fundamental rationale for an enterprise is central to helping retain your focus...
Stock Markets and Safer Choices — There may be a better way
In a recent article in The Economist, the author bemoans the fact that today’s “low interest rates leave savers with few good options.” True, but a limited analysis. Carofin suggests savvy investors, and particularly relative newcomers to private investments, look closely at private debt. Let’s dig a little deeper. If they were planning for #retirement, this couple might have turned to U.S....
Are You About to Become “Accredited?”
On August 26, 2020, the SEC adopted amendment to the “Accredited Investor” definition, which determines who can participate in most offerings in the private capital markets. While the definition historically limited access to individual investors who met a specific income or net worth test, the amended definition now allows investors with sufficient knowledge and expertise to participate in...
A Time for “Meaningful Investments”
The COVID years are proving to be a time for reflection – a relatively chaotic period that’s forcing us, both personally and professionally, to reconsider how and why we conduct our lives the way we do. Your investments are, obviously, an important reflection of your values and priorities. What Carofin offers, and why we hope you will be attracted to the companies we represent, is captured in...
Accredited Investor Verification Guidelines
The following outlines the different approaches required for Investors to qualify as Accredited Investors under Rules 506(b) and 506(c). As of September 23, 2013, all Investors participating as Accredited Investors in Regulation D, Rule 506(c) and Rule 506(b) Private Placements must verify that their financial status qualifies them as an Accredited Investor. The manner in which they verify...
The Case of the Slipping Shipping
Does it surprise you how inventive entrepreneurs are when problems arise? Here’s one that struck our fancy. We call it “The Case of the Slipping Shipping.” Years ago, a business owner was mystified. He would load a truck in one location for a customer delivery about 50 miles away. Each time he did so, what should have taken at most an hour and a half was taking 3 hours. His customer,...
Measuring ROI in a private company is tough
The pricing of private securities is obscured by several factors: each is unique, analyses available for public securities don’t exist privately, and easy comparisons don’t exist. Cash-on-cash, simple interest, and IRR are useful metrics, but only if you apply them correctly. Let’s make sure that, when we’re talking about a Return on Investment (ROI, return or yield), we’re saying the same...
Investing in Private Companies vs. Publicly traded ones
The rules are very different in the private markets, and you should know the difference if you’re going to play the game. We all know that you can trade public securities. The most well-known exchanges include the New York Stock Exchange and NASDAQ for U.S. public equities and the institutional “bond markets” for government and corporate debt. Don’t expect to trade your investment in a private...
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INVESTMENT TERMS
In the interest of accessibility, here are some terms that any investor should be familiary with.