Unbanked need a choice
Payday loan or prepaid card
No way to build wealth
Payday loan or prepaid card
No way to build wealth
Friday, September 06, 2013
Public Banking for the Unbanked in BDDs
I've blogged before about how public banking combined with crowdfunding can be a powerful wealth generator. I now think there is an excellent opportunity for public banks to serve the unbanked and help low-income Americans build wealth.
The biggest national initiative to serve the unbanked that I've found so far is Bank On. The program focuses on lobbying local bank branches to offer no-cost services to the unbanked and was pioneered right here in my town with Bank on San Francisco. The national rollout of EARN's Bank on USA is supposed to be a federally funded initiative but I can't find any federal government site describing this program's implementation. The FDIC's Economic Inclusion initiative has data from several pilot programs and financial education curricula, but serving the unbanked needs a permanent effort.
I've got the all-in-one solution. Let's go back to my earlier blog article (linked up top, folks) about a public bank in every state that also runs a crowdfunding platform. This public bank should offer no-cost checking and savings accounts to low-income individuals and should be the sponsoring institution for Individual Development Accounts (IDA). Almost all of its transactions can be done online, but local branches of the public bank can be a nucleus for developing a Banking Development District (BDD). The whole point of a BDD is to attract bank branches into underserved neighborhoods. I see no reason why a public bank can't be the first to jump in to a BDD. The New America Foundation's BDD concept works in New York. Check out NY's state BDD program and NYC's BDD program.
I spin up these kinds of ideas all the time. It's all part of my job as an aspiring big-shot in finance. Now I just need to get policymakers to listen to me. Stay tuned to this blog for more financial innovation from Alfidi Capital.
The biggest national initiative to serve the unbanked that I've found so far is Bank On. The program focuses on lobbying local bank branches to offer no-cost services to the unbanked and was pioneered right here in my town with Bank on San Francisco. The national rollout of EARN's Bank on USA is supposed to be a federally funded initiative but I can't find any federal government site describing this program's implementation. The FDIC's Economic Inclusion initiative has data from several pilot programs and financial education curricula, but serving the unbanked needs a permanent effort.
I've got the all-in-one solution. Let's go back to my earlier blog article (linked up top, folks) about a public bank in every state that also runs a crowdfunding platform. This public bank should offer no-cost checking and savings accounts to low-income individuals and should be the sponsoring institution for Individual Development Accounts (IDA). Almost all of its transactions can be done online, but local branches of the public bank can be a nucleus for developing a Banking Development District (BDD). The whole point of a BDD is to attract bank branches into underserved neighborhoods. I see no reason why a public bank can't be the first to jump in to a BDD. The New America Foundation's BDD concept works in New York. Check out NY's state BDD program and NYC's BDD program.
I spin up these kinds of ideas all the time. It's all part of my job as an aspiring big-shot in finance. Now I just need to get policymakers to listen to me. Stay tuned to this blog for more financial innovation from Alfidi Capital.
Thursday, September 05, 2013
The Haiku of Finance for 09/05/13
Light sweet crude is good
Better to refine and sell
Harder to find now
Better to refine and sell
Harder to find now
Americas Petrogas Plays For Shale In Argentina
I'm all about energy today. Americas Petrogas (BOE.V / APEOF) wants to pull oil and gas out of shale formations in Argentina. I believe they have a very competent and experienced management team. I like the fact that they have deep-pocketed JV partners. I like the fact that they've discovered light sweet crude deposits, which are easier to refine. I like that maps of their project areas show good coverage by existing pipelines.
One concern I have is that this is in Argentina. That country is #102 (out of 174) on Transparency International's Corruption Perceptions Index and #160 (out of 177) on the Heritage Foundation's Index of Economic Freedom. The political risk for any foreign investment in Argentina is enormous.
The company had just under C$26M in cash on hand as of June 30, 2013 according to their quarterly statement. Their net income has swung from a loss to a positive in about one year. I'm less concerned with burn rate for a company at this stage provided their revenue is growing and their operating costs remain stable.
I'm adding Americas Petrogas to my watch list. It deserves a more serious look once I can calculate its intrinsic value based on their proven (P90) and probable (P50) reserves.
Full disclosure: No position in Americas Petrogas at this time.
One concern I have is that this is in Argentina. That country is #102 (out of 174) on Transparency International's Corruption Perceptions Index and #160 (out of 177) on the Heritage Foundation's Index of Economic Freedom. The political risk for any foreign investment in Argentina is enormous.
The company had just under C$26M in cash on hand as of June 30, 2013 according to their quarterly statement. Their net income has swung from a loss to a positive in about one year. I'm less concerned with burn rate for a company at this stage provided their revenue is growing and their operating costs remain stable.
I'm adding Americas Petrogas to my watch list. It deserves a more serious look once I can calculate its intrinsic value based on their proven (P90) and probable (P50) reserves.
Full disclosure: No position in Americas Petrogas at this time.
Citadel Exploration (COIL) Keeps It In The Family
I'm checking out Citadel Exploration (COIL) right here in California. The founding family behind this operation has been drilling for as long as oil has been drilled in the Golden State. I am somewhat concerned about the philosophy of "find oil where it's already been found." That has long been an industry truism but today it is executed with geological and mathematical precision.
Citadel has active exploration projects at Rancho Grande and Project Indian. My concern with Rancho Grande is the company's stated plan to eventually truck the oil to regional refineries, which I interpret to mean there is no pipeline network serving the area. I'd like to see how much the cost of truck transportation adds to each BOE, or if the company would consider building out a pipeline connection. My concern with Project Indian is the oil's heavy API gravity. Heavy oil is more costly to refine than light sweet, so this may eliminate the 10% price premium to WTI that California refineries are supposedly willing to pay for California production.
The company admits to going concern doubts in its 10-K dated August 13, 2013. I noticed that executive compensation makes up a significant part of their operating expenses and has been increasing since 2012. They had $307K cash on hand as of June 30 and a burn rate of approximately $100K/month. The good news is that they have successfully raised cash and wiped out notes payable in early 2013.
This is a young company with an old history. I want to hear more details on well results and logistics. The stock has traded below a buck since July but if oil is in this family's blood, they may strike pay dirt once again. That's why I'm going to keep watching this company's results.
Full disclosure: No position in COIL at this time.
Citadel has active exploration projects at Rancho Grande and Project Indian. My concern with Rancho Grande is the company's stated plan to eventually truck the oil to regional refineries, which I interpret to mean there is no pipeline network serving the area. I'd like to see how much the cost of truck transportation adds to each BOE, or if the company would consider building out a pipeline connection. My concern with Project Indian is the oil's heavy API gravity. Heavy oil is more costly to refine than light sweet, so this may eliminate the 10% price premium to WTI that California refineries are supposedly willing to pay for California production.
The company admits to going concern doubts in its 10-K dated August 13, 2013. I noticed that executive compensation makes up a significant part of their operating expenses and has been increasing since 2012. They had $307K cash on hand as of June 30 and a burn rate of approximately $100K/month. The good news is that they have successfully raised cash and wiped out notes payable in early 2013.
This is a young company with an old history. I want to hear more details on well results and logistics. The stock has traded below a buck since July but if oil is in this family's blood, they may strike pay dirt once again. That's why I'm going to keep watching this company's results.
Full disclosure: No position in COIL at this time.
Wednesday, September 04, 2013
Angel Investors Peek Into SOCAP13
I don't have time to attend the full SOCAP13 conference this year but I did make time to stop in briefly at one event. Hub Ventures and Investors' Circle teamed up to host an "Angel Squared" mixer tonight for those of us from the finance sector. I left early as the room was getting pretty crowded but I met some cool people.
In case you haven't heard, accelerators and incubators for the non-profit sector are proliferating. They're just as adaptive as their for-profit counterparts and some organizations reach out to both for-profit and non-profit startups. The social capital ecosystem is growing in size and complexity. One of the gurus I met at Angel Squared tonight likened social capital to a managed forest where some managers want to clearcut trees for farmland, some would rather harvest timber responsibly, and others would prefer to preserve the forest and clear the undergrowth to grow coffee. I had previously thought social capital was more like an Amazon rain forest, with tremendous chaos and random diversity.
I arrived early enough to check out the crowds of conference goers streaming out of Fort Mason. The one most important take-away I gleaned from watching these folks is that the social capital movement is populated by a large number of very attractive-looking women. I mean, for crying out loud, these chicks had model-quality looks and triathlete-caliber figures. I am definitely clearing my calendar in 2014 to attend SOCAP if it means I'll be surrounded by hot females all week. Even the gals I met tonight at Angel Squared were hot, although they may have thought I was a jerk for not being much of a conversation starter. Hey ladies, it was so loud in that cramped conference center I could hardly hear a word any of you said to me. I'm much more loquacious during a candlelit dinner in a quiet restaurant, if you know what I mean. One hot woman did answer my question about whether a for-profit publicly traded company can certify as a B-corporation. The answer is yes, it can.
Let's recap tonight's important lessons. Is SOCAP cool? Yes, it is. Will I attend next year? Yes, I will. Are hot chicks attracted to social capital? Yes, they are. Do these women find me intriguing and stunningly handsome? Of course they do, don't be silly. Alfidi Capital is going full steam into social capital.
In case you haven't heard, accelerators and incubators for the non-profit sector are proliferating. They're just as adaptive as their for-profit counterparts and some organizations reach out to both for-profit and non-profit startups. The social capital ecosystem is growing in size and complexity. One of the gurus I met at Angel Squared tonight likened social capital to a managed forest where some managers want to clearcut trees for farmland, some would rather harvest timber responsibly, and others would prefer to preserve the forest and clear the undergrowth to grow coffee. I had previously thought social capital was more like an Amazon rain forest, with tremendous chaos and random diversity.
I arrived early enough to check out the crowds of conference goers streaming out of Fort Mason. The one most important take-away I gleaned from watching these folks is that the social capital movement is populated by a large number of very attractive-looking women. I mean, for crying out loud, these chicks had model-quality looks and triathlete-caliber figures. I am definitely clearing my calendar in 2014 to attend SOCAP if it means I'll be surrounded by hot females all week. Even the gals I met tonight at Angel Squared were hot, although they may have thought I was a jerk for not being much of a conversation starter. Hey ladies, it was so loud in that cramped conference center I could hardly hear a word any of you said to me. I'm much more loquacious during a candlelit dinner in a quiet restaurant, if you know what I mean. One hot woman did answer my question about whether a for-profit publicly traded company can certify as a B-corporation. The answer is yes, it can.
Let's recap tonight's important lessons. Is SOCAP cool? Yes, it is. Will I attend next year? Yes, I will. Are hot chicks attracted to social capital? Yes, they are. Do these women find me intriguing and stunningly handsome? Of course they do, don't be silly. Alfidi Capital is going full steam into social capital.
Tuesday, September 03, 2013
The Haiku of Finance for 09/03/13
Track the right factors
People and environment
Sustain that report
People and environment
Sustain that report
UN Agenda 21 As the Foundation for a Sustainable ESG Scorecard
I've already discussed UN Agenda 21 and ESG sustainability metrics. Now is the time to put them together. Agenda 21 is a useful set of criteria for a business to use in scoring its ESG valuation. Yes, folks, I really did read the UN's original Agenda 21 materials and they are not as draconian as the scaremongering critics would have us believe. The Agenda 21 objectives are very broad and do not come with measurable milestones or scales. We'll have to explore the rest of the UN's development publications for metrics.
Here's the Rio 2012 Issues Brief on finance. Investment banks and asset management firms can use this to ensure the financial instruments they manage have sustainable impacts. They can also identify gaps to cover in targeting investment to meet development needs in emerging markets.
Here's the UN framework for sustainable consumption and production. This is a broad framework, as broad as the global economy. The UNEP report on "Making Investment Grade: The Future of Corporate Reporting" gives corporate officers practical advice on how to fulfill the intent of the Global Reporting Initiative. The ISO is getting into the act with sustainability guidelines that comport with the UN's Rio+20 convention.
There's enough material in those links to keep C-suite task forces busy for months. Crafting balanced scorecard standards is no picnic but it's worth it if the private sector wishes to identify future drivers of value.
Here's the Rio 2012 Issues Brief on finance. Investment banks and asset management firms can use this to ensure the financial instruments they manage have sustainable impacts. They can also identify gaps to cover in targeting investment to meet development needs in emerging markets.
Here's the UN framework for sustainable consumption and production. This is a broad framework, as broad as the global economy. The UNEP report on "Making Investment Grade: The Future of Corporate Reporting" gives corporate officers practical advice on how to fulfill the intent of the Global Reporting Initiative. The ISO is getting into the act with sustainability guidelines that comport with the UN's Rio+20 convention.
There's enough material in those links to keep C-suite task forces busy for months. Crafting balanced scorecard standards is no picnic but it's worth it if the private sector wishes to identify future drivers of value.
Infrastructure as a Separate Asset Class
Infrastructure is gaining acceptance as an investment style. Some observers even recognize it as a separate asset class. I'm a financial purist wedded to the traditional breakdown of three asset classes - equity, fixed income, and cash - with everything else falling into some subset of those three. Even the hard asset things I've inspected recently like REITs are a form of equity ownership despite the similarity of their cash flows to a debt instrument. I want to determine whether infrastructure really does belong in its own asset category.
Fitting infrastructure into a financial taxonomy begs the question of how ownership in such an asset is structured. Equity is outright ownership, albeit with a residual claim after creditors in the event of liquidation. Ownership of bridges, airports, prisons, inland waterway locks, and other infrastructure assets that support management of "the commons" typically resides with government entities. Privately owned assets used for public purposes are rare exceptions to this state, but there are such things as private toll roads in Texas. Infrastructure plays are thus rarely subject to outright ownership interests that are tradable in the capital markets.
Investors already have exposure to infrastructure investments through fixed income instruments that municipalities issue to finance development. Anyone who wants a piece of this action can buy airport bonds, Tennessee Valley Authority power bonds, and securities from state development authorities that build roads and bridges. I'm not fond of bonds at all right now due to the strong likelihood that the US will experience sudden hyperinflation in the near future. Infrastructure investors who select bonds may get burned even if government agencies raise usage fees to maintain the physical assets. Bonds pay a coupon fixed as a percentage of their face value. Hyperinflation reduces that fixed value to nothing, with a similar reduction in the real purchasing power of that coupon payment. Increases in usage fees to keep up with hyperinflation may cover little more than physical maintenance of infrastructure; bond investors will get a pittance in real terms. Covenants in those bonds may allow issuers to call them at par, enabling them to stick it to bondholders during inflation and retire enormous debt piles at minimal cost.
On the other hand, private equity investors in toll roads, airports, bridges, and other infrastructure assets need not bother with bond covenants. They can raise usage fees at will because control of infrastructure gives them pricing power over consumers who have little alternative but to use the asset. I suspect that private equity ownership of infrastructure is the only form of ownership that fully utilizes an inflation hedge.
The emergence of special treatment for infrastructure owes much to the never-ending quest among professional investors for something new and exciting. Every investment bank wants to stand out from the pack to keep deal flow coming. The OECD recognizes infrastructure as a special case for the largest institutional investors. I just don't think it's a special enough style to merit its own asset class.
Fitting infrastructure into a financial taxonomy begs the question of how ownership in such an asset is structured. Equity is outright ownership, albeit with a residual claim after creditors in the event of liquidation. Ownership of bridges, airports, prisons, inland waterway locks, and other infrastructure assets that support management of "the commons" typically resides with government entities. Privately owned assets used for public purposes are rare exceptions to this state, but there are such things as private toll roads in Texas. Infrastructure plays are thus rarely subject to outright ownership interests that are tradable in the capital markets.
Investors already have exposure to infrastructure investments through fixed income instruments that municipalities issue to finance development. Anyone who wants a piece of this action can buy airport bonds, Tennessee Valley Authority power bonds, and securities from state development authorities that build roads and bridges. I'm not fond of bonds at all right now due to the strong likelihood that the US will experience sudden hyperinflation in the near future. Infrastructure investors who select bonds may get burned even if government agencies raise usage fees to maintain the physical assets. Bonds pay a coupon fixed as a percentage of their face value. Hyperinflation reduces that fixed value to nothing, with a similar reduction in the real purchasing power of that coupon payment. Increases in usage fees to keep up with hyperinflation may cover little more than physical maintenance of infrastructure; bond investors will get a pittance in real terms. Covenants in those bonds may allow issuers to call them at par, enabling them to stick it to bondholders during inflation and retire enormous debt piles at minimal cost.
On the other hand, private equity investors in toll roads, airports, bridges, and other infrastructure assets need not bother with bond covenants. They can raise usage fees at will because control of infrastructure gives them pricing power over consumers who have little alternative but to use the asset. I suspect that private equity ownership of infrastructure is the only form of ownership that fully utilizes an inflation hedge.
The emergence of special treatment for infrastructure owes much to the never-ending quest among professional investors for something new and exciting. Every investment bank wants to stand out from the pack to keep deal flow coming. The OECD recognizes infrastructure as a special case for the largest institutional investors. I just don't think it's a special enough style to merit its own asset class.
Monday, September 02, 2013
Adapting Portfolio Theory To Social Capital
Today I attended an awesome seminar on the research behind the Bay Area Impact Investing Initiative. A diverse bunch of finance types gathered at the East Bay Community Foundation to hear the principals behind BAIII discuss work that is very relevant to the social capital movement. I don't have time this week to attend SOCAP13 at Fort Mason so this seminar will have to tide me over until next time.
R. Paul Herman from HIP Investor elaborated on the five "HIP" factors that he uses to describe previously unquantified drivers of corporate valuation. Human capital has heretofore been an off-balance sheet intangible asset that financial models have ignored. Endogenizing this asset into a financial model adds depth to a balanced scorecard managerial approach. Incorporating environmental, social, and corporate governance (ESG) factors into corporate management is a new approach to mitigating risk. Asset management firms are now publishing ESG reports and corporate managers are plotting projects and business units on a 2x2 human capital matrix. We've all seen BCG's growth-share matrix, so just picture one with profit on the y-axis and a human capital scale on the x-axis. I learned from Mr. Herman that Infosys tracks its human capital according to a formula from a 40-year old Harvard Business Review article. I'll bet that reference is the Lev and Schwartz model for the present value of future earnings referenced under human resource accounting.
The HIP theory has some surprising implications. I've noticed that lots of investing styles - growth, GARP, sector rotation - all claim to outperform benchmarks at some point. Mr. Herman's research reveals that even "vice" portfolios of investments in cigarettes and gambling can outperform market benchmarks, but sustainable ESG portfolios can also outperform with reduced risk. His findings indicate that more diverse corporate boards of directors are associated with higher ROE and lower volatility, and that unsustainable companies have more volatile share prices.
Lauryn Agnew from Seal Cove Financial discussed her work on attracting institutional assets to social capital investments. Modern portfolio theory is limited by its emphasis on historical measures of risk, like tracking error and volatility. She wants to educate investment managers on how ESG criteria mitigate future risk. Institutions are starting to come around. The Federal Reserve Bank of San Francisco held its Impact Investing in the Bay Area conference this past May. Get the conference report and read the working paper.
Ms. Agnew's focus stems from her work with the governance of local non-profit institutions. These investors want to align their fiduciary duties with the social benefit mission of their endowments. Institutional trustees have had to live with tradeoffs between impact and investment returns up until now. Her starting point for identifying locally-based public corporations was the Bloomberg Bay Area Index. She then matched the ESG scores for portfolio candidate stocks to criteria defined by a given non-profit's mission, and then ranked the stocks for optimal fit. Several iterations of sample portfolios revealed which combinations of local concentration and ESG score minimized tracking error.
The Bay Area Council's Family of Funds has sought double bottom line impacts for several years. Enthusiasm for ESG investing is not limited to the Bay Area. The California Economic Summit's Capital Action Team is pushing triple bottom line results all over the Golden State. The California Financial Opportunities Roundtable has outlined solutions for growing local businesses. The Community Reinvestment Act encourages the formation of investment companies that implement its principles. Community development financial institutions (CDFI) certified by the US Treasury's CDFI Fund can use equity equivalent investments to give non-profits lower capital costs.
Private sector thought leaders in ESG analysis are few and far between. Changemaker Capital Partners is driving impact private equity investing. Collaborative Economics is helping to seed the civic ecosystem with "innovation brokers" who can drive multidisciplinary change. I've done similar work as a knowledge management professional but I had no idea there was a term for an emerging field. The Stanford Social Innovation Review and Ceres publish leading edge think pieces on sustainability and ESG. The Global Environmental Management Initiative (GEMI) is taking this subject's tools worldwide. Now I've got some high-quality sources for future blog articles.
I'll close out this intense, multidisciplinary discussion with my own proposed social capital innovation. I see a massive disruption opportunity in sustainability for a business development company (BDC) that is chartered to provide capital to small and medium enterprises meeting ESG criteria. I believe such an entity that is majority owned by investment professionals from traditionally disadvantaged demographics (women, ethnic minorities, disabled military veterans) could register in the Altura Capital Emerging Manager Database and qualify for capital from institutions with a mandate to diversify their sub-managers. Such a business may also qualify as an SBA-designated Small Business Investment Company (SBIC), giving it additional advantages. Domiciling this enterprise in a HUBZone would be the crowning glory in a pitch for local investment. I do not know whether this ESG / BDC / SBIC plan is workable but I am very willing to work with other finance professionals who want to explore it and give it a shot. We won't know until we try. Maybe some ambitious innovation broker from 85 Broads or the Wall Street Warfighters Foundation is willing to help me make this happen.
Full disclosure: No positions in any securities, funds, or enterprises mentioned at this time.
R. Paul Herman from HIP Investor elaborated on the five "HIP" factors that he uses to describe previously unquantified drivers of corporate valuation. Human capital has heretofore been an off-balance sheet intangible asset that financial models have ignored. Endogenizing this asset into a financial model adds depth to a balanced scorecard managerial approach. Incorporating environmental, social, and corporate governance (ESG) factors into corporate management is a new approach to mitigating risk. Asset management firms are now publishing ESG reports and corporate managers are plotting projects and business units on a 2x2 human capital matrix. We've all seen BCG's growth-share matrix, so just picture one with profit on the y-axis and a human capital scale on the x-axis. I learned from Mr. Herman that Infosys tracks its human capital according to a formula from a 40-year old Harvard Business Review article. I'll bet that reference is the Lev and Schwartz model for the present value of future earnings referenced under human resource accounting.
The HIP theory has some surprising implications. I've noticed that lots of investing styles - growth, GARP, sector rotation - all claim to outperform benchmarks at some point. Mr. Herman's research reveals that even "vice" portfolios of investments in cigarettes and gambling can outperform market benchmarks, but sustainable ESG portfolios can also outperform with reduced risk. His findings indicate that more diverse corporate boards of directors are associated with higher ROE and lower volatility, and that unsustainable companies have more volatile share prices.
Lauryn Agnew from Seal Cove Financial discussed her work on attracting institutional assets to social capital investments. Modern portfolio theory is limited by its emphasis on historical measures of risk, like tracking error and volatility. She wants to educate investment managers on how ESG criteria mitigate future risk. Institutions are starting to come around. The Federal Reserve Bank of San Francisco held its Impact Investing in the Bay Area conference this past May. Get the conference report and read the working paper.
Ms. Agnew's focus stems from her work with the governance of local non-profit institutions. These investors want to align their fiduciary duties with the social benefit mission of their endowments. Institutional trustees have had to live with tradeoffs between impact and investment returns up until now. Her starting point for identifying locally-based public corporations was the Bloomberg Bay Area Index. She then matched the ESG scores for portfolio candidate stocks to criteria defined by a given non-profit's mission, and then ranked the stocks for optimal fit. Several iterations of sample portfolios revealed which combinations of local concentration and ESG score minimized tracking error.
The Bay Area Council's Family of Funds has sought double bottom line impacts for several years. Enthusiasm for ESG investing is not limited to the Bay Area. The California Economic Summit's Capital Action Team is pushing triple bottom line results all over the Golden State. The California Financial Opportunities Roundtable has outlined solutions for growing local businesses. The Community Reinvestment Act encourages the formation of investment companies that implement its principles. Community development financial institutions (CDFI) certified by the US Treasury's CDFI Fund can use equity equivalent investments to give non-profits lower capital costs.
Private sector thought leaders in ESG analysis are few and far between. Changemaker Capital Partners is driving impact private equity investing. Collaborative Economics is helping to seed the civic ecosystem with "innovation brokers" who can drive multidisciplinary change. I've done similar work as a knowledge management professional but I had no idea there was a term for an emerging field. The Stanford Social Innovation Review and Ceres publish leading edge think pieces on sustainability and ESG. The Global Environmental Management Initiative (GEMI) is taking this subject's tools worldwide. Now I've got some high-quality sources for future blog articles.
I'll close out this intense, multidisciplinary discussion with my own proposed social capital innovation. I see a massive disruption opportunity in sustainability for a business development company (BDC) that is chartered to provide capital to small and medium enterprises meeting ESG criteria. I believe such an entity that is majority owned by investment professionals from traditionally disadvantaged demographics (women, ethnic minorities, disabled military veterans) could register in the Altura Capital Emerging Manager Database and qualify for capital from institutions with a mandate to diversify their sub-managers. Such a business may also qualify as an SBA-designated Small Business Investment Company (SBIC), giving it additional advantages. Domiciling this enterprise in a HUBZone would be the crowning glory in a pitch for local investment. I do not know whether this ESG / BDC / SBIC plan is workable but I am very willing to work with other finance professionals who want to explore it and give it a shot. We won't know until we try. Maybe some ambitious innovation broker from 85 Broads or the Wall Street Warfighters Foundation is willing to help me make this happen.
Full disclosure: No positions in any securities, funds, or enterprises mentioned at this time.
Sunday, September 01, 2013
The Limerick of Finance for 09/01/31
China tries to get tough on state graft
Lots of money has gone down some shaft
Discipline will be hard
If you hold a weak card
Foreigners who trust China are daft
Lots of money has gone down some shaft
Discipline will be hard
If you hold a weak card
Foreigners who trust China are daft
API Technologies Corporation (ATNY) Not For Me
API Technologies Corporation (ATNY) offers a complex line of electronic components and systems to government customers in the NATO countries. The business model is right up my alley but defense contractors everywhere are up against major economic headwinds. Many European NATO countries will have to trim spending to stay within EU budget guidelines.
They've been losing money for the past three years, with only the most recent quarter showing positive earnings. Their long term debt has absolutely exploded since 2012. Their retained earnings are massively negative and FCF for much of their recent history has been negative.
I'm sorry, folks, but if the financials don't meet my standards then I don't waste time delving into the business model.
Full disclosure: No position in ATNY at this time.
They've been losing money for the past three years, with only the most recent quarter showing positive earnings. Their long term debt has absolutely exploded since 2012. Their retained earnings are massively negative and FCF for much of their recent history has been negative.
I'm sorry, folks, but if the financials don't meet my standards then I don't waste time delving into the business model.
Full disclosure: No position in ATNY at this time.
Vystar Corporation (VYST) Bottom-Bouncing Like Rubber
Vystar Corporation (VYST) first came onto my radar over three years ago when another finance professional mentioned it to me. I promptly forgot about it. Revisiting it now reveals that I didn't miss very much. The company makes an all-natural rubber latex. No jokes on usage, please. This blog maintains a family rating.
I'm not sure what to make of the management team's background. The CEO has been in leadership roles at Vystar since at least 2005 and a background in health care would in theory help find a market for this material. I don't know why a material designed with health care applications in mind would be of interest to balloon manufacturers.
The company has been losing money for three years straight and has increasingly negative retained earnings. Read their 10-Q dated August 30, 2013. Their full statement for the quarter shows $209K in cash on hand and a net loss for the quarter of -$659K. The MDA admits going concern doubts due to lack of liquidity. They seem to be unable to turn a profit and will need another capital raise to survive in the short term. That means massive dilution for shareholders.
The stock was worth over a buck in July 2010, when I first noticed the company. It now trades at seven cents. Anyone who invested back then has lost almost everything they put in if they held on until now. Vystar wasn't for me then and isn't for me now.
Full disclosure: No position in VYST, ever.
I'm not sure what to make of the management team's background. The CEO has been in leadership roles at Vystar since at least 2005 and a background in health care would in theory help find a market for this material. I don't know why a material designed with health care applications in mind would be of interest to balloon manufacturers.
The company has been losing money for three years straight and has increasingly negative retained earnings. Read their 10-Q dated August 30, 2013. Their full statement for the quarter shows $209K in cash on hand and a net loss for the quarter of -$659K. The MDA admits going concern doubts due to lack of liquidity. They seem to be unable to turn a profit and will need another capital raise to survive in the short term. That means massive dilution for shareholders.
The stock was worth over a buck in July 2010, when I first noticed the company. It now trades at seven cents. Anyone who invested back then has lost almost everything they put in if they held on until now. Vystar wasn't for me then and isn't for me now.
Full disclosure: No position in VYST, ever.
Subscribe to:
Posts (Atom)