Looking for partners/investors in a niche market trading operation

Discussion in 'Professional Trading' started by SREC, Dec 17, 2011.

  1. SREC


    Hello all,

    I figure I would repost this in Career Trader, as it would probably get more traffic. Mods, feel free to delete the other threat in Hook Up.

    I have been actively trading a niche yet fast growing market of Solar Renewable Energy Credits (SRECs) since June of 2010. For a quick synopsis, feel free to read http:/http://en.wikipedia.org/wiki/Solar_Renewable_Energy_Certificates.

    Since that time, I am up ~85% on my initial starting capital, which was a modest low to mid five figures. This is also completely unleveraged, as this is not a market where you can just access brokers & prop firms for high leverage. Leverage is attained by a direct bank credit line or a letter of credit.

    While I am satisfied with my results, I have had to let even greater opportunities pass me by, due to lack of capital and lack of a bank relationship (for letter of credit purposes). The reality is that this market will grow and at some point mature. The profit potential in its current form will not be around forever, and I would hate to miss it simply due to lack of capitalization & foundation.
    I am hoping to meet some individuals (and/or firms) that would be interested in partnering up with me in growing this operation to take advantage of opportunities in the SREC space. While extra capital is always nice, I do feel I need some sweat equity in helping me establish a better legal entity to do this (it's just a single member LLC right now), help with marketing, establishing a process for accepting investors and other minor stuff.

    Key points about the SREC market:
    1. It is not traded on any major exchange like CME. That is likely to change in the intermediate future. It is an OTC market that is fragmented, with most deals done direct between the parties, with contracts signed and direct payment & transfer.
    2. At times it can be illiquid & stagnant.
    3. There are many intricate details since every state's SREC design has minor but often very important differences
    4. It can be very volatile with sharp price moves
    5. Shorting is possible but not simple, as you can only do it via forward contracts which require a letter of credit. This is one of the primary hurdles I want to conquer.
    6. Currently only 7 states have a significant SREC markets that are designed to grow on an annual basis. It's only at a fraction of the potential as more states implemented Solar Renewable Portfolio Standards.

    Key points about myself:
    1. I'm in my early 30s. I live & work in the NYC area.
    2. I have prop trading experience of stocks, some of which I do apply to this market to exploit inefficiencies.
    3. I do not do this for extra income, as I have a full time position at a small hedge fund. This is a venture of mine which I have worked on building for almost 5 years and plan to build it into a serious operation and/or (ideally) hedge fund
    4. I have significant experience & exposure to the US solar industry, particularly solar finance and trading of SRECs.

    Key notes on the trading:
    1. I implement multiple strategies, spanning from quick scalps, arbitrage trades, straight directional trades, forward contracts and prepaid forward contracts. The latter two I have been able to do to a very limited degree.
    2. My original concept was to do prepaid forward contracts & standard forward contracts, however these are very hard to attain without significant capital backing & strong bank relationship. Once I started on this venture, I naturally grabbed any opportunity I could, utilizing my past trading experience.
    3. While most of my results have come from shorter term strategies, I strongly believe that the premium returns for years to come will be from longer terms strategies (forward contracts and prepaid forward contracts)
    4. I've done roughly 50 trades so far with 5 being unprofitable. My largest % profit was tripling my trade in a matter of a month, adding ~10% to my capital. My largest loss was for about ~5% of my capital and was when I had to pay to break out of a contract.
    5. When calculating for my returns, I do not look at paper profits. Everything is marked at cost.

    Before you ask, I have taken this concept, with real results to the owner of the hedge fund I am employed at. While he is quite wealthy, his focus is on his hedge fund and he also feels that this market is too early & too new. Plus, he does not fully understand it. What I have actually noted from this, is that this venture is in a stage that requires individuals with a entrepreneurial mindset that looks for new opportunities to develop & grow. Call it a very early start up, if you wish.
    I have some resources on my end to get some feeder funding once this is built up to a bigger enterprise. To get it to this point, I will need outside help, both on the capital end & sweat equity. I do require that anyone interested in partnering up does contribute capital, but I am not looking for absurd sums, more like match my initial stake. Of course if you, your firm or your buddies are ready to contribute six to seven figures, I'm ready to put it to work.

    Write me a PM or reply in this thread. Interests, Criticisms, Advice & Flames are all welcome & expected. One thing, do not ask me to start going into exact detail of my trades and teach you what took me years of research to acquire. That is proprietary and would only be discussed in person with an interested party and after a NDA is signed.

    Thanks & looking forward to the replies.
  2. SREC


    140 views and no response? Quite surprising.
  3. lindq


    >>> I have taken this concept, with real results to the owner of the hedge fund I am employed at. While he is quite wealthy, his focus is on his hedge fund and he also feels that this market is too early & too new. Plus, he does not fully understand it. <<<

    Well, that's not really much of a ringing endorsement of your concept, is it? If your employer - who is an experienced investor - doesn't understand it, it seems you need to put a lot of work into your presentation. Do you have friends/associates you can share it with to get feedback on your clarity, organization, etc.?
  4. SREC


    Yes, and they understand it, quite quickly as well. At least the basic concepts at the core, this is not something you will be able to understand fully with a crash course. Either way, my boss is not the type of investor this venture needs at this point. He looked into incorporating the strategy into our hedge fund but it won't pass the legal & auditor since it's such a young OTC market.
  5. western


    From your vague description, sounds like you've already made 10k-20k trading these things.

    I'm assuming your hedge fund job pays well, so why can't you just amass 100k yourself from your personal funds and some from friends and family?

    Also, why doesn't your boss personally invest in this strategy with you? Even if its not right for the hedge fund, if it had any viability you'd think he'd put some of his own money in.
  6. SREC


    Over $20k.

    My job pays OK. Nothing to brag about but enough for me to put away money every month into savings, investments and side ventures.
    I'll probably start injecting capital again with the new year but 100k is not any type of benchmark. The reality is that to reach the bigger trades & deals that I have been unable to take, you probably need seven fig capital and the right setup with a bank.
    I have a couple friends in finance who are interested in investing, but I don't know how much they can contribute besides capital. Hence the reason for me making this post, I hope to find some synergy by meeting like-minded individuals.

    I've discussed this already in the previous posts. He is actually ridiculously picky about any other investments right now and has very demanding criteria for a deal. The bottom line is that this is not for him, and not for everyone. By the time this space becomes a more common and accepted trading arena, the type of returns I am getting will be near non-existent.
  7. Shadow23


  8. SREC


    Do you mind giving me some details behind who this person is?

    Shoot me a PM if you do not want to disclose it in the thread. Eventually I will be able to access it once I reach 30 posts.
  9. emg


    he is a mob that runs a chophouse.
  10. They are just being nice.
    I think you are just full of it because if you know how to trade and can make 80% annually , you don't need to solicit anyone.
    #10     Dec 19, 2011