Surf's Special Situation Journal

Discussion in 'Journals' started by marketsurfer, Aug 4, 2012.

Thread Status:
Not open for further replies.
  1. Yes, every entry is generally the same size.

    I am optimistically holding here, expecting more upside in KCG per the current info, chatter, and data set. Fully expecting the $3.50 high to be taken out in the near future.....:cool:

    Very confident.
     
    #21     Aug 6, 2012

  2. I'll admit that holding can be my downfall, but I like riding the big waves and will take losses in between....
     
    #22     Aug 6, 2012
  3. Maverick74

    Maverick74

    That's not how convertibles work. LOL.
     
    #23     Aug 6, 2012
  4. traderchi128

    traderchi128 Guest


    Trailing stop Surf. Try it sometimes. Ya lock in profits on the way up. While I can appreciate your going for the home run all the time, let's be honest. The guys who last the longest in this biz are the .300 hitters.

    It's like the guys who cleaned up in the fall of 2008. That was the time to go for home runs. Since then those same guys can't make a dime. You have to ride those waves when they are there.

    Catching KCG at 2.50 or so and having it go to 4.00 is a pretty damn big wave.
     
    #24     Aug 6, 2012
  5. Holding longs here in KCG-- expecting waves of good news and positive developments in the saga.

    Awaiting the next special situation to set up.

    surf
     
    #25     Aug 7, 2012
  6. -----------------------------------------------------------------------------------

    Ok explain to me Maverick please.
    If the new investors give Knight money, they get stock shares, true? Now the company Knight have more stock at $1.50 per share. More stock shares than before. So surf should be careful because all the new stock can dilute the price. That is what I am thinking.
     
    #26     Aug 7, 2012
  7. Maverick74

    Maverick74

    Yes, but the stock does not go to the convertible price. That's their cost basis and yes it massively dilutes the shares. However in this situation, the convertible will more then likely allow them to stay in business and ultimately will drive the stock higher. Of course there could be more bad news on the way. No one knows that. But in this case, had they not done the convertible, the stock would probably be at $1. Dilution is the least of the problems KCG has right now.
     
    #27     Aug 7, 2012
  8. A great article for those of you wanting to start a fund;


    START-UP FIRMS FACE MARKETING CHALLENGES

    AUG 7, 2012

    SHARE: _ _ _ _

    James Armstrong
    Many traders dream about striking off and starting their own investment firms, but with capital difficult to come by these days, start-up shops are having to find innovative ways to market themselves and demonstrate the strengths of their strategies.

    When Anthony Cambeiro left a large hedge fund to found Anthology Capital Group, the trader was surprised by how difficult it was to get investors to seriously consider his fund, in spite of the long and successful track record he had previously.

    “It’s definitely challenging out there,” Cambeiro said. “Assume you are going to reach out to a thousand people, talk to a hundred, to get one investor.”

    Though some traders turn out to be natural marketers, Cambeiro said that for him marketing involves a very different mentality than investing. A trader might have total confidence in an investment strategy, but demonstrating that confidence to prospective investors can be another thing.

    Fortunately for him, Cambeiro frequently dealt with prospective investors at his old firm, but that was as part of a team. Now, he has to sit down with prospects without a large sales team to provide assistance.

    “In my previous hedge fund sales experience as one member of a team presentation, I didn’t have to know everything and have it at the tip of my tongue,” he said. “I now have to be able to talk and think ahead as to what the next key point is I have to communicate.”_


    Bruce Frumerman

    According to Cambeiro, the sales cycle has gotten longer since the financial crisis of 2008. These days, it’s a six-to-nine-month process from meeting with potential investors to actually getting a check, and with some institutional investors, it can take years.

    Bruce Frumerman heads the consulting firm of Frumerman & Nemeth, which helps start-up firms better position themselves to attract capital. He said in addition to having all of the right systems in place, such as trusted service providers and a solid legal structure, a firm needs to know how to properly tell its story, to fully relate how it does its research, risk management and decision making.

    “There are two jobs for the prop trader who now has started his own shop,” Frumerman said. “First, you have to deliver performance that is in the ballpark of acceptance. Then, you have to be able to educate and persuade people to understand and buy into how you invest, because that's what differentiates you from the competition.”

    According to Frumerman, the number one cause of money management firms closing their doors is not because their trading strategies blew up. Rather, it’s because they couldn’t get enough people to understand and buy into how they run their portfolios.

    The first step, he said, is getting the right people to hear your pitch. If an investor is looking for a certain trading style or sector exposure, and your firm doesn’t offer that, any meetings will just be a waste of time. Start-up funds should do their research before reaching out to a perspective investor.

    Second, in a post-crash environment, investors are looking for transparency, and that means something different today than it did before 2008. It used to be investors wanted to know what all of a fund’s holdings were---now they want to know that and the logic behind all of those holdings.

    “One complaint institutions have had is that while post-crash there is more data transparency, more numbers don't reveal what the underlying investment beliefs thinking and investment process was,” Frumerman said. “They are looking to determine whether portfolio managers are doing something on an ongoing repeatable basis, or if it was just serendipity that they happened to get the returns they did.”

    Though traders don’t have to reveal every step in their process or every percentage of weighting they give to different stocks, they do have to effectively communicate how their process works. And sometimes, less is more.

    Start-up firms will often bring a 50-page pitch book into a meeting with a prospective client. No one can process that much information in one meeting. Frumerman suggests having a small brochure running around 12 pages to review with potential investors. Then, at the end of the meeting, give them a few more pages that they can review at a later date to remind them of the topics covered in the meeting.

    This review material is especially helpful when dealing with institutional clients who will have to relate information about a fund to an investment board. Frumerman said traders need to make sure not just that they don’t screw up their own pitch, but that someone else doesn’t screw up the pitch when taking it to a board.

    One other thing Frumerman suggests is to pay especial attention to risk management, which has increased considerably in importance since 2008. Today, risk management can’t just be an overlay. It has to be integrated into a trader’s strategy.


    Sam Won

    Helping traders develop all-inclusive risk management is the specialty of Sam Won, founder of Global Risk Management Advisors. He said nearly all investors today are demanding institutional quality risk management even from small emerging managers.

    New funds need to be able to clearly state in writing what their framework is for risk management, he said, and to explain how the process is intertwined with the investment program. Being able to simply check off boxes on a due diligence questionnaire is no longer sufficient.

    “After the events of 2008, it is not enough for a fund manager to simply say that they do some risk measurement,” Won said. “Today, institutional investors expect a fund to substantiate that it has a true risk management process that encompasses controls, such as risk limits, and governance in the form of a risk management committee that has meaningful influence over the investment process.”

    Being able to measure risk is important, but funds today need to also demonstrate how they plan to hedge that risk, he added. In today’s competitive environment, investors can always find another firm that offers comparable returns, and if that firm can also demonstrate consistency and sustainability, it will end up being the one with the investment dollars.

    After having launched his own firm, Cambeiro has some advice about getting investor money: Line up as much of it as you can before striking out on your own. Some investors will end up contributing less than they initially say they will, and others who promise to invest will end up not putting in any money at all.

    Still, marketing a start-up firm can have some pleasant surprises, too.

    “Some of the people that you think will invest will never invest, and some of the people that you never thought would ever invest may invest,” Cambeiro said. “You just never know.”

    Click here to watch video

    SHARE: _ _ _ _

    For more information on related topics, visit the following channels:
    Buyside
    More News
    Return To Homepage
     
    #28     Aug 7, 2012
  9. ---------------------------------------------------------------------------------

    Ok, thank you for explaining. I am not saying all the stock will go to $1.50, no. I understand the convertible bring money to the company so they are not going to bankrupt.

    And you say "Dilution is the least of the problems KCG has right now." [/B][/QUOTE]. I understand because they need cash. But for surf dilution maybe can hurt his bet. But I understand now when you say if no investors come with cash, then surf can be in really big trouble. Even more trouble than he have now because he not selling now to take profit.
     
    #29     Aug 7, 2012
  10. Daal

    Daal

    Conversion investors can now realize a 100% profit for a few days of work. This is likely to bring downward pressure on the stock when the transaction closes. They will own so much stock it will have an impact
     
    #30     Aug 7, 2012
Thread Status:
Not open for further replies.