Tag Archives: Investing

Institutions reacting to poor hedge fund/private equity returns

As a partner in a hedge fund, we understand exactly what a “hedge” fund is – it hedges other investments so that when one investment tanks, there is a counter weight for it. When all boats rise, sometimes the “hedge” drags your return down, but it mitigates your risk.

Our hedge fund, [name left out since this is not a ad for that investment], was the number two fixed income return’er in 2008, 2009, and 2010 – 52%, 38%, and 27% [I believe, this might be incorrect but close, doesn’t matter since this isn’t an ad and doesn’t make reference to the fund]. In the years since, it has underperformed the market significantly because it is a “hedge”. The term and the “hedge” fund’s purpose in the world has been corrupted to the point of insignificance.


A couple of days ago, the Dealbook section of the New York Timesreported on a recent meeting of the Institutional Investors Roundtable in western Canada.

The purpose of the organization, founded in 2011, is to help large government-linked investment bodies, like sovereign wealth funds and managers of government employee pension plans, cooperate to solve common problems.

According to the NYT, the agenda of the latest meeting was hedge fund and private equity investments.  Although the proceedings are secret, it doesn’t take a genius to figure out what went on.

The institutions’ dilemma:  on the one hand, they want and need the diversification and the high-return investment opportunities that hedge funds and private equity promise.   On the other, despite their colorful brochures and persuasive presentations, many hedge fund/private equity ventures produce pretty awful returns.

There are two main reasons for this:

–some hedge fund/private equity operators are brilliant marketers…

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Posted by on August 20, 2013 in BLOG, Business


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New OTC Market regulations

Within the OTC Markets Group monthly newsletter, there is an interesting announcement on OTC Market Regulation & Compliance.

FINRA Rule 6433

On August 5, 2012 FINRA announced that the SEC-approved amendments to FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities) will become effective on November 5, 2012. This has been approved as a 1 year pilot period. The new quotation sizes are as follows:

Price (Bid or Offer) Minimum Quote Size (# of Shares)
$0.0001 to $0.0999 10,000
$0.10 to $0.1999 5,000
$0.20 to $0.5099 2,500
$0.51 to $0.9999 1,000
$1.00 to $174.99 100
$175.00+ 1

For full details of this announcement, please see: FINRA Regulatory Notice 12-37.

So what does this mean to the average investor?  Well, if there is a penny stock out there, the minimum order you can place is 10,000 shares, which equates to $1.00.  Would anyone ever place a market order for $1?  Not a retail buyer since a retail buyer’s stock trade fee wold be at $10 (Schwab or Ameritrade) and then there are market fees of probably $2 on top of that.  On the market maker side though, you would see trades as small as this because their fees are much smaller.

© 2012 by Rhodes Holdings LLC, all rights reserved except excerpts from the FINRA notice.

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Posted by on August 28, 2012 in BLOG, Business, Public markets


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Securities in America, what’s changing

stock market

stock market (Photo credit: 401K)

Every since the Jump-start Our Businesses Start-ups, or JOBS Act, was signed into law this last week, there have been a number of items of interest coming out in the press.

Community Banks and Second Markets Holdings Inc.

The article just released today in the Houston Business Journal entitled, “A stock market for Houston, other community banks?” brought out some great points, but missed the biggest one – this is not a new issue.  The federal government enacted laws, and continues to enact laws and taxes, that severely hamper the transfer of shares, restricted or otherwise. provides a great service – Rhodes Holdings LLC and its parent are members of their service.  Recently they were in the news since many Facebook shares were traded over their service, or more properly, in their market.  We got involved with their market as they were liquidating many of the mortgage and bond packages caused by the 2007 – 2008 financial melt down.

Now that the JOBS Act will introduce a whole new set of investors to investing in start-ups with a plan and gumption enough to take advantage of the markets / PPM portals that will inevitably pop up, Second Markets stands out as a top end portal.


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OTC Markets newsletter a treasure trove

Each month, OTC Markets puts out a newsletter that always holds some unique treasure for issuers, their management team, and investors in general.  This month’s is no different.  Take some time and read the April 2012 OTC Markets’ Newsletter.


© 2012 by Rhodes Holdings, Inc., all rights reserved.


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