Google Inc. (GOOG) has shed most of its opening bell gain and is near even, up 0.09%, amid an executive shake up launched by Chief Executive Larry Page. Page wants to create clearer lines of responsibility. The changes include the promotion of six executives, including the heads of YouTube and the Android mobile device software, according to the Wall Street Journal.
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How to Fund a Hedge Fund
By Sara Nunnally, Editor, Smart Investing Daily, taipanpublishinggroup.com
Yesterday, we received a letter from Smart Investing Daily reader L.D. This question was different from other questions we’ve fielded so far…
I have been a Professor of Business Law in New Orleans, Louisiana for a number of years and have been fortunate to meet many people here in the business community.
Recently, I was asked by one of my foreign students if I ever considered becoming an intermediary or third party marketer for hedge funds. I understand that these professionals find accredited investors for hedge funds and their compensation is negotiable.
My question for you is: how does one go about finding accredited investors outside of his business, family, and social circle? If you can provide some advice on this, I will pass it on to my class.
I hope to put together a lecture on this for my three business law classes. It sounds like fascinating work to me.
This question took a fair amount of research, and I started at my favorite resource for investment questions, Investopedia.com. I found a couple articles to get me started.
This is by no means an exhaustive research, but it will certainly help point you in the right direction.
First off, I found that accredited investors are also called angel investors. Before the global financial crisis (in 2006), there were about 234,000 active angel investors in the United States, according to the University of New Hampshire’s Center for Venture Research.
The Center for Venture Research also found that 728 companies obtained initial investments from venture funds in 2009 — to the tune of $3.3 billion. But 259,480 angel investors contributed $17.6 billion to 57,225 businesses.
That’s a fair amount of money, and as you can see, angel investors are much more likely to lend startup money.
You should also note that the number of angel investors has grown since 2006.
(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Jared Levy simplify the stock market for you with our easy-to-understand investment articles.)
Angel Investors
So what is an angel investor, and how do you find them?
There are standards. Accredited investors must have a net worth (or joint net worth with their spouse) of $1,000,000, or have income above $200,000 a year ($300,000 jointly).
(Of course, you can widen your sponsor pool by inviting investors of other income levels, but you would have to meet the disclosure requirements of the Securities Act.)
These angel investors form groups all across the country. The Angel Capital Association helps keep track of them, and provide a central forum for investment resources and other member services. Visit the Entrepreneurs page for how this organization can help you, or point you to a local angel investors group that could be more likely to invest with a locally grown business.
Another resource is Hedgefund Conferences (HC).
In real estate the adage is, “Location, location, location.” In finding funding, it’s, “Network, network, network.” Conferences can provide a wealth of new contacts you can tap for sponsors, and better yet, you can learn from some of the best hedge fund managers in the business.
Some new hedge funds have trouble attracting investors, however. There’s a dizzying amount of paper work and registration requirements that I won’t pretend I have any significant knowledge of… but it’s enough to turn some new funds off.
There’s an alternative, according to Hannah Terhune from the Capital Management Services Group.
An “Incubator” can be created by breaking down the hedge fund development process into two stages and isolating the first. The first stage sets up the fund and management company entities, as well as pertinent operating agreements and resolutions. This is enough to allow the hedge fund to begin trading, usually with the manager’s own funds. By trading under this structure, the manager can develop a track record, which can be marketed legally to potential investors in the offering documents. Then, in the second stage, the PPM [private placement memorandum spelling out subscription and operating agreements] is developed with the performance information included. The Incubator method affords the opportunity for those with a skill for trading (often in their personal accounts) to break down the hedge fund development process into a manageable undertaking.
Once the hedge fund has a history of successfully making money, investors will be a lot more willing to sit down and look at a proposal.
In general, this is how the money flows for a start-up company, and can be applied to hedge fund startups too. From Investopedia.com:
“Alphabet Rounds” are when a company of fund is ready to approach venture capital firms. These guys — though they’ve made billions upon billions from taking risks on new companies — probably won’t touch a new company without a significant amount of money already invested from angel investors.
This level is different for every company, but considering that venture capitalist typically plop down several millions of dollars at a time, this can give you an idea of what you should aim for before approaching a venture capital firm.
The Center for Venture Research has a state-by-state listing of venture capital resources for when you’re ready for this stage.
Another thing to keep in mind is that funds with under $25 million under management should follow their individual state’s requirements for registering the fund. If the fund has more than $30 million, it will need to be registered with the SEC as an investment advisor, according to Terhune.
I hope this article gives you a good place to start your own research, L.D. Best of luck to you, and let us know what you find and how you do!
Editor’s Note: I stole these winners from billionaire hedge fund managers. Here’s why Uncle Sam helped me do it. Steal from the funds like they stole from American investors. You could turn $5,000 into as much as $500,000 with this gem. I’ll tell you all the details in this exclusive investment report.
About the Author
Sara is Managing Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country. Most recently, Sara co-authored a book with Sandy Franks called, Barbarians of Wealth.
As Senior Research Director, global correspondent and managing editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.
Crude For May Delivery Approaches $112 A Barrel
Light crude for May delivery approached the $112 a barrel level, while Brent crude futures rose $1.74 to $124 a barrel. Buying momentum has continued as hopes fade for a quick resolution of conflicts in Libya. Last week, crude-oil futures traded at $106 a barrel and prices have only climbed since then. The weakening of the U.S. dollar and uncertainty over a possible U.S. government shutdown helped crude-oil prices increase. Tudor Pickering Holt analysts said, “Middle East tensions driving further crude-oil gains from these elevated levels will make us incrementally more nervous about energy demand, the economy and inflation.”
Forex CT 8-4-11 – Daily Forex Market Commentary
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
Oil Prices Climb above $111 a Barrel
By Anton Eljwizat
Crude oil prices rose significantly yesterday and peaked at $111.36 per barrel. However, the daily chart is suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. Forex traders involved with commodities like this can take advantage of this knowledge by going short on crude oil now, and at a great entry price!
• Below is the daily chart for crude oil by ForexYard.
• The technical indicators used are the Slow Stochastic, RSI and Williams Percent Range.
• Point 1: There is a “doji” candlestick formed in the chart, indicating that a reversal should take place.
• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.
• Point 3: The RSI signals that the price of this pair currently floats in the over-bought territory, suggesting downward pressure.
• Point 4: The Williams Percent Ranges is showing that this pair is heavily over-bought and may be experiencing strong downward pressure.
Crude Oil Daily Chart
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
ForexCT Afternoon Thoughts 08-04-11
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
EUR/USD Hits 15-Month High Following Rate Hike
Source: ForexYard
Following the widely expected euro-zone interest rate hike yesterday, the euro hit a fresh 15-month high against the dollar, peaking at $1.4400. Meanwhile, the yen resumed its recent bearish behavior during the overnight session and lost over 50 pips against the dollar before staging a correction. Currently the USD/JPY stands at 85.02.
Economic News
USD – Dollar Drops on Renewed Risk Appetite
The U.S dollar fell against most of its major currency rivals yesterday, hitting its lowest level in nearly a week against the EUR, as gains in commodities prompted investors to wade into riskier currency trades. By yesterday’s close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.4400. The dollar experienced similar behavior against the GBP and closed at 1.6385.
The dollar has fallen almost every day this week against the EUR and sterling pound, and it marked its second straight decline against the Japanese yen yesterday. Analysts attributed the fall in the dollar, which has been treated as a lower risk, safe-haven investment, to growing optimism that the worst of the financial crisis has passed, causing investors to unwind positions in favor of the U.S. currency that were built up when fear was widespread, credit was frozen and stock markets were in free fall.
Another leading indicator released yesterday was U.S. Unemployment Claims. This number handedly beat last week result but failed to provide strength to the Dollar as investors may be waiting for key data due to be released today to implement their trading strategies.
Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.
EUR – The EUR Continues to Strengthen against the USD
The euro rose to its highest level in almost 15 months against the dollar on Friday as a mildly firmer risk environment from higher equity markets and rising oil prices boosted flows into the single currency. The euro rose as high as $1.4400, its highest since mid-January 2010, bringing its gains this year to 7%.
Yesterday, the European Central Bank raised interest rates and cemented expectations for at least two more rate hikes by year-end as it seeks to cool rising price pressures. The ECB’s widely expectedly quarter-point rate hike to 1.25% was its first such move since July 2008. In contrast, the Bank of England left its key rate at 0.50%, as concerns over domestic growth trumped, for now, worries over an uncomfortably high 5% inflation rate
Currency traders have started to focus more on fundamentals such as economic growth and short-term interest rates. That shift, just getting underway, could take the shine off the soaring EUR in coming months.
The euro zone has a few reports scheduled for today but most of the attention will be on the ECOFIN meeting. Depending on the statements being released from the meeting of European Union countries, it may be difficult to gauge the direction of the EUR and traders should be aware of the heightened volatility in today’s market.
JPY – The Yen is Losing Ground on All Fronts
The JPY saw a bearish trading session yesterday, losing ground against most of its currency crosses. The JPY fell against the sterling pound, pushing the oft-traded currency pair to 139.50. The Japanese yen experience similar behavior against the EUR and closed at 122.55.
The JPY’s trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.
Crude Oil – Crude Oil Prices Continue to Rise
The price of oil crossed $111 a barrel for the first time in two and a half years on Thursday amid concerns about war in Libya and as the dollar weakened against the euro.
AFP reported Thursday that an oil field in Libya had been damaged. Furthermore Libyan insurgents as well as civilians stampeded out of Ajdabiya due to rumors that loyalist forces were outside the eastern town, hours after an air strike tore into the rebels’ defenses.
In addition, a weaker U.S. dollar tends to boost the price of dollar-priced commodities as it lowers the price to holders of other currencies and reduces the value of the currency oil producers receive of their product.
Technical News
EUR/USD
Most technical indicators are showing that this pair is in overbought territory and could see a downward correction today. It appears like a bearish cross is forming on the daily chart’s Stochastic Slow, while the 8-hour chart’s Williams Percent Range is currently at -10. Opening short positions may be the wise choice today.
GBP/USD
Both the Relative Strength Index and Williams Percent Range on the 8-hour chart have moved into the overbought zone, indicating that downward pressure exists for this pair. Traders may want to go short with tight stops today, as a bearish correction may take place.
USD/JPY
While technical indicators on the daily chart are showing the pair in overbought territory, the hourly charts are proving to be much more inconclusive. With most indicators placing this pair in neutral territory, taking a wait and see approach appears to be the preferred strategy today.
USD/CHF
The Relative Strength Index on the 8-hour chat has dropped into oversold territory, indicating that a bullish correction may occur today. This theory is supported by the Stochastic Slow on the 4-hour chart, which is close to forming a bullish cross. When it does, it will likely be a good time to open long positions.
The Wild Card
GBP/CHF
The 8-hour chart’s Williams Percent Range is currently hovering right above the oversold zone, indicating that the pair could see some upward pressure today. Similarly, the Relative Strength Index on the 4-hour chart is showing that bullish movement is likely to occur, providing forex traders with an excellent opportunity to open long positions ahead of the impending wave.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Oil Prices Climb above $111 a Barrel
Crude oil prices rose significantly yesterday and peaked at $111.36 per barrel. However, the daily chart is suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. Forex traders involved with commodities like this can take advantage of this knowledge by going short on crude oil now, and at a great entry price!
• Below is the daily chart for crude oil by ForexYard.
• The technical indicators used are the Slow Stochastic, RSI and Williams Percent Range.
• Point 1: There is a “doji” candlestick formed in the chart, indicating that a reversal should take place.
• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.
• Point 3: The RSI signals that the price of this pair currently floats in the over-bought territory, suggesting downward pressure.
• Point 4: The Williams Percent Ranges is showing that this pair is heavily over-bought and may be experiencing strong downward pressure.
Crude Oil Daily Chart
EUR Set to Maintain Gains to Close Out Week
Following yesterday’s widely expected euro-zone interest rate hike, the euro started today’s trading on a high note, hitting fresh highs against the US dollar and yen. With no significant news set to be released from the euro-zone or US, traders can expect the 17-nation single currency to maintain its current trend as we close out markets for the week.
Today, attention will want to be given to a batch of Canadian news. The CAD has recently turned bullish against the US dollar. Whether or not it will continue this trend will likely be determined by the following news events:
11:00 GMT-Canadian Employment Change
The monthly employment report is forecasted to show that Canada added around 27.8K jobs last month, a sharp increase over March’s figure. If true, traders can expect the loonie to go bullish against its main currency rivals, including the dollar and euro.
11:00 GMT- Canadian Unemployment Rate
The indicator is forecasted to show that unemployment in Canada has dropped from 7.8% to 7.7%. If true, the CAD is likely to find further support and move up against its main rivals to close out the week.
