Author Topic: Non-public market strategies  (Read 3713 times)

Gregmal

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Re: Non-public market strategies
« Reply #20 on: March 31, 2020, 04:52:54 PM »
A wise man once told me to never mix business and personal relationships. Another crudely said, donít shit where you eat. Both good advice here.


netnet

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Re: Non-public market strategies
« Reply #21 on: April 05, 2020, 03:23:06 PM »
After the ethics 'discussion', btw I'm on Jurgis's side,(and I did say ethical in the original post) let's get some ideas going. 

20% loans to SMB and hoping to foreclose, just does not interest me.   Also anything to do with restaurants or lending to friends doesn't either for that matter.

-One idea, going to a small business owner (hopefully in your area of expertise) and give them some cash and an offer to run it and he/she gets some percentage of the upside.  Remember there are going to be owners whose businesses have basically evaporated and just don't have the energy to restart, so this would be a salvage/asset sale type deal.

-Second idea, do the AirBnB mortgage take over play, i.e. take over assumable mortgage.

-Third idea, in 2 months or so start going thru the BK proceedings.  (Unbelievable tedious and time consuming though.)

-Fourth idea, stick to public markets, just wait to see what Buffett does and see if you piggyback. 

rb

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Re: Non-public market strategies
« Reply #22 on: April 05, 2020, 03:41:55 PM »
Well, in the private markets it's way more complicated. On average there's more fraud, less liquidity, and people are way more willing to screw you because it's "their company". So you definitely need to pay more attention to your counterparty.

The other thing is that prices are way more inelastic in private markets. So why would you want to do a deal now. I'm actually doing a private to public swap/arbitrage with a client of mine that owns a bunch of apartments in DC. Switching from physical to to EQR because the public prices went down so much further than the private ones. So what's even the point of dealing with the private dudes?

Jurgis

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Re: Non-public market strategies
« Reply #23 on: April 05, 2020, 08:01:53 PM »
@netnet: one can wait for startup down rounds. But as you know there's a bunch of reasons this is problematic. Like rb says there's also the fact that private cos (startups) are much less likely to drop the price 50%+. We can see what happens but I don't hold my breath much.

Or wait for new startups to raise money. But similar issue: they won't raise at very low valuation; and likely they won't raise at all until this passes.

There might be some opportunities, but likely they would depend on existing network.
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netnet

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Re: Non-public market strategies
« Reply #24 on: April 06, 2020, 03:11:05 PM »
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Well, in the private markets it's way more complicated. On average there's more fraud, less liquidity, and people are way more willing to screw you because it's "their company". So you definitely need to pay more attention to your counterparty.
Well, you do have to get your hands dirty and really, really play close attention, even more than public markets--there is no fiduciary standard or SEC to (somewhat) protect you.

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The other thing is that prices are way more inelastic in private markets. So why would you want to do a deal now. I'm actually doing a private to public swap/arbitrage with a client of mine that owns a bunch of apartments in DC. Switching from physical to to EQR because the public prices went down so much further than the private ones. So what's even the point of dealing with the private dudes?

Prices for private market tend to trade in a much narrower band, that said, sometimes you can find almost giveaway prices in private markets, mostly in assets that the seller deems surplus, but you know better. (A friend bought a piece of prime, but unused waterfront California real estate owned by a midwestern church. Not a friend, but a guy in the Bay Area, bought acres attached to a disused marina on the San Francisco Bay that sold for less than the average local house.)

In any case, I'm trying to be proactive here.  I expect there to unbelievable fall out in the small business segment. (BTW, I heard that some banks have stopped taking PPP applications today (Monday!) and the program just opened.

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@netnet: one can wait for startup down rounds. But as you know there's a bunch of reasons this is problematic. Like rb says there's also the fact that private cos (startups) are much less likely to drop the price 50%+. We can see what happens but I don't hold my breath much.

There will be down rounds. It is just going to take some time.

JayGatsby

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Re: Non-public market strategies
« Reply #25 on: April 11, 2020, 12:27:24 PM »
-Second idea, do the AirBnB mortgage take over play, i.e. take over assumable mortgage.
Will banks actually do this or how would you go about that? In Sam Zell's book he talked about at one point (early 90s / S&L collapse) he was scooping up commercial properties from the banks by doing this. I don't remember exactly, but basically they'd just give him the property and he'd cover monthly costs. To the banks it was great because they got to turn a non-performing loan into a performing loan. For him he got a property with no equity at close.