Sophisticated Investors

[see_change]

We have a friend who was a CEO of a listed property company prior to GFC . They didn't go under , but he wound the company up afterwards .

Now he puts together syndicates for sophisticated investors . He prefers to do it that way simply because there at less hurdles and hoops they have to jump through or over . They're are currently on their third or forth .

We have thought about it , but have decided to keep on doing our own thing with Direct investing in property . Main reason is more control . They are usually for a set time .

It gives access to investing in properties that otherwise people ouldnt be able to invest in . One was a commercial site in inner Sydney , one a half acre development site in the rocks and another a shopping Center in Brisbane which had potential for further development.

Cliff

 

[Scott No Mates]

Similarly there is a difference between being able to get on board with a wholesale fund or mixing it with the rest of the rabble in retail funds. Wholesale funds are the old 'unlisted property trusts' , much harder to move into and out of, less disclosure of value etc

 

[Intrinsic_Value]

I think I remember hearing this term way back when reading some of Kiyosakis stuff.
I just noticed it again recently, but don't hear much about it usually.
For those who don't know the definition, it's:

Definition of a Sophisticated Investor
Sophisticated investors, as defined by Corporations Law are:

1. Individual entities in respect of whom a qualified accountant has given a certificate in the last 24 months confirming that the individual entity either has net assets of at least A$2.5 million, or has a gross annual income (for each of the last 2 financial years, of at least A$250,000.

2. Individual entities who subscribe for and are allocated at least $500,000 worth of the securities being offered.

3. Individual entities who control for the purpose of investment in securities (that is, shares, debentures, units in managed funds - not property), at least $10,000,000.

4. Individual entities who are licensed dealers subscribing for the securities as principal. More info in this link:
http://www.ozinvestor.com.au/articles/2010/aug/001.html


Do sophisticated investors really get an advantage with available opportunities offered to them?
Does anybody have experience with any examples?

....

yes I managed to participate in Bank of Queensland capital raising a couple of years without owning any shares.
Participated in the institutional capital raise at $6.50 (or whatever it was).

I had 24hrs to make a bid.
Got my full allocation.
Back then banks were not as popular as now, so obviously they were happy to take my teenie bopper 'institutional' takeup (I think it was around $80k bid)

Now that markets have recovered, nobody is interested in me anymore

 

[Intrinsic_Value]

Now he puts together syndicates for sophisticated investors . He prefers to do it that way simply because there at less hurdles and hoops they have to jump through or over . They're are currently on their third or forth .

.

Cliff

This is the BIG red herring that most people don't realise.

With sophisticated investor status, you loose your 'consumer rights' on many things.

You are supposed to be sophisticated, so you are supposed to know what you are doing.

Hence various consumer laws wont protect you to the extent they will protect other investors.

Brokers, 'wealth managers', bankers love dealing with you. Because if you stuff up, there is much less recourse. They have your 'sophisticated investor certificate' on file in the event of a stuff up, and then future litigation on your behalf.

 

[see_change]

This is the BIG red herring that most people don't realise.

With sophisticated investor status, you loose your 'consumer rights' on many things.

You are supposed to be sophisticated, so you are supposed to know what you are doing.

Hence various consumer laws wont protect you to the extent they will protect other investors.

Brokers, 'wealth managers', bankers love dealing with you. Because if you stuff up, there is much less recourse. They have your 'sophisticated investor certificate' on file in the event of a stuff up, and then future litigation on your behalf.

I wouldnt call that a red herrring . It's just a fact . You're really on the integrity of the people involved and doing your DD on them .


cliff

 

[Biz]

If I smoke a cigar, swirl a bit of cognac and borrow a pin stripe suit I could almost pass for a sophisticated investor.

 

[sanj]

I wouldnt call that a red herrring . It's just a fact . You're really on the integrity of the people involved and doing your DD on them .


cliff

Agreed. Definitely higher risk but potential for higher rewards too

 

[willair]

yes I managed to participate in Bank of Queensland capital raising a couple of years without owning any shares.
Participated in the institutional capital raise at $6.50 (or whatever it was).


Now that markets have recovered, nobody is interested in me anymore

I bet you would be happy with that purchase ,BOQ is in the mid low 14$$ a few minutes ago,,just a matter of looking at numbers that were relevant at the time when they were in the high 6$$ range, and ignoring the media spin that was on BOQ at the time ..imho..

 

[Scott No Mates]

I wouldnt call that a red herrring . It's just a fact . You're really on the integrity of the people involved and doing your DD on them .


cliff

That is exactly the reason we have legislation to protect the majority who are 'unsophisticated' eg: residential tenancy laws, retail leasing act, Property Stock & Business Agents Act, Builders Licensing Act etc to protect consumers from the sharks - whether they be those unscrupulous slumlords, retail shopping centre owners, residential home builders or shonky car salespeople & real estate agents. Oh and that other lot, the bankers/finance industry/financial advisors

 

[see_change]

That is exactly the reason we have legislation to protect the majority who are 'unsophisticated' eg: residential tenancy laws, retail leasing act, Property Stock & Business Agents Act, Builders Licensing Act etc to protect consumers from the sharks - whether they be those unscrupulous slumlords, retail shopping centre owners, residential home builders or shonky car salespeople & real estate agents. Oh and that other lot, the bankers/finance industry/financial advisors

We've never seriously looked at these styles of offerings as we've " worked out " property .

Cliff

 

[redwing]

Simplicity is the ultimate form of sophistication

When I think Sophistication, I think along these lines...

 

[Intrinsic_Value]

Simplicity is the ultimate form of sophistication

When I think Sophistication, I think along these lines...

totally agree, not the cartoon, but your comment