# For Sophisticated Investors



## tech/a (17 October 2013)

What is that?
Who are they?
How do I become one.





Surely its me all over!


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## CanOz (17 October 2013)

haha! Classic spruke that one!!


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## KurwaJegoMac (17 October 2013)

Not sure if you're seriously asking or just having some fun 

If you are serious, then there is criteria and certification required.

You need a qualified accountant to certify you based on the following criteria:

- $2.5m in net assets

or 

- $250,000 in income for each of the last 2 financial years

If you meet it a qualified accountant will issue you with a "Sophisticated Investor Certificate" which you can then use to apply for offers like what you posted above.


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## tech/a (17 October 2013)

KurwaJegoMac said:


> Not sure if you're seriously asking or just having some fun
> 
> If you are serious, then there is criteria and certification required.
> 
> ...




Bit of both.

Thanks for the reply I've learnt something!

So can you explain the type of offer that is offered?
How is this and any other offer better or worse than a normal capital raising?


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## Gringotts Bank (17 October 2013)

I had a client once who was a 'soph'.  Whilst I was with him for a short period one day, his broker called.  I could hear the conversation.  He was offered a minimum 'lot' of $500,000 in BKN, which was part of a left over parcel after an institutional capital raising.  And the discount?  10%.  I made sure to check the SP the next day and it actually went up 2%.  He could have made 12% on that money overnight.  He said no at the time, but I bet he reconsidered later that day.


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## KurwaJegoMac (17 October 2013)

tech/a said:


> Bit of both.
> 
> Thanks for the reply I've learnt something!
> 
> ...




No problem 

Typically sophisticated investors receive a better deal than a retail customer would, owing to the bulk/size of the investment. There is no hard/fast rule as to how good the deal is, but you would get a bigger discount on the capital raising than a retail trader would.

Or, the other alternative is that they don't open up the capital raising to non-sophisticated investors at all. The belief being that the sophisticated investor would hold onto the investment for a longer time-frame and not churn as a smaller investor might.


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## barney (17 October 2013)

tech/a said:


> Bit of both.
> 
> Thanks for the reply I've learnt something!
> 
> ...





The answer you seek is in the announcement Tech ..... you didn't read it did you  ... bad duck!

I'm not telling you the answer cause it may be detrimental to your health:


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## barney (17 October 2013)

All right, I'll tell you anyway ... you seem like a reasonable Duck

PEN have a debt facility with Blackrock (the sophisticated guys)

They had certain conditions which needed to be met before they could start to drawdown on those funds

Time was running out ... they thought they needed cash in a hurry ..... a proposed Cap raise

The conditions were met pre Cap raise, so the funds became available, but they felt "obliged" to offer a small sweetener to Blackrock to keep them happy

Why?  Because Blackrock are a major contributor to PEN's future in various ways  .... This particular debt facility is for $22 million


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## McLovin (17 October 2013)

tech/a said:


> Bit of both.
> 
> Thanks for the reply I've learnt something!
> 
> ...




They don't have to release an offer document. Basically, you can tell your underwiter to ring a few of his bigger clients and they can do it all over the phone. It's cheaper and faster for the company. It's much more common in off market investing, where an IM can be used in place of a full offer document but can only target sophisticated/wholesale/professional investors. You also don't need an ASIC license to target those investors. I've done a few that required it.


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## Garpal Gumnut (17 October 2013)

tech/a said:


> What is that?
> Who are they?
> How do I become one.
> 
> ...




Haha.

You have to be invited tech.

Not every mug fits the bill.

There was a bloke in Townsville a years ago called Manny Cassim.....

gg


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## Country Lad (17 October 2013)

Garpal Gumnut said:


> Haha.
> 
> You have to be invited tech.




Actually, no.  All that needs to happen is that you need to meet the criteria, your accountant advises the broker that you meet the criteria and then your broker will offer you stuff based on the level of business you do with them and/or how long you have been a client.

Generally, the broker knows the client well and what to offer him.  If my broker were to offer me PEN, I would no longer be a client and he knows it.

Cheers
Country Lad


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## ROE (17 October 2013)

basically people that has money that they can burned if **** happen and reply on their adviser for deal leads and recommendation.

Personally if I end up wealthy with millions I still chase my own deal on the market where I know a lot about 

Nothing kick ass conflict of interest  better than when it comes to money


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## skyQuake (17 October 2013)

Country Lad said:


> Actually, no.  All that needs to happen is that you need to meet the criteria, your accountant advises the broker that you meet the criteria and then your broker will offer you stuff based on the level of business you do with them and/or how long you have been a client.




Exactly. 

Pay a lotta comm and your broker will get you sweet placements and IPOs like OFX.

Give him no business and you'll get a 3% allocation on anything good, and 100% on anything bad!



> Generally, the broker knows the client well and what to offer him.  If my broker were to offer me PEN, I would no longer be a client and he knows it.
> 
> Cheers
> Country Lad




How about some juicy sub-underwriting with a 5% fee


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## skc (17 October 2013)

skyQuake said:


> Exactly.
> 
> Pay a lotta comm and your broker will get you sweet placements and IPOs like OFX.
> 
> Give him no business and you'll get a 3% allocation on anything good, and 100% on anything bad!




Yes the word I hear is that to get the good placements, you have to knowingly take the bad sometimes. Some brokers have known to offer short hedge at the same time as the placement so it is risk free money for soph + plenty of commission for the broker. The broker has plenty of power in this case and can allocate his available stocks anyway he likes.


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## Country Lad (18 October 2013)

skc said:


> Yes the word I hear is that to get the good placements, you have to knowingly take the bad sometimes.




No, can't agree with that.  No broker would willingly offload a bad one to a client who knows what he is doing because he would take a chance on losing the client .  Why would he anyway, because he doesn't need to sell them unless he is underwriting the issue and most brokers won't underwrite "bad" ones unless they know that they can offload them to retail clients.



skc said:


> The broker has plenty of power in this case and can allocate his available stocks anyway he likes.




Not really, keep in mind he is dealing with sophisticated (read knowledgeable or experienced) clients who generally can pick the difference between a poor and an attractive IPO or bookbuild.  Not only that, these are the brokers' better clients and they will not do anything to upset them, so it is the client in a position of power. 

Cheers
Country Lad


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## prawn_86 (18 October 2013)

Country Lad said:


> Not really, keep in mind he is dealing with sophisticated (read knowledgeable or experienced) clients who generally can pick the difference between a poor and an attractive IPO or bookbuild.  Not only that, these are the brokers' better clients and they will not do anything to upset them, so it is the client in a position of power.
> 
> Cheers
> Country Lad




I would doubt the underlined part. Just cause someone earns 250k per year doesn't mean they are either of the above.

I would be interested to see how many cap raisings to soph investors there are in small cap stocks, where they never recover their initial investment


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## Country Lad (18 October 2013)

prawn_86 said:


> I would be interested to see how many cap raisings to soph investors there are in small cap stocks, where they never recover their initial investment




Probably none, not how it works.  Keep in mind there are not all that many people registered as sophisticated investors with each broker.  Many have been introduced to each by the particular brokers and talk amongst themselves.

As I said previously, "_Generally, the broker knows the client well and what to offer him_" oops, /her.

Armani, Dior, Versace, Hermes, Burberry, Dolce, Gabbana, Fendi, and Rolex clients for example aren't going to be offered Target specials.  Similar principle with bookbuild/IPO offers.  

Cheers
Country Lad


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## notting (18 October 2013)

tech/a said:


> What is that?
> Who are they?
> How do I become one.
> 
> ...




A Sophisticate investor has 1/3 or his portfolio in Blue chip franked yielding stocks, 1/3 in yeild hyprids, preferably franked (cash), and 1/3 in property.

It's very complicated.
Sophisticated is simply bankster for you 'have allot,' we admire you, do it with us.

Here's a video to learn more -


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## Country Lad (18 October 2013)

notting said:


> A Sophisticate investor has 1/3 or his portfolio in Blue chip franked yielding stocks, 1/3 in yeild hyprids, preferably franked (cash), and 1/3 in property.
> 
> It's very complicated.
> Sophisticated is simply bankster for you 'have allot,' we admire you, do it with us.




Well, that has ended the intelligent part of this thread.


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## notting (18 October 2013)

Country Lad said:


> Well, that has ended the intelligent part of this thread.




So the intelligent investor would spread his/her wealth in a more sophisticated way, being?


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## McLovin (18 October 2013)

prawn_86 said:


> I would doubt the underlined part. Just cause someone earns 250k per year doesn't mean they are either of the above.




Damn straight. The use of the phrase "sophisticated" is dumb. The only time I used one was to subscribe to a cap raising to soph investors that was wildly undersubscibed and the broker (who I had hitherto never spoken to) was happy to give me as much as I wanted. The general idea (misconception) is that you have enough money that you should know better.


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## burglar (18 October 2013)

prawn_86 said:


> ... Just cause someone earns 250k per year doesn't mean they are either of the above. ...




Just because someone receives 250k per year doesn't mean they earn it!!


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## notting (18 October 2013)

McLovin said:


> Damn straight. The use of the phrase "sophisticated" is dumb.




Exactly.
It reminds me of a private school types who think they are well educated worldly and more sophisticated than the rest.  However they tend be narrow minded, out of touch and street dumb.

"You think your so clever and classless and free, but you're still only peasants as far as I can see." J Lennon.

Back to trading


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## prawn_86 (18 October 2013)

McLovin said:


> Damn straight. The use of the phrase "sophisticated" is dumb. The only time I used one was to subscribe to a cap raising to soph investors that was wildly undersubscibed and the broker (who I had hitherto never spoken to) was happy to give me as much as I wanted. The general idea (misconception) is that you have enough money that you should know better.




I could name over 20 people that the 'title' applies too should they wish to claim it. And of those 20 very few have basic stock market/investment knowledge


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## tech/a (18 October 2013)

> You need a qualified accountant to certify you based on the following criteria:
> 
> - $2.5m in net assets
> 
> ...







> "The use of the phrase "sophisticated" is dumb.




While the phrase itself connotates--tosser

Its simply a label.
Could easily be "Ã„" class
or " Whale"


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## McLovin (18 October 2013)

tech/a said:


> While the phrase itself connotates--tosser




People who like to use amusing puns like "I best be getting out of these wet clothes and into a dry martini" at cocktail parties.


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## tech/a (18 October 2013)

McLovin said:


> People who like to use amusing puns like "I best be getting out of these wet clothes and into a dry martini" at cocktail parties.




Oh----we've met then?


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## McLovin (18 October 2013)

tech/a said:


> Oh----we've met then?




Yes I think so...Are you the guy who always ends his stories with "So I said, 'I'm not a gynaecologist but I'll take a look"?


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## Garpal Gumnut (18 October 2013)

tech/a said:


> While the phrase itself connotates--tosser
> 
> Its simply a label.
> Could easily be "Ã„" class
> or " Whale"




+1

Whale says it in one.

gg


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## Muschu (18 October 2013)

Maybe slightly off topic, but I struggle with the term Angel Investors - suggesting rescue.

I suggest most of these Angels are more self-interested than they are Saviours / Savers.


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