“Do [fewer] deals and focus on cash instead of return [on investment],” says Mr. Stephen Mr. Hicks, the exclusive member of the group of founders of Southridge Capital. Hicks is the CEO of Southridge, a company founded in 1996 that is still based in Ridgefield, Connecticut, a wealthy suburban area in the southeastern portion of Connecticut that complements Southridge Capital’s operations – and pocketbook – well.
How do most investment firms make money?
When held by itself, virtually all currency on plant Earth devalues over time. No reasonable person aiming to maximize their wealth would hoard their money in cash or cash equivalents; rather, they’d stow away their liquid assets in the form of financial instruments.
While financial instruments do include currency, the instruments most standard investment firms dabble in are stocks of large, public companies and bonds. These are safe investments that won’t vanish – poof – into thin air unless a company is involved in a massive fraud scandal like Enron was nearly 20 years ago.
Virtually all investors who do not have high incomes and lofty net worths choose to store their money in the hands of financial advisors, small-time portfolio managers who exclusively serve local clients, and other generally-safe bets.
Conversely, how do most alternative asset management companies generate revenues?
By definition, alternative asset management firms are many times riskier than their plain, vanilla counterparts talked about above. Southridge Capital’s investors have never taken home a loss after just one year’s worth of placing non-ownership equity shares in businesses around planet Earth that are not yet large enough to go public.
Let’s use Southridge Capital as an example of how alternative asset management entities make more money than their traditional counterparts. Southridge Capital’s largest expense is related to evaluating companies to invest in that virtually nobody has heard of. While stocks and bonds are popular – financial statements of publicly-traded companies let investors know everything they need to know about those particular companies – the entities Southridge invests in doesn’t have them. This is a riskier strategy than traditional investment managers; it’s well worth it if companies like Southridge Capital exercise due diligence in checking out such companies beforehand. You can follow their Twitter and Facebook page.
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