Today is a big day for us. If you haven’t seen anything on our socials we’re working on pulling off our biggest giveaway to date.
We’re shipping out a TESLA!! Like the car, at 4pm EST, TODAY!
Click here for the zoom link that you can use to join us.
It’s going to be crazy. I’ve got a whole bunch of other giveaways, announcements, and programs being rolled out as well, so please join me by registering here.
On an unrelated note let’s get to a little bit of content today with Investment Funds and Holding Companies.
Okay, so we’ve discussed funds a million times on this blog, but I want to break down a couple of specific aspects of them.
One, we’re all hopefully somewhat familiar with the LP/GP structure of the fund. The GP or general partner, usually consists of you, the fund manager, who will govern the actions of the fund.
Meanwhile the LPs are your limited partners and investors, who are providing the majority of the capital.
The two are ideally supposed to work in cohesion with the same goal and direction in mind, but sometimes differences will arise.
Perhaps you as the GP see the value of purchasing a given asset and holding it for an indefinite amount of time, meanwhile the LPs are much more focused on a buy and flip type of model.
They want to be able to access their cash quickly and be able to divert it into other assets as the market or landscape changes.
Because of this, and the fact that the LPs are the ones with the money, you’re going to see a lot of buy and flip models, which consequently makes them shorter term.
Holding companies and funds are like two brothers that you know are related, but don’t really look alike.
You can almost think of a holding company as a SPAC or something along those lines. It’s usually set up as an LLC or a Corp, and you can essentially buy shares of that entity.
Holding companies can be both public and private, with different advantages to each. Publicly traded holding companies are much more liquid and the exchange of shares/stock is much easier to facilitate.
The advantage for a “fund manager” in this case is that you are making all of the decisions and those that are buying into the company don’t really have much say or control of what is going on.
It’s truly a vote of confidence on part of the investors, but they want to do it because of how good these guys are. Exhibit A is Warren Buffet.
He did NOT set up a hedge fund, like everyone just assumes. Rather he ran his own holding company and things worked out really really well for him haha.
All in all, the biggest difference is that holding companies are much more long term. It’s a buy and hold model, which can often favor the fund manager.
They’re in it for the long haul, and investors know that going into it.
Just a quick one today because we’ve got a ton going on!
If you read this as soon as it gets out please join us today at 4pm EST, it’ll be a whopper of a webinar.
And remember the differences between funds and holding companies, it’ll help you navigate your fund journey.
Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.