Private Company Index

[CrazyGolfer]

Anyone heard of a company called Entrex or the Private Company Index? Apparently they have developed a way for you to be able to invest in private companies, but I wanted to check to see if anyone has any experience with them before I decided whether or not to try it out. Any info you might have about them would be great. Thanks

[aiki14]

Anyone heard of a company called Entrex or the Private Company Index? Apparently they have developed a way for you to be able to invest in private companies, but I wanted to check to see if anyone has any experience with them before I decided whether or not to try it out. Any info you might have about them would be great. Thanks

These guys pitched me a year or so ago, heavy sell with lawyers and accountants etc, it's a type pf royalty contract, in microcap private corps. I remember there was only quarterly revaluations and near zero liquidity. You have to be an accredited investor, and I believe they wanted a minimum of $100k but it may have been $250K. I didn't go for it but they did look professional, I haven't tracked their performance so who knows how any investment may have done. I would rather be in a hedge fund if I am only gonna have 4 get outs a year. You should consider Citadel or the like if you're gonna go into this sort of thing, better (longer) track record.
Post what you come up with, I'd be interested in what they have done over the last year.

[CrazyGolfer]

These guys pitched me a year or so ago, heavy sell with lawyers and accountants etc, it's a type pf royalty contract, in microcap private corps. I remember there was only quarterly revaluations and near zero liquidity. You have to be an accredited investor, and I believe they wanted a minimum of $100k but it may have been $250K. I didn't go for it but they did look professional, I haven't tracked their performance so who knows how any investment may have done. I would rather be in a hedge fund if I am only gonna have 4 get outs a year. You should consider Citadel or the like if you're gonna go into this sort of thing, better (longer) track record.
Post what you come up with, I'd be interested in what they have done over the last year.

Thanks for replying. I will check into it and get back to you again when I get the chance.

[CrazyGolfer]

Here is the info I was able to find so far.

I found a press release on Yahoo saying that the Private Company Index just celebrated their 2nd anniversary. The article also says a little about how they keep track of the companies financial info for investors. Lastly it says that so far it has shown a 420% greater return than the average of the Dow, NASDAQ and S&P Small Cap 600 indices performance in the same 24 month period.

Here is where the yahoo press release is located. http://biz.yahoo.com/prnews/070913/aqth132.html?.v=12

Here is another press release I found that talks about their last quarter which showed monthly grow nearly three times greater than the NASDAQ index. http://www.pr.com/press-release/62005

Anyways, just wanted to share the information. Hope it is useful to you.

[AJLightning]

hmmm... 8O



2220

[netwrangler]

Comparisons based on percentages give me the willies.

[AJLightning]

Comparisons based on percentages give me the willies.


you can spin it any way you want...but this is blowing away the other markets!!

[rozz]

Is there a minimum to invest? I couldn't find anything at their site.

[aiki14]

you can spin it any way you want...but this is blowing away the other markets!!

The only question I have is how much of the increase do you see as an investor. It certainly is a nice chart. There are mutual funds performing in the same ROR range with fairly low expense ratios.
My recollection is they are closer to Hedge fund than mutual fund, but I can't remember for certain.

[aiki14]

Is there a minimum to invest? I couldn't find anything at their site.

You have to be an accredited investor as per their website. The fund has a minimum investment of $250k, up from $100k when the fund was conceived. That info is per my Merrill rep, not from 1st hand knowledge.

Here's what an accredited investor is now

In the United States, for an individual to be considered an accredited investor, they must have a net worth of at least one million US dollars or have made at least $200,000 each year for the last two years ($300,000 with his or her spouse if married) and have the expectation to make the same amount this year. This rule came into effect in 1933 by way of the Securities Act of 1933.

New regs are being thrown around that increase the net worth to 3 or 5 million, and 500k for a couple per year.

[rozz]

thanks for the info!

[netwrangler]

you can spin it any way you want...but this is blowing away the other markets!!Well, that's what I get for posting a gut reaction before I dug into the research.

It just struck the data analyst in me that what the chart is actually saying may be quite different from the initial impression the chart conveys - to wit: "this is blowing away the other markets."

A quick pass at the research leads me to believe that my gut reaction was correct. I think this is what we used to call a "gee whiz" chart -- one that really skews the data to make a point.

I'm out of town for the rest of the week. I'll post a second reply on the weekend. If I can find the data I'm looking for, we may be able to file this under "Lies, Damned Lies, and Statistics."

[AJLightning]

Here we go again :?

My apologies for stating the obvious...the chart cleary shows this "fund" outperforming the markets. (accurate or not, I did not give an opinion)

It's hard to tell if someone is being facetious or they truly believe what their saying.

Isn't it Net?

Now please, enlighten us with your snazzy power point responses!!

[AJLightning]

No response = PRICELESS!!

;)

[aiki14]

Here we go again :?

My apologies for stating the obvious...the chart cleary shows this "fund" outperforming the markets. (accurate or not, I did not give an opinion)

It's hard to tell if someone is being facetious or they truly believe what their saying.

Isn't it Net?

Now please, enlighten us with your snazzy power point responses!!

Here's a theoretical scenario where the info posted could result in just the opposite of what you would think.

The Avg of the 3 indices (Dow, NasDaq, and S&P 600 sm cp) is +.5% over the time span. The PCI (Private Comp Index) at 500% of that returns 2.5%. The fees for the PCI are like a hedge fund, 3% of assets per year plus 20% of profits.
That would result in a 2% absolute return, minus the 3% per year on assets.
So here's the comparison
1000 invested in the indexes returning .5% with a typical commission on trade of $10 would give you $995 at the end of the 2 years.
1000 in the PCI with the above charges would give you 959.81
And the chart as you've shown would still be correct.
I am not saying this is what has occurred, nor are the returns real, but it does show how a chart showing a large outperformance can be very misleading.
The fact that their website doesn't indicate a commission and fee schedule, and the investor requirements, and the way they represented themselves when they called me, leads me to believe the fees are likely to be as I have stated, more hedge fund than mutual fund. Again I do not know this for certain.

[netwrangler]

Here we go again :?

My apologies for stating the obvious...the chart cleary shows this "fund" outperforming the markets. (accurate or not, I did not give an opinion)

It's hard to tell if someone is being facetious or they truly believe what their saying.

Isn't it Net?

Now please, enlighten us with your snazzy power point responses!!

No response = PRICELESS!!

;)Good morning, AJ. Sorry if I responded to Grunt's post out of turn. Drove back from Burlingame yesterday. Getting it back together. It's still early out here.

Anyway, I'm working now on a more detailed analysis of the graph. I expect to post around the time that the Cowboys game is over. Figure that ought to be a convenient time for you.

What I think I am doing is justifying why the graph "gives me the willies." I can't determine if the PCI values are accurate either. I think I can give some reasons why the graph may "[skew] the data to make a point." Certainly, I have some questions that I would ask of Entrex.

As for being facetious, it would be gracious of you to allow me to put my "Lies, Damned Lies, and Statistics" crack in that category. I have no reason to believe that anyone is lying, that is, knowingly saying something that is not true. I do think the graph raises more questions than it answers.

In the meantime, "Go Cowboys!"

[netwrangler]

Here is a larger version of the chart in question. It was available on the Entrex web site. I sized it to fit in this forum.

2250

There are some nits to pick with the chart.

Where are the scales [presumably in percent] associated with the Dow, NASDAQ, and S&P SC 600?
Why are the dates reported on the 5th of each month when at least seven of those days were not trading days?

I'm willing to accept that those issues are not material. Still, it's a sloppy chart, and one I would not have been allowed to publish — at least not after I left Marketing.

The real issue is figuring out what the Y-axis scale is telling us. There's no axis label, but let's assume it is a measure of the PCI.
But what is the PCI. The Entrex web site says this:
Private Companies &
Potential for Returns
The Entrex PCI (Private Company Index) has measured potential returns from this sector for nearly two years.
This authority on private company growth & performance tracks revenue trends from goods/services of private companies via monthly gross revenue reporting.
Calendar 2006 saw a 52% increase in revenue across the portfolio, calendar 2007 is currently tracking to achieve slightly higher.
Though potential royalty distributions can be directly inferred from this data, the PCI portfolio was not created for investment purposes, simply a sector performance sampling tool. Investment products utilizing Entrex Ensured companies, may contain a selection of PCI companies and will likely also include new targets.The first words that jump out at me here are, "monthly gross revenue reporting." The PCI does not measure the value of an investment. It does not even measure the profitability of the underlying companies. It measures Gross Revenue! And that is compared to indices that measure share value. This is a classic apples and oranges comparison. It is invalid per se. QED.

The second set of words that jump out are the last two sentences. The chart might have been saved if you could invest in the PCI, but you can't.

On the same web page Entrex says, "Investors, Fund Managers and Institutions can choose companies, like building blocks, to construct custom and diversified baskets of financially transparent private companies." In other words, it's cafeteria style. But the choices from the steam table change based upon what was in the larder that day/week/month.

Here is a link to the web page quoted. (http://www.entrex.net/documents/EntrexPCICompanySnapshot-August2007.pdf)

Another problem I have with the PCI, and therefore the chart, is that it appears the composition of the PCI is constantly changing. Elsewhere on the site Entrex says the PCI may consist of up to 1000 companies. There is an application form for companies that would like to join the PCI.

Let's assume that the statisticians calculating the PCI are good enough to normalize the index properly when companies are added or drop out. That's OK from that time forward, but unless the new firms provide historical data [unlikely at best] the PCI's value as a data time series is compromised.

Finally, as Aiki pointed out, all of this is a comparison before fees. Returns after fees and after taxes are the ones that count. To the extent that the fee and tax structure of the PCI is different from, say, investing in QQQQ, the chart is misleading.

=====
Does this mean that Entrex is touting lousy investments? Not at all. It simply means they have a lousy chart.

[AJLightning]

I guess you've cleared this up then. PCI's not worth it!

Sorry to waste your time over a misleading chart. My mistake in making a random comment without proper dd again...

By the way, it was mighty white of you to post your response around my schedule...I bleed Cowboy Blue!!!

[netwrangler]

I guess you've cleared this up then. PCI's not worth it!

Sorry to waste your time over a misleading chart. My mistake in making a random comment without proper dd again...

By the way, it was mighty white of you to post your response around my schedule...I bleed Cowboy Blue!!!AJ, don't think twice about the schedule. I've been a Cowboys fan ever since the Rams moved to St Louis.

As far as the "misleading chart" is concerned, there are lots of folks that will read our posts [the lurkers] and will benefit from the exchange.

I'm still in your debt for asking Grunt about Risk and Reward. :)

[AJLightning]

AJ, don't think twice about the schedule. I've been a Cowboys fan ever since the Rams moved to St Louis.

As far as the "misleading chart" is concerned, there are lots of folks that will read our posts [the lurkers] and will benefit from the exchange.

I'm still in your debt for asking Grunt about Risk and Reward. :)




any little bit of knowledge goes ALONG way!