We train hard, spend lots of $ on the sport, and invest in the future of start-up technologies and small businesses by buying their products.
I would love to spend all my income on tri-gadgets, but i have to allocate some of my $ to investments. so when im old, frail, and filled with titanium joints, i wont have to work.
As I find myself selling stocks that have done well this year, i am considering investing in triathlon related businesses - public ones…anyone know of any?
I would venture to guess that most, if not all, tri-related companies are privately held or owned by private equity firms. The established companies like Cervelo and Orca probably have more than sufficient cash flows so they have little need for capital. Companies entering the market probably have large initial cash needs but no proven track record. Therefore, startup tri-companies would receive funding from firms that specialize in this market.
Unfortunately there is a strong economic trend for successful/mid-sized companies to be purchased by equity firms that pool together and diversify funds of very wealthy individuals and institutions. This puts all the best investment opportunities out of the reach of mid-income Americans. Us common folk are left to invest in large proven companies that have slowed cash flows, large debt loads (often the result of leveraged buy-outs from these private equity funds), corrupt executives, and steady but less than stellar performance.
Personally, I wouldn’t mind getting in on the ground floor of 2XU.
I assume you are referring to venture capitalists when discussing private equity firms. I doubt even these firms are too interested in our market. The sole purpose of private equity firms investing in companies is to provide enough liquidity for the Company to go public often on “ruthless” terms to the founding investors. You are right though cash likely comes from internal industry sources. Say for instance a tri bike manufacturer purchasing an equity interest in a wet-suit start up?
Anyway, point being the market is still way too small. A company like Huffy or maybe Schwinn would be the closest you will get. I don’t think either even piss around with tri bikes anymore. In fact, Huffy may have even been public at one point. I vaguely recall that they filed for BK sometime back. I am too lazy to research.
I am not sure I agree that mid-income Americans can only invest in established slow growth equities. I WOULD say that most mid-income Americans have little business investing in start-ups as it is basically legalized gambling. I point to the fall of the NASDAQ as exhibit number 1! Most of those companies had no business model to stand on. That being said there are plenty of established stocks with a beta greater than 1 to invest in. In fact, we all had the opportunity to invest in Apple in 2003, the stock was trading around $6, then the iPod came out and it’s trading around $80 these days, inclusive of a split!
GRMN (Garmin). Buy on the dip in mid-Jan and then hold it long.
and to fill you with titanium joints, buy ISRG (Intuitive Surgical), makers of the DiVinci surgical robot line. This one is very volatile, so $ cost average in on the dips. But long term it’s a great story.
…and don’t buy real estate at sea level.
OK, well, maybe ST isn’t the best place for financial advice…LOL.
I assume you are referring to venture capitalists when discussing private equity firms. I doubt even these firms are too interested in our market. The sole purpose of private equity firms investing in companies is to provide enough liquidity for the Company to go public often on “ruthless” terms to the founding investors. You are right though cash likely comes from internal industry sources. Say for instance a tri bike manufacturer purchasing an equity interest in a wet-suit start up?
Anyway, point being the market is still way too small. A company like Huffy or maybe Schwinn would be the closest you will get. I don’t think either even piss around with tri bikes anymore. In fact, Huffy may have even been public at one point. I vaguely recall that they filed for BK sometime back. I am too lazy to research.
I am not sure I agree that mid-income Americans can only invest in established slow growth equities. I WOULD say that most mid-income Americans have little business investing in start-ups as it is basically legalized gambling. I point to the fall of the NASDAQ as exhibit number 1! Most of those companies had no business model to stand on. That being said there are plenty of established stocks with a beta greater than 1 to invest in. In fact, we all had the opportunity to invest in Apple in 2003, the stock was trading around $6, then the iPod came out and it’s trading around $80 these days, inclusive of a split!
I am talking about private equity firms; not venture capitalists. As an example, the company I work for was started by an individual several years ago and has a well established pattern of growth. A private equity firm came in and “bought” the company. The firm used my company’s strong asset base to obtain a loan that equaled 95% of the purchase price; in the name of the company I work for. Zero risk for the equity firm – if things go south, my company defaults on the loan and this private equity firm walks away. If things take off, the equity firm spins it off and makes a fortune.
The public was never invited to take part in the real success of the Microsofts or Ciscos of the world. By the time middle America was offered a piece the returns were 30 to 40%; outstanding by any means but nothing in comparison to the triple digits the elite received.
And a company like 2XU that has to have a very strong business plan would not be gambling in my opinion. Risky, yes.
In general, not the specific stock tips necessarily, this is really good advice – invest in the less glamorous companies that support the front line tri companies. It is well known that most startup companies are one of two things – a restaurant, or a bar. With good reason these are the two types of business that fail. So why would people start business that inherently risky? They have found that restaurant and bars are the most common startups because many people, a) want to start a business, and, b) these are the first things that come to their mind. If you can look beyond the obvious, there is often good opportunities to be had. The customers of some of the most successful entrepreneurs I know (and I know many) are other businesses or retailers. They are suppliers who never deal with the end customer.
k2 is publicly traded, not sure I’d call it a triathlon company, they make bikes. Or used to.
Some of the shoe companies also, same issue though not terribly tri related.
Garmin - I have started looking into their company a bit but have not looked hard enough to know if the company gets sizeable revenue form their sports product line.
Along the lines of venture capital vs provate equity. Cannondale was public for a while, tried motorcycles, went bankrupt and the bicycle portion was bought by a private equity form. Occasionally private equity firms will take companies public again after a while. I have no idea if this is on the horizon for cannondale.
Triathlon in general is just too small to get up to wall street.
It is my understanding that a few years back rules on small public offerings were changed. I think Pres Bush or reagan had loosened regulations sn small stock issuances in the neighborhood of 1 - 2 million. Those rules were changed back even before Sarbanes Oxley which adds a nother layer of complexity. End result is that in the past a small company could issue a small amount of shares to get themselves going, list it on the pinksheets and get to work. I think now for small sums ofmoney you need to go to venture capitalists as already mentioned.
It is my understanding that a few years back rules on small public offerings were changed. I think Pres Bush or reagan had loosened regulations sn small stock issuances in the neighborhood of 1 - 2 million. Those rules were changed back even before Sarbanes Oxley which adds a nother layer of complexity. End result is that in the past a small company could issue a small amount of shares to get themselves going, list it on the pinksheets and get to work. I think now for small sums ofmoney you need to go to venture capitalists as already mentioned.
But to qualify to invest in these “pinklist” companies you have to prove you are, what they call a “sophisticated investor.” To prove you are sophisticated you basically have to have a net worth of more than $1,000,000. I guess the government’s theory is that if you have a net worth of a mil, you can risk losing some of it.
AUUUGGGHHH! You had to write those two llittle words didn’t you? “Sarbanes” and “Oxley”. AUGH! I have been BURIED in SoX for over a year with no end in sight. (edit: I’ve been working solid on it all holiday season, working on it right now. Damn expenditures process."
Kill me now.
SoX on ST. It’s one of the signs of the apocalypse.
Hate to give away what i normally charge for, but you might take a look at Life Time Fitness (LTM) who sposnor a little tri you might be familiar with. Pretty pricy right now, but look at a chart and you see how it has performed.
It’s accredited investor not sophisticated and $1M in net worth is only one of several criteria
Look up Regulation D on the SEC website - there are three different rules for private companies under reg D. You can generally have an unlimited number of accredited investors and limited (35 I think) non accredited. Investing in small companies or private funds is very risky.
Okay let’s be clear on terminology, venture capital is a sub-category of “private equity”. As it relates to start-up companies, private equity essentially equals venture capital. A firm such as KKR, is almost exclusively interested in large LBOs or MBOs for established companies as opposed to a company like 2XU. If 2XU (or similar) wants equity cash, they need an “angel investor”, a venture capitalist, an industry partner, or a miracle.
That being said, more than just restaurants and bars fail. The idea of an $30,000 a year blue collar worker being able to invest a life savings into a fledgling start-up in ANY industry is a scary thought! Can you imagine the amount of individual BKs this nation would begin to see? For every success story of people making millions, there are a dozen or more failures where people lost milions. The elite know this and can afford this, the rest of us should steer clear.
You are right, investing in a start up isn’t gambling. The odds of winning at blackjack if played properly are about 49%. A friend of mine that works for a private equity firm say they lose their entire investment on 9 out of 10 deals (they invest in a variety of industries) and they make a killing on only about 1 out of 20 deals, the rest are somewhere in the middle. The general public doesn’t need to be in this business! Want triple digit returns, invest in an S&P fund (or really any index fund). The S&P was valued at 500 in 1995, today its valued at 1,420, that’s a 284% return in a little over 11 years including 2 recessions. It may not be overnight, but there isn’t much risk. There’s a reason why virtually every fund manager attempts to outperform the S&P, its consistent, its safe and its profitable. The rich may have significant advantages in our society, but we can all do well.
BTW if things go south the equity company absolutely has risk. Securing a loan against assets is only as good as the ability to liquidate those assets. What do you think the value of working capital assets for a defunct company is? 50 cents on the dollar if you are lucky. Property assets seems safe, but it all depends. Take a look at how many empty office buildings are for rent in Silicon Valley these days.
Maybe I am too conservative, but I live a pretty charmed life the way I see it and I am not even 30.
If I understand my quick tour of the internet, Authentic Fitness effectively owns the Speedo brand (perpetual license) - and Authentic Fitness is a wholly–owned subsidiary of Warnaco (WRNC on the Nasdaq). Speedo is a big player in the sport of triathlon (perhaps the biggest in terms of dollar volume?) - but triathlon occupies but a small portion of Speedo’s overall market.
“The sole purpose of private equity firms investing in companies is to provide enough liquidity for the Company to go public.”
The sole purpose is to generate a return on the investment. An IPO is a possible exit scenario, but it’s far from the only one.
And in all likelihood, you’re wrong about this:
“BTW if things go south the equity company absolutely has risk”
PB said that they secured the loan with the assets of his company. So, his company is the borrower. His company, not the equity firm, is the only one obligated to repay the loan. Occasionally, the equity firm would guarantee the loan, but that’s extremely unlikely.
Okay let’s be clear on terminology, venture capital is a sub-category of “private equity”. As it relates to start-up companies, private equity essentially equals venture capital. A firm such as KKR, is almost exclusively interested in large LBOs or MBOs for established companies as opposed to a company like 2XU. If 2XU (or similar) wants equity cash, they need an “angel investor”, a venture capitalist, an industry partner, or a miracle.
Also, many private equity firms focus only on well established growth companies that have zero need for capital. Founders of private companies (the sellers) like these deals because it provides an exit for them and often gives them a guaranteed high paying job for X number of years.
Venture capitalists, on the other hand, provide seed money or capital to startups that have a great need for money. These deals are extremely risky and, like you said, probably only 10 to 20% pay off.
So yes, I guess you could consider a venture capital firm as a subset of the private equity sector. But private equity does not = venture capitalism. We are going to see all kinds of variations of private equity companies in the next several years. There is fierce competition for opportunities to invest capital these days.
Nike (sponsor of Hunter Kemper and Cam Brown)
Under Armour (sponsor of Chris McCormack)
Triumph Group (owns Allied Aerospace, which operates the famous wind tunnel in San Diego)
.
