Reading stuff like this from Ajammer, on the ESVS/Yahoo thread, will be helpful for rookie investors, like I am. You'll see some familiar SI names mentioned in this posting.
Re: Netvestajammer_1998
May 25 1998
1:07PM EDTNetvest is a limited partnership, which in itself is a
security. They are by law limited to 20 or less people if they are to
remain private placements.
They are high risk ventures with extremely favorable tax benefits, hence
each investor must display the ability to be able to afford the
substantial loss which may be involved. That is why Zulu Party Times
conjecture about the Newport R. I. yachting crowd makes sense.
There is one general partner, Hayton, who makes all the day to day
business decisions for the partership. The partership can vote out the
general partner at any time and replace him with one of the other
partners although he would still maintain a financial interest in the
partnership. Usually the general partner is the inceptor of the
partnership. He does this by convincing wealthy investors that he has a
vehicle and the skill to make that particular vehicle successful. He is
therefore the limited partnerships general partner by default at the
partnerships inception. He must display to the SEC that he possesses the
particular skill required by that partnership.
The people who invest in these things are all wealthy, they are not
callow and they usually hire lawyers to review the partnership and
investigate the general partner and his qualifications. Bill Giles owned
the Phiadelphia Phillies baseball club under such an agreement. The
general partneship chose to replace him this year. He is still a
financial partner but no longer has any say in the day to day operations
of the club.
Like an owner that is a single entity they also share directly in the
revenues generated. Until voted out, the general partner rules. A
general partnership has to be registered with the SEC and IRS. Given the
sophistication of the investor, a private placement prospectus is all
gloom and doom. They would be a tough sell to the ordinary investor.
Partytime, writing private placements would be good jobs for JT and OC,
they are naturals.
There is not much doubt left in my mind, That in order to raise 50 mil
in private placement Hayton must have some connection to the "beautiful
people". He probably has that connection on the other shore as well. I
wouldn't doubt that he probably had the money raised before they even
wrote the prospectus.
Party, that mutual swapping of the stock was done simply to make sure
that ESVS did not lose the prize (NASDAQ listing). Look at the
valuations of the two entities. It would be too costly for ESVS to
absorb ZULU they(ESVS) have zilch for net worth and revenues. ZULU had
21 mil in their war chest for investment. After the SEC review of the
financials. It will be far easier for ZULU to buy out ESVS in toto. That
is why all the inside buying of ESVS stock. The insiders know the stock
was a bargain and as good as cash, the NASDAQ market Makers knew it too
that is why the price was so high on miniscule volume. The insiders at
ESVS know the revenues are there. They know the ultimate success of ZULU
is imminent, they also know the financial backing is there. Or do you
thing they are spending millions so they will be able to paper the walls
of their dens with useless stock certificates.
Why has no one mentioned one of the never fail truths about investing.
The insider buing and selling is the best indicator of FUTURE revenues
and growth. The insiders at ESVS have left almost nothing in the float,
this has got to say it all.
That R. I. connection cleared up one of the few remaining doubts I had.
For some reason the private placement angle had blown right by me. The
investigative work that wealthy investors put into these placements is
awesome. Hayton would have had to come up clean. The SEC does its own
investigation of the general partner. The Nasdaq is doing one right now.
That is triple jeopardy. Do you think there has been enough
investigation of this company? I do.
Lets get ready to rummmble!
Ajammer
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