Inside Scoop page 1

THE FINE ART OF THE FINANCIER

by Jezz

To start off the new year I thought I would write about one of the most maligned and little understood ranks in Federation Data Space. The Financier. Oh, I know I know, we all talk about those evil fins circling the unfortunate trader just about to promote, completely unaware that his yet unborn company is about to be savaged before it has even drawn it's first breath. But what's the truth behind this rank that so few people really embrace?

Well to start with, it takes a tremendous amount of patience. The financier needs to be able to predict the IPO, because the competition for shares is so ferocious that unless he has prior knowledge of the IPO and is ready and waiting for it, his chances of being able to buy shares are slim to none. The dedicated financier will watch the comm chatter for clues, keep a check on new exchanges and the names of the traders who should be close to filling the trader credit requirement, and watch for those traders entering the Sol system. Once the trader lands on Earth, that fin is checking Spynet Review constantly, waiting to see the promotion and the all-important company name appear. Then he pounces! But... In the time it takes to put the command BUY 100 SHARES WHATEVER INC on an f-key, all the shares could have been bought up by a macro-player with 9 alt perma-financiers using share grabbing triggers, in which case all the waiting and watching has been for nothing.

So how does the Fedterm Fin manage to buy shares? He makes alliances. He uses his social skills and gets to know the up and coming folk. He offers advice and assurances of share sell-back or help finding factories in return for prior knowledge of the IPO and company name. He gives information on forthcoming IPOs to friendly fins in exchange for information they might have on others.

The truly dedicated financier knows which other financiers hold what shares because he's done a DI COMPANIES and checked the share register of every company on the books. He has a note of each financier's portfolio, because if that financier promotes to Founder, any shares still held will be returned to the broker and made available for purchase. He also will check the number of companies after each reset to see if he has missed any last second IPOs. If there is an "anomaly" during the Fed day that causes an unexpected reset, all shares bought that day will likely go back to the broker. It's not unheard of for a financier to pick up some extra shares that were previously unavailable after that sort of event. He is acquainted with all the current traders and knows that multiple new exchanges means that more traders will be ready to take that trip to Earth. He checks the shares of returnees who might have been absent from Fed for a while and therefore have shares sitting with the broker due to one of their financiers selling off.

Is this starting to sound more involved than you thought it was? It takes work to be a good financier. Obviously I don't count those trigger-toting, share-snatching macro-fins in the "good category". They simply ruin the rank for others.

Now, if our social-networking financier does actually manage to buy shares in a company, he is not guaranteed any sort of meaningful return on his investment. He can only own 1000 shares in any company he invests in. He has paid the IPO price per share, plus a broker fee. There will likely be no dividend for around three weeks and that first glimmer of a return will be a tiny fraction of what he has paid out. As the target company moves into the manufacturer rank, he should begin to see a slightly better return because the company owner is having to combat disaffection by issuing dividends. There is still a good chance that after having owned shares for two months, the financier will not have gained back all the cash he spent on the shares in the first place, let alone made a profit. It's important to look at the price you pay on that first buy of 100 shares. There have been occasions where someone has IPOed at an extremely high price and then died shortly afterwards. If that happens and you had shares, it's a total loss... another reason to never use a macro to buy shares.

Then there are the shares that never pay out. If the factory owner meets with a tragic accident or gets depressed and commits suicide, the shares simply disappear with no compensation to the investors at all. If you buy shares in a company that has already reach financier rank and they don't load a planet, the shares will just sit there in your portfolio taking up space and never bringing you any income. If you do find available shares in a financier's company, it's a good idea to take a look at their accounts and see if anything has been paid out in dividends, check SpyNet to see if the player is active at all. If it's a defunct company then buying shares will likely be a dead loss.

How does the financier make the big groats? Well there are a couple of ways. If the company in which he holds shares suffers a shareholder's rebellion, the financier will receive a percentage of the treasury equal to the percentage of the company shares he holds. Likewise, if the company owner declares bankruptcy, the financier gets his portion of the treasury. If the company owner promotes to financier and then links a planet and becomes a founder, the shareholder will receive his portion of the treasury and likely make the big groats more than two months after his initial investment... that is of course if he hasn't sold all the shares back in mean time.

However, if the company owner promotes to financier and stays there, he no longer has to make dividends and his shareholders will receive no more return on their investment. If that happens, the financier has a tough decision to make. Does he hold onto the shares in the hope that eventually there will be a planet and a pay out, or does he sell the shares to make room in his portfolio for a more profitable investment? As disaffection has no bearing on another financier's company, there is no hope of a shareholder's rebellion to provide a return. This scenario is the more common one and it's quite easy for a financier to end up with a portfolio full of shares in companies that are not paying out. The company register is full of dormant companies that really have no hope of ever becoming active again. The shares held by absent fins never get sent back to the broker so others can purchase them and the shareholders in that dormant fin's company never get a return.

Perhaps the best way to know if you've made a good investment as a financier is to keep in touch with the factory owner and find out what their promotion plans are. The financier has a vested interest in how well the factory owner does. A large FO treasury will pay out more when the planet is eventually linked.

A financier can actively influence a company by trading shares. When shares in a company are sold by an investor, the share price goes down and disaffection is driven up, making the chances of a rebellion more likely. If the company owner is not on the ball and issuing dividends to stave off a rebellion he could find himself in a mess when the next reset hits. Not many financiers will intentionally try to cause a rebellion for a quick return by trading shares back and forth, but it has happened. That's another reason that the prospective factory owner should plan for whom his investors will be and keep them apprised of his promotion plans.

Now if this very brief explanation of the financier rank has made you think it sounds like a lot of hard work for an uncertain return, you'd be right. It's not a rank for the faint-hearted. Being a profitable financier really is a long term investment, so any factory owner who wants to have a planet quickly should probably not even get involved in buying shares. Trade in a few futures while you wait for your planet to link and spend as little time in the most hated rank in Fed as possible. I purposefully have not talked about the philanthropic financiers here because they aren't staying as financiers for the purpose of making groats.

For those that are willing to embrace the rank of Financier to its fullest, it can be a rewarding rank with a great sense of achievement when the investments finally pay off. You can't be afraid to say "no" to a manufacturer who requests his shares back as soon as he is able. Don't get me wrong. I'm not advocating any sort of unfairness. But if you are really a financier you should expect to make a profit on your investments. Recently a player who had just promoted to manufacturer came to a financier friend of mine and asked for their shares. After checking her records and their accounts she informed the manufacturer that their share price was high when they IPOed and they had not come close to issuing enough of a dividend for her to consider selling back at that point. She also noticed a certain pattern in the other shareholders which made it seem that the person had made a deal prior to the IPO with a "group" of financiers. As my friend had not been given any information prior to the IPO, she had to spend time working on getting those shares. Naturally, she decided that the financiers with the inside information should be the ones to sell the shares back so she suggested as much to the manufacturer. This isn't being evil. It's just business.

So, in closing, next time you malign those circling fins, remember what they have to go through to make any groats at all and maybe divvy up just a few more groats than you absolutely have to if you want them to sell your shares back. After all... they really really really care about how YOU do.

Fed2 Star index Previous issues Fed 2 home page