Norada Capital Management notes

[Craig Salzer]

There were some old threads, so I'm starting a new one.  Any have any experience investing in the Norada notes?

[Don Konipol]

Quote from @David Waite:

As someone who actually invested in these notes - perhaps too much as they comprise almost 15% of my investable assets - I am also worried about where this is going, and kicking myself for making a decision based largely on reputation with only a cursory review of what I was signing up to. All that being said, there seems to be rather over-the-top and ill-informed postings regarding converting these notes to equity. Yes, actively asking for investments on July 18th and revealing suspension of payments on July 20 seems a bit odd and poorly done. But that is a far cry from all the "Ponzi" and "Madoff" nonsense being thrown around. I, like all other investors, will be tracking this closely and if there is any evidence that Norada did anything underhanded, I will be aggressively pursuing them as anyone would. Until that time, I am assuming that I am dealing with a reputable firm that is making the best of a bad situation. I have 3 or 4 similar investments that fall into this same situation (muli-family syndications, etc.), so I don't think that suspending payments is unusual in this economic climate, nor by itself an indication of malfeasance. Keeping myself informed and fingers crossed, as that feels like about all I can do at this point in time.   

Sorry about your experience David.  Investing as a limited partner/ passive investor is a somewhat risky endeavor whether it in private placement or in the public markets.  The three ways to handle the risk are (1) gaining knowledge and experience in both investment in general and in the area you’re investing in specifically (2) extensive due diligence and when the inevitable bad outcomes occur despite (1) and (2) then (3) diversification.  My personal rule is to never invest more than 10% of my financial assets in any one deal.  It’s not an easy rule to follow as there are many ways to get sucked into investing a larger sum, especially in the private deal arena. 

[Chris Seveney]

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

[Doug Effinger]

Quote from @Chris Seveney:

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

 Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting. 

[Chris Seveney]

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

 Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting. 

 Curious what would happen if there were $50M in investors he owed money to but then the company valuation came back at $25M. Basically would he then say he has zero shares? 

[Doug Effinger]

Quote from @Chris Seveney:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

 Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting. 

 Curious what would happen if there were $50M in investors he owed money to but then the company valuation came back at $25M. Basically would he then say he has zero shares? 

 Chris, the early updates to the default sounded more like prospectus docs identifying investments NCM were partial owners in with expected future valuation looking very strong. Those same updates were short on information related to the equity conversion except that they were working on it. Now that the 90 day deadline has expired and we haven’t received certified equity nor an update informing note holders of their status, concern is definitely growing. 

If valuation came in at 50% of investor debt, then it would seem that share valuation would be just that, 50%. But if the blue sky materialized then repurchasing that equity could still turn into a win/win. NCM appears to not have been ready for this process since it had experienced a strong market for many years. Marcos reputation has been solid up to now so many note holders believe that he intends to make good on this turn of bad fortune. Other seem to want to hang the guy without a trial. (Figuratively)

[Chris Seveney]

@Doug Effinger

Did they ever give you the “valuation” or transfer your debt to equity? He still keeps posting videos and I saw this one and was like hmmm - speculating / what was he doing

https://youtube.com/shorts/FrAQe2ZuP38?si=ewgotugDu7yH5mlV

[Doug Effinger]

Quote from @Chris Seveney:

@Doug Effinger

Did they ever give you the “valuation” or transfer your debt to equity? He still keeps posting videos and I saw this one and was like hmmm - speculating / what was he doing

https://youtube.com/shorts/FrAQe2ZuP38?si=ewgotugDu7yH5mlV

Not yet Chris. I did receive a response from one of his team saying that the valuation and legal was wrapping up and that we should receive a substantive email before the end of the month. There was also an admission that the process was more involved than expected. 

[Chris Seveney]

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Doug Effinger

Did they ever give you the “valuation” or transfer your debt to equity? He still keeps posting videos and I saw this one and was like hmmm - speculating / what was he doing

https://youtube.com/shorts/FrAQe2ZuP38?si=ewgotugDu7yH5mlV

Not yet Chris. I did receive a response from one of his team saying that the valuation and legal was wrapping up and that we should receive a substantive email before the end of the month. There was also an admission that the process was more involved than expected. 

 you would have thought if this was an option being provided they would have had a little more knowledge on it, it seems like this guy woke up one day and realized he had no money coming in or left in the bank account and was like oh $h.t. and has not been very proactive but reactive. 

[Doug Effinger]

Quote from @Chris Seveney:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Doug Effinger

Did they ever give you the “valuation” or transfer your debt to equity? He still keeps posting videos and I saw this one and was like hmmm - speculating / what was he doing

https://youtube.com/shorts/FrAQe2ZuP38?si=ewgotugDu7yH5mlV

Not yet Chris. I did receive a response from one of his team saying that the valuation and legal was wrapping up and that we should receive a substantive email before the end of the month. There was also an admission that the process was more involved than expected. 

 you would have thought if this was an option being provided they would have had a little more knowledge on it, it seems like this guy woke up one day and realized he had no money coming in or left in the bank account and was like oh $h.t. and has not been very proactive but reactive. 

Its easy to get complacent when the market has treated you well for a dozen years. And easy to take greater risk. Then when the market finally pulls back reality sets in. The contract stated this could happen but preparations for it were practically non existent. The next update hopefully will be very informative and positive. 

[Jay Hinrichs]

Quote from @Doug Effinger:

Quote from @Chris Seveney:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

 Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting. 

 Curious what would happen if there were $50M in investors he owed money to but then the company valuation came back at $25M. Basically would he then say he has zero shares? 

 Chris, the early updates to the default sounded more like prospectus docs identifying investments NCM were partial owners in with expected future valuation looking very strong. Those same updates were short on information related to the equity conversion except that they were working on it. Now that the 90 day deadline has expired and we haven’t received certified equity nor an update informing note holders of their status, concern is definitely growing. 

If valuation came in at 50% of investor debt, then it would seem that share valuation would be just that, 50%. But if the blue sky materialized then repurchasing that equity could still turn into a win/win. NCM appears to not have been ready for this process since it had experienced a strong market for many years. Marcos reputation has been solid up to now so many note holders believe that he intends to make good on this turn of bad fortune. Other seem to want to hang the guy without a trial. (Figuratively)

BP sure has seen the hang em high folks come out.. what I find amazing though is once queried those same folks admit to not really knowing what they invested in.. Which leads to other posters to offer no sympathy for those investors and then the name calling started.

Myself I firming believe Norada needs to issue those shares at what ever valuation they are so they at least honor that part of the contract. I doubt Norada Guaranteed these investments so if they went down remained neutral or went up does not matter. To me they need to issue those shares ASAP

[Doug Effinger]

He is a month past due with that issuance. I'm giving Marco the benefit of the doubt that he intends to keep his reputation and get this thing done right. 

[Don Konipol]

Quote from @Jay Hinrichs:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

 Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting. 

 Curious what would happen if there were $50M in investors he owed money to but then the company valuation came back at $25M. Basically would he then say he has zero shares? 

 Chris, the early updates to the default sounded more like prospectus docs identifying investments NCM were partial owners in with expected future valuation looking very strong. Those same updates were short on information related to the equity conversion except that they were working on it. Now that the 90 day deadline has expired and we haven’t received certified equity nor an update informing note holders of their status, concern is definitely growing. 

If valuation came in at 50% of investor debt, then it would seem that share valuation would be just that, 50%. But if the blue sky materialized then repurchasing that equity could still turn into a win/win. NCM appears to not have been ready for this process since it had experienced a strong market for many years. Marcos reputation has been solid up to now so many note holders believe that he intends to make good on this turn of bad fortune. Other seem to want to hang the guy without a trial. (Figuratively)

BP sure has seen the hang em high folks come out.. what I find amazing though is once queried those same folks admit to not really knowing what they invested in.. Which leads to other posters to offer no sympathy for those investors and then the name calling started.

Myself I firming believe Norada needs to issue those shares at what ever valuation they are so they at least honor that part of the contract. I doubt Norada Guaranteed these investments so if they went down remained neutral or went up does not matter. To me they need to issue those 

There are different reasons or situations when a deal "goes south". Investors who aren't experienced, knowledgeable nor sophisticated are taken by suprise that their "promised" return hasn't materialized. They immediately believe they've been defrauded, which of course MAY be true as a lot of these investment deals are scams from day one. If they are then shown that fraud was not involved, they next go to the theory that the sponsor was incompetent, made a "bad" investment, etc. Again MAY be true. However, there are two other possibilities when an investment doesn't work out. One, the investment may have been one that worked well but a mostly unforeseen occurance happened, to either the economy in general or to the subject investment in particular. Second, the investment may have been made anticipating a chance of failure; for example an investment may correctly analyze that it has a 50% chance of a 25% ROI, a 35% chance of a 50% ROI, and a 15% chance of a 50% loss. When the loss occurs, which it will in one out of seven times, the unsophisticated investors does not understand it's merely the law of mathematics and wants to attribute something sinister to a statistically verifiable event.

This is why as a sponsor - syndicator - fund manager I DON’T like the deals that allow the general public to invest.  I understand the argument that the general public should not be restricted from investing in “highly profitable” deals, but what tends to end up being offered to unaccredited, unsophisticated investors in the “junk” end of the investment spectrum. 

[Doug Effinger]

Quote from @Don Konipol:

Quote from @Jay Hinrichs:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

 Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting. 

 Curious what would happen if there were $50M in investors he owed money to but then the company valuation came back at $25M. Basically would he then say he has zero shares? 

 Chris, the early updates to the default sounded more like prospectus docs identifying investments NCM were partial owners in with expected future valuation looking very strong. Those same updates were short on information related to the equity conversion except that they were working on it. Now that the 90 day deadline has expired and we haven’t received certified equity nor an update informing note holders of their status, concern is definitely growing. 

If valuation came in at 50% of investor debt, then it would seem that share valuation would be just that, 50%. But if the blue sky materialized then repurchasing that equity could still turn into a win/win. NCM appears to not have been ready for this process since it had experienced a strong market for many years. Marcos reputation has been solid up to now so many note holders believe that he intends to make good on this turn of bad fortune. Other seem to want to hang the guy without a trial. (Figuratively)

BP sure has seen the hang em high folks come out.. what I find amazing though is once queried those same folks admit to not really knowing what they invested in.. Which leads to other posters to offer no sympathy for those investors and then the name calling started.

Myself I firming believe Norada needs to issue those shares at what ever valuation they are so they at least honor that part of the contract. I doubt Norada Guaranteed these investments so if they went down remained neutral or went up does not matter. To me they need to issue those 

There are different reasons or situations when a deal "goes south". Investors who aren't experienced, knowledgeable nor sophisticated are taken by suprise that their "promised" return hasn't materialized. They immediately believe they've been defrauded, which of course MAY be true as a lot of these investment deals are scams from day one. If they are then shown that fraud was not involved, they next go to the theory that the sponsor was incompetent, made a "bad" investment, etc. Again MAY be true. However, there are two other possibilities when an investment doesn't work out. One, the investment may have been one that worked well but a mostly unforeseen occurance happened, to either the economy in general or to the subject investment in particular. Second, the investment may have been made anticipating a chance of failure; for example an investment may correctly analyze that it has a 50% chance of a 25% ROI, a 35% chance of a 50% ROI, and a 15% chance of a 50% loss. When the loss occurs, which it will in one out of seven times, the unsophisticated investors does not understand it's merely the law of mathematics and wants to attribute something sinister to a statistically verifiable event.

This is why as a sponsor - syndicator - fund manager I DON’T like the deals that allow the general public to invest.  I understand the argument that the general public should not be restricted from investing in “highly profitable” deals, but what tends to end up being offered to unaccredited, unsophisticated investors in the “junk” end of the investment spectrum. 

Don, I completely agree. This offering was only to accredited investors. I am a fairly new accredited investor myself but I read the note from front to back and understood the risks. Sad that it only lasted a few months before default for me but those are the risks. Accreditation today has a seemingly lower bar than it was, say, ten years ago due to inflation. So there are many more participants at the novice level who may not understand the risk/reward nature of this type of investment. 

One thing that the Norada default posted here has done is to provide some fairly sound financial advice from different advisors and seasoned investor who understand these things. 

Finally, I might be novice to alternative investments but to your point, I believe Norada just ran into an economics wall and lost its ability to meet obligations. And I believe they are doing everything they can to make this default right. Patience, I believe, may be the best practice to recover principal. Nevertheless, some outside pressure (i.e. SEC) might be good to dig into motive and assure this thing is on the radar. 

[Chris Seveney]

Quote from @Doug Effinger:

Quote from @Don Konipol:

Quote from @Jay Hinrichs:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

 Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting. 

 Curious what would happen if there were $50M in investors he owed money to but then the company valuation came back at $25M. Basically would he then say he has zero shares? 

 Chris, the early updates to the default sounded more like prospectus docs identifying investments NCM were partial owners in with expected future valuation looking very strong. Those same updates were short on information related to the equity conversion except that they were working on it. Now that the 90 day deadline has expired and we haven’t received certified equity nor an update informing note holders of their status, concern is definitely growing. 

If valuation came in at 50% of investor debt, then it would seem that share valuation would be just that, 50%. But if the blue sky materialized then repurchasing that equity could still turn into a win/win. NCM appears to not have been ready for this process since it had experienced a strong market for many years. Marcos reputation has been solid up to now so many note holders believe that he intends to make good on this turn of bad fortune. Other seem to want to hang the guy without a trial. (Figuratively)

BP sure has seen the hang em high folks come out.. what I find amazing though is once queried those same folks admit to not really knowing what they invested in.. Which leads to other posters to offer no sympathy for those investors and then the name calling started.

Myself I firming believe Norada needs to issue those shares at what ever valuation they are so they at least honor that part of the contract. I doubt Norada Guaranteed these investments so if they went down remained neutral or went up does not matter. To me they need to issue those 

There are different reasons or situations when a deal "goes south". Investors who aren't experienced, knowledgeable nor sophisticated are taken by suprise that their "promised" return hasn't materialized. They immediately believe they've been defrauded, which of course MAY be true as a lot of these investment deals are scams from day one. If they are then shown that fraud was not involved, they next go to the theory that the sponsor was incompetent, made a "bad" investment, etc. Again MAY be true. However, there are two other possibilities when an investment doesn't work out. One, the investment may have been one that worked well but a mostly unforeseen occurance happened, to either the economy in general or to the subject investment in particular. Second, the investment may have been made anticipating a chance of failure; for example an investment may correctly analyze that it has a 50% chance of a 25% ROI, a 35% chance of a 50% ROI, and a 15% chance of a 50% loss. When the loss occurs, which it will in one out of seven times, the unsophisticated investors does not understand it's merely the law of mathematics and wants to attribute something sinister to a statistically verifiable event.

This is why as a sponsor - syndicator - fund manager I DON’T like the deals that allow the general public to invest.  I understand the argument that the general public should not be restricted from investing in “highly profitable” deals, but what tends to end up being offered to unaccredited, unsophisticated investors in the “junk” end of the investment spectrum. 

Don, I completely agree. This offering was only to accredited investors. I am a fairly new accredited investor myself but I read the note from front to back and understood the risks. Sad that it only lasted a few months before default for me but those are the risks. Accreditation today has a seemingly lower bar than it was, say, ten years ago due to inflation. So there are many more participants at the novice level who may not understand the risk/reward nature of this type of investment. 

One thing that the Norada default posted here has done is to provide some fairly sound financial advice from different advisors and seasoned investor who understand these things. 

Finally, I might be novice to alternative investments but to your point, I believe Norada just ran into an economics wall and lost its ability to meet obligations. And I believe they are doing everything they can to make this default right. Patience, I believe, may be the best practice to recover principal. Nevertheless, some outside pressure (i.e. SEC) might be good to dig into motive and assure this thing is on the radar. 

 Doug

I agree - The net worth threshold for an accredited investor has remained at $1 million since 1982, and has not been adjusted for inflation. If the threshold were adjusted for inflation, it would be $3,037,840 as of 2022 and the $200,000 income would be $547,129. To me this actually makes a lot more sense for people dumping $50-$100k into an investment. 

In 1983 1.8% of population was accredited and today 13.85% is. They say by 2028 the percentage will be closer to 30-40% of people.

[Jay Hinrichs]

Quote from @Chris Seveney:

Quote from @Doug Effinger:

Quote from @Don Konipol:

Quote from @Jay Hinrichs:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

Quote from @Doug Effinger:

Quote from @Chris Seveney:

@Don Konipol

Great comments as always.

Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.

Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?

 Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting. 

 Curious what would happen if there were $50M in investors he owed money to but then the company valuation came back at $25M. Basically would he then say he has zero shares? 

 Chris, the early updates to the default sounded more like prospectus docs identifying investments NCM were partial owners in with expected future valuation looking very strong. Those same updates were short on information related to the equity conversion except that they were working on it. Now that the 90 day deadline has expired and we haven’t received certified equity nor an update informing note holders of their status, concern is definitely growing. 

If valuation came in at 50% of investor debt, then it would seem that share valuation would be just that, 50%. But if the blue sky materialized then repurchasing that equity could still turn into a win/win. NCM appears to not have been ready for this process since it had experienced a strong market for many years. Marcos reputation has been solid up to now so many note holders believe that he intends to make good on this turn of bad fortune. Other seem to want to hang the guy without a trial. (Figuratively)

BP sure has seen the hang em high folks come out.. what I find amazing though is once queried those same folks admit to not really knowing what they invested in.. Which leads to other posters to offer no sympathy for those investors and then the name calling started.

Myself I firming believe Norada needs to issue those shares at what ever valuation they are so they at least honor that part of the contract. I doubt Norada Guaranteed these investments so if they went down remained neutral or went up does not matter. To me they need to issue those 

There are different reasons or situations when a deal "goes south". Investors who aren't experienced, knowledgeable nor sophisticated are taken by suprise that their "promised" return hasn't materialized. They immediately believe they've been defrauded, which of course MAY be true as a lot of these investment deals are scams from day one. If they are then shown that fraud was not involved, they next go to the theory that the sponsor was incompetent, made a "bad" investment, etc. Again MAY be true. However, there are two other possibilities when an investment doesn't work out. One, the investment may have been one that worked well but a mostly unforeseen occurance happened, to either the economy in general or to the subject investment in particular. Second, the investment may have been made anticipating a chance of failure; for example an investment may correctly analyze that it has a 50% chance of a 25% ROI, a 35% chance of a 50% ROI, and a 15% chance of a 50% loss. When the loss occurs, which it will in one out of seven times, the unsophisticated investors does not understand it's merely the law of mathematics and wants to attribute something sinister to a statistically verifiable event.

This is why as a sponsor - syndicator - fund manager I DON’T like the deals that allow the general public to invest.  I understand the argument that the general public should not be restricted from investing in “highly profitable” deals, but what tends to end up being offered to unaccredited, unsophisticated investors in the “junk” end of the investment spectrum. 

Don, I completely agree. This offering was only to accredited investors. I am a fairly new accredited investor myself but I read the note from front to back and understood the risks. Sad that it only lasted a few months before default for me but those are the risks. Accreditation today has a seemingly lower bar than it was, say, ten years ago due to inflation. So there are many more participants at the novice level who may not understand the risk/reward nature of this type of investment. 

One thing that the Norada default posted here has done is to provide some fairly sound financial advice from different advisors and seasoned investor who understand these things. 

Finally, I might be novice to alternative investments but to your point, I believe Norada just ran into an economics wall and lost its ability to meet obligations. And I believe they are doing everything they can to make this default right. Patience, I believe, may be the best practice to recover principal. Nevertheless, some outside pressure (i.e. SEC) might be good to dig into motive and assure this thing is on the radar. 

 Doug

I agree - The net worth threshold for an accredited investor has remained at $1 million since 1982, and has not been adjusted for inflation. If the threshold were adjusted for inflation, it would be $3,037,840 as of 2022 and the $200,000 income would be $547,129. To me this actually makes a lot more sense for people dumping $50-$100k into an investment. 

In 1983 1.8% of population was accredited and today 13.85% is. They say by 2028 the percentage will be closer to 30-40% of people.

based on those numbers 500k plus 3 mil plus I suspect less than 2% of all folks in the US would qualify and maybe less than 1%..  maybe the answer is some sort of Hunters safety course we all took as kids before we got our first guns.. you have a investor safety program that is not a guru LOL..