Our team works tirelessly to build Magna’s businesses and provide our portfolio companies with the capital they need to achieve their objectives. Since day one our objective has been to be the most transparent, honest, and diligent investors in our marketplace, working as true partners to the companies and management teams we invest into.
We regret Bloomberg’s attempt to marginalize these efforts by attacking our firm’s integrity and my personal character for the sake of a catchy headline. While we did not solicit this coverage, when the reporter reached out we cooperatively provided accurate information on Magna, our investments and our marketplace. Unfortunately, nearly all of this information -- including conversations with many CEOs of our portfolio companies -- was ignored in the final article.
We therefore feel compelled to make two emphatic points in response:
First, Magna provides strategic capital to support the business objectives of our portfolio companies; we do not engage in “death-spiral” financing.
Every investment we undertake is priced and structured uniquely according to the risk profile of the opportunity assessed by our team. In November 2014 the industry-leading issuer protections we build into our investments were profiled by The Deal, a professional journal which extensively monitors our marketplace.
We work to protect our downside where possible, as every seasoned investor does, but we always stand to benefit most when our equity positions appreciate in value. We never enhance our profit through a declining share price in any of our holdings. Period.
Since Bloomberg presents Magna’s July 2011 investment into Pervasip Corp as “typical,” it may be instructive to look at the specifics of this investment when assessing our value as an investor. We invested $75,000 into Pervasip to provide critical working capital at a key inflection point in the company’s growth. We held our position for approximately nine months, slowly selling our equity over that period, representing a fraction of the overall trading volume. Between the time of our investment and our exit from the position, Pervasip’s share price increased by about 110%, yielding a significant increase in shareholder value. We are proud of these results and of the role we played in supporting Pervasip’s growth over this period.
Second, Magna’s pre-investment due diligence process leads the industry and our portfolio companies are held to the highest regulatory compliance standards.
When evaluating an investment, Magna’s team conducts extensive research to prepare a rigorous opinion on all aspects of the opportunity. This process leverages both an internal team of over 25 investment professionals and external specialist resources. Together, they produce due diligence packages which have been heralded by major clearing firms, brokerage firms and investment partners as “the standard of the industry.”
Our portfolio companies, in turn, are held to the highest standards of regulatory compliance by their respective investment exchanges, including the New York Stock Exchange, NASDAQ, London Stock Exchange, and OTC Markets. These sophisticated international exchanges have rigorous monitoring and reporting standards, and we monitor every portfolio company closely to ensure they are fully compliant -- working swiftly to resolve any deviations if they occur.
For the past six years I have worked passionately alongside my dedicated, talented, and creative team to make Magna one of the most exciting and entrepreneurial investment firms around. Our strategy is continuously evolving as we find new opportunities and better ways to support the objectives of those we work with. Together we have built Magna into a disciplined, fully diversified firm with three core strategic platforms, holdings on six continents, and nine distinct revenue-generating lines of business.
We continually reinvest our profits into improving our organization, supporting our portfolio companies, and giving back to our communities. This will never change and we look forward to continuing to help our partners achieve their objectives for years to come -- always remaining committed to being the most transparent, honest, and diligent investors in the marketplace.
Founder & CEO, Magna