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Portfolio > Economy & Markets > Stocks

Why Direct Investments Are More Exciting Than Stocks

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Third Seven Advisors CEO Amit Dogra is trying to bring the excitement of investments back into investing.

“If you think back to the genesis of the financial advisory industry, [the industry] was always talking about interesting stocks,” Dogra recently told ThinkAdvisor. “[For example], ‘there’s this great stock called IBM, really solid company that pays a dividend and you should get invested in it.’”

However, Dogra added, that in this day and age in the world, there’s no such thing as a stock that no one’s heard of.

“Nobody talks in stocks,” Dogra said.

The so-called “golf course conversations” of yesteryear needs to be redefined, according to Dogra.

How does Dogra and Third Seven Advisors plan on doing this?

Third Seven Advisors, a relatively new RIA with $800 million assets under management, has been making waves because of its ability to provide advisors and clients with access to direct investment opportunities. Third Seven Advisors works in tandem with Third Seven Capital, an investment bank that sources unique investment opportunities in pre-IPO, post friends and family companies.

According to Dogra, the reason for this focus on early-stage, pre-IPO companies is because a lot of companies fall into what he calls a “Death Valley.”

“They don’t want to take money from hedge funds or [private equity] … because you give up so much capital,” he explained. “Third Seven Capital [and Third Seven Advisors were] built on saying, ‘Look we want to support the entrepreneur and help them grow.’”

While Third Seven Advisors does take an equity stake, Dogra said it’s “de minimis.”

“We want to be aligned with their growth and not hamstring the entrepreneur,” he told ThinkAdvisor. “So we look at these companies and help them get through that sort of Death Valley stage with post-capital advisory services, helping them professionalize their business to get to the next round, whether it’s Series A or whatever it will be.”

Dogra gave two examples of early-stage companies that Third Seven Advisors has in its portfolio.

One is a hydrogen-infused water called HFactor that has recently been linked to Katy Perry and The Golden State Warriors.

“The big difference about it is it’s one of the few waters that has medicinal benefits and science to back it,” according to Dogra.

The other example is NuCalm, a high-tech stress-relief product.

“Meditation [and] self-help is a huge interest right now,” Dogra explained. “The [2017 iPhone App of the Year] was Calm. NuCalm is much more than that.”

According to Dogra, it’s these types of companies today that make the “cocktail conversation” or the “golf course conversation.”

“It’s the opportunity to brag a little bit, and that’s why you get into investing,” he said, who believes that the  “final frontier” is in unique alternatives and direct investing.

“It empowers the advisor to have that unique conversation,” he added.

Dogra does stress that the portfolio has to be balanced. He’s not saying go all in on alternatives and direct investments.

At Third Seven Advisors, the alternatives section of a client’s portfolio is anywhere from 5-20%, according to Dogra.

“We’re not promoting massive amounts in a portfolio, but it is the exciting part of the portfolio,” he told ThinkAdvisor. Adding that, “What we’re doing is providing them with something that’s unique and distinguishing and a differentiator.”


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