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How You Profit from Beyoncé and Bieber? (10) – Risks?
Continuing from the last post, when I specifically mentioned the risk of them taking the money and running, and of course other risks, he said the following.
He said, “First of all, with over 7,000 songs, the risk is diversified enough, and of course, there will be more songs in the future. It’s common sense that the likelihood of all these songs collapsing together is very small, so diversification is one of the methods to significantly mitigate this risk. Secondly, we’ve been doing this for several years, and our specially designed model doesn’t charge management fees. We are shareholders ourselves, and we receive dividends just like all shareholders. We only make a profit when the portfolio makes money, so our interests are aligned.”
I said, “So you don’t take management fees, but do you also not take salaries?” He said, “The company only has the two of us, and the salary is set at XXX (if it really is this number, then it’s indeed market price). So far, we haven’t incurred any debt, and all the cash flow is distributed as dividends.”
I asked, “What if your company goes under?” He said, “The company has purchased key person insurance, and by now you should understand this model. As long as the songs are bought in, nothing needs to be done. It’s just a matter of receiving money, reconciling accounts, and distributing dividends every month. Any asset management company can provide this service, and it can continue to operate even if we’re gone.”
Regarding whether he might run away, I found one of Tim’s current shareholders, who is also his neighbor for many years and watched Tim’s son grow up. It’s an affluent neighborhood where everyone is pretty much well-off. This person initially invested hundreds of thousands and said that Tim has indeed been doing real business for many years, and there are no signs of him running away.
I asked him, “Do you know if Tim invested his own money?” The person said, “I think he said he did invest for about xxx-xxx. ” I then asked Tim again, “How much did you invest yourself?” He said, “Together with my family, it’s a total of XXX (seven figures).” I was a bit skeptical because the range given by his neighbor was quite different. So, based on the data on the appreciation of the share price given by Tim, I calculated backwards to the initial share price, and the amount he invested initially matched the range given by his neighbor, roughly hundreds of thousands.
So, now for the final question: How can one participate if they want to try it out? Stay tuned for the grand finale next time!