Monthly Archives: February 2012

HBCU Money™ B-School: Hedge Fund


For the most part, hedge funds (unlike mutual funds) are unregulated because they cater to sophisticated investors. In the U.S., laws require that the majority of investors in the fund be accredited. That is, they must earn a minimum amount of money annually and have a net worth of more than $1 million, along with a significant amount of investment knowledge. You can think of hedge funds as mutual funds for the super rich. They are similar to mutual funds in that investments are pooled and professionally managed, but differ in that the fund has far more flexibility in its investment strategies.

It is important to note that hedging is actually the practice of attempting to reduce risk, but the goal of most hedge funds is to maximize return on investment. The name is mostly historical, as the first hedge funds tried to hedge against the downside risk of a bear market by shorting the market (mutual funds generally can’t enter into short positions as one of their primary goals). Nowadays, hedge funds use dozens of different strategies, so it isn’t accurate to say that hedge funds just “hedge risk”. In fact, because hedge fund managers make speculative investments, these funds can carry more risk than the overall market.

Learn more terms at http://www.investopedia.com/
Advertisements

HBCU Credit Union – Why It Needs To Be A Reality


By William A. Foster, IV

“Find a need and fill it. Successful businesses are founded on the needs of people.” – A.G. Gaston

Imagine a financial institution whose branches span from coast to coast and in every major city in the United States that has a large African American population. A full service financial institution that provides affordable mortgages, insurance, student loans, small business loans, commercial loans, investments, lines of credit, manages over 100 institutional endowments, provides financial literacy, employment for thousands, and even conducts financial research as a de facto Federal Reserve. Now imagine that it is controlled by, operated by, and serves African America. That financial institution would be the HBCU Credit Union and its scope, reach, and impact for African America and even the African Diaspora if the vision is aggressive would be unrivaled in the world of finance.

A credit union is a cooperative financial institution that is owned and managed by its members, and is regulated by National Credit Union Administration. Typically, a credit union is formed around a shared interest. Some examples are teacher’s credit unions, firefighters, and in the case of the Navy Federal Credit Union any member, family member, or employee of the entire Department of Defense. Currently, there are a number of credit unions that are located in HBCU towns, like Prairie View A&M University Credit Union and Virginia State University Credit Union just to name a few. Usually, each has a single branch and provides very limited products and services to students, faculty, and the respected HBCU that bears its name.

We’ve all heard the numbers. African America has over $1 trillion in buying power annually and yet less than 1% of that money sits in financial institutions owned or controlled by us. HBCUs and many African American organizations, like UNCF and Thurgood Marshall Fund, bank with European American owned banks. In fact, the only HBCU, albeit a non-traditional HBCU, that I know of that had an African American banking presence on its campus was Medgar Evers College in New York who had Carver Bank, one of African America’s top 3 largest banks, with a presence on its campus. Controversy would follow at MEC when the administration decided to replace Carver’s ATMs with ones from a European American owned bank. It is actions like this that are an enormous strategic failure on our part. You’re giving all of your economic and financial power to other communities who do not have your same economic interest. These types of actions are also cutting off our ability to circulate the dollar which, if a financial institution is operating properly is its real purpose. Financial institutions also protect the economic and financial interest of the community or group of people that owns it. Unfortunately, we give up that institutional control (see desegregation) and then we are surprised when our neighborhoods are gentrified because we can’t get access to capital to build them up, we are burdened with absorbent fees, our HBCUs can’t find funding for renovations or buildings, students can’t get financing for school, or we’re given an abnormal amount of subprime toxic mortgage loans even if we qualify for traditional ones. At some point we need to take control of our own financial destiny.

Moving to an economy of scale with any of our business industries has plagued African America’s economic growth time and time again particularly because we have too many generals and not enough soldiers. As mentioned, we have a number of singular credit unions with reach typically not beyond their locale. They are not full service institutions and the desire to use them becomes more and more limited as students or faculty members financial needs mature. In some cases they are even lacking basic products like debit cards and services like online banking. These credit unions are of virtually no use to the HBCUs themselves who have far more complex financial needs than simple checking and savings. The lack of size and capital of a singular unit simply does not provide the depth of scale that is needed.

From the very outset the HBCU Credit Union would have access to 180,000 full and part-time employees, approximately 400,000 current students, well over a million alumni, national accounts of the Divine 9, city and town accounts of which the HBCU is located, HBCU endowments worth over $1.5 billion, $400 million in HBCU research expenditures, $10 billion in short term economic impact annually, countless number of HBCU owned businesses, and a pipeline of the brightest African American business minds in the country to run it.

I envision this project being led by Dr. William Harvey, President of Hampton University. His foresight on financial matters as they pertain to HBCU economic development has been nothing short of genius in my humble opinion. I also believe it is Dr. Harvey who has the clout that could bring all of the stakeholders to the table because his commitment to the mission of HBCUs is unheralded. All HBCUs would move their financial assets into the HBCU Credit Union as well as the UNCF and Thurgood Marshall Fund. Non-traditional HBCUs like Chicago State, Medgar Evers in New York, Roxbury Community College in Boston, and Charles Drew Medical University in Los Angeles and others would all be invited to form the credit union. This would give the credit union a truly national reach as alumni graduate and move to different areas of the country. If they are feeling really bold (and I’d pray that they were) they would include the University of West Indies and some strategic alliances with colleges and universities in Africa that would give the HBCU Credit Union a global reach.

There is something to be said for a quote by Albert Einstein who once famously said “Imagination is more important than knowledge.” It is the knowledge of what we know that helps us look at our situation critically but it is the imagination that with ideas, such as the HBCU Credit Union that will give us the keys to control and build our destiny.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK Companies, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.

HBCU Money™ Business Book Feature – On Her Own Ground: The Life and Times of Madam C.J. Walker


On Her Own Groundis the first full-scale, definitive biography of Madam C. J. Walker — the legendary African American entrepreneur and philanthropist — by her great-great-granddaughter, A’Lelia Bundles.The daughter of slaves, Madam C. J. Walker was orphaned at seven, married at fourteen and widowed at twenty. She spent the better part of the next two decades laboring as a washerwoman for $1.50 a week. Then — with the discovery of a revolutionary hair care formula for black women — everything changed. By her death in 1919, Walker managed to overcome astonishing odds: building a storied beauty empire from the ground up, amassing wealth unprecedented among black women and devoting her life to philanthropy and social activism. Along the way, she formed friendships with great early-twentieth-century politi-cal figures such as W.E.B. Du Bois and Booker T. Washington.

On Her Own Ground is not only the first comprehensive biography of one of recent history’s most amazing entrepreneurs and philanthropists, it is about a woman who is truly an African American icon. Drawn from more than two decades of exhaustive research, the book is enriched by the author’s exclusive access to personal letters, records and never-before-seen photographs from the family collection. Bundles also showcases Walker’s complex relationship with her daughter, A’Lelia Walker, a celebrated hostess of the Harlem Renaissance and renowned friend to both Langston Hughes and Zora Neale Hurston. In chapters such as “Freedom Baby,” “Motherless Child,” “Bold Moves” and “Black Metropolis,” Bundles traces her ancestor’s improbable rise to the top of an international hair care empire that would be run by four generations of Walker women until its sale in 1985. Along the way, On Her Own Ground reveals surprising insights, tells fascinating stories and dispels many misconceptions.

The HBCU Money™ Daily Market Watch


Our Money Matters /\ February 24, 2012

NAME PRICE (GAIN/LOSS %)

African American Publicly Traded Companies

Citizens Bancshares Georgia (CZBS) $4.00 (4.76% DN)

Carver Bank New York (CARV) $6.11 (12.71% DN)

Radio One (ROIA) $1.12 (7.44% DN)

African Stock Exchanges

Bourse Regionale des Valeurs Mobilieres (BRVM)  145.50 (0.55% UP)

Bourse des Valeurs Mobilieres de Tunis (BVMT)  N/A

Bourse Regionale des Valeurs Mobilieres d’Afrique Centrale (BVMAC)  N/A

Botswana Stock Exchange (BSE)  6 971.74 (0.06% DN)

Ghana Stock Exchange (GSE)  1 011.36 (0.10% UP)

Nairobi Stock Exchange (NSE)  70.73 (N/A)

Stock Exchange Mauritius (SEM)  5 424.63 (N/A)

Casablanca Stock Exchange (Casa SE)  11 397.33 (0.21% UP)

Nigeria Stock Exchange (NSE)  N/A

Johannesburg Stock Exchange (JSE)  34 260.76 (UNCH)

Zimbabwe Stock Exchange (ZSE)  N/A

International Stock Exchanges

New York Stock Exchange (NYSE) 8 151.96 (0.19% UP)

NASDAQ Stock Exchange (NASDAQ)  2 604,21 (0.36 % UP)

London Stock Exchange (LSE)  3 074.65 (0.01% DN)

Tokyo Stock Exchange 834.29 (N/A)

Shanghai Stock Exchange (SSE) – (N/A)

*All quotes reported as of 5:30 PM Eastern Time Zone

4 HBCU Alumni Found The HBCU Chamber Of Commerce


There is no security on this earth. Only opportunity. — Douglas MacArthur

USChamber

On February 18th four business owners officially met to establish the HBCU Chamber of Commerce. The founding companies were AK, Inc. an investment and operations firm in Houston, TX that owns HBCU Money and operates in the agriculture, energy, finance, media, research, and transportation industries; Carter Media Enterprises a media company in Baltimore, MD that owns and operates HBCU Digest; Style Root, Inc. a public relations firm in New York City, NY; and Urban Argyle an events company in Atltanta, GA that are creators of innovative events geared toward image, activism, and awareness.

The chamber’s stated mission is “To promote and assist in developing sound economic progress in our community.” It will serve as the lobbyist voice for businesses owned by HBCU alums, students, and even HBCU institutionally owned businesses. The chamber will be creating institutes and initiatives, one of which it highlighted is its Rebuild Black Wall Street by 2020 initiative listed below:

  1. 51% of African America’s buying power in African American owned banks & credit unions
  2. African America owning 1.7 billion acres
  3. 51% of African America employed by African American owned companies
  4. Forgive all African American student loan debt
  5. Top 100 largest HWCU endowments to give HEF designated HBCUs 15% of asset value
  6. No income tax for African America individuals or companies for 25 years
  7. All drug related felonies for African Americans be expunged from records and voting rights restored

The goals are lofty but its impact on the African American economy will be profound and will allow future generations to truly build the economic institutional infrastructure that has been needed. To have a voice that is focused on our interest is vital as opposed to hoping that lawmakers will distribute and enact policies that would be accessible to everyone. Something we have tried in the past and has continued to leave us at a loss of opportunities. The founding of the HBCU Chamber of Commerce shows a move to creating an institutional mechanism that secures and increases the probability of opportunity coming to us.

The founding of this organization is also amazing when one considers the impact of four alums from four different HBCUs (Virginia State University, Morgan State University, Tennessee State University, and North Carolina A&T University) being represented in the founding. It highlights the promise of what HBCU collaboration can truly achieve and why we should strive to have more of it.