Investment Strategy Research Of Private Investments In Public Equity For JR Fund Management Company

Since the SEC issue the law of private placement(or private investment in public equity)in 2006,the sale of this kind of securities is getting up and up.The money funded from the private placement is even much more which through IPOs during the same years.The regulation allows an issuer to sell this kind of securities to less than 10 investors,so each investor could buy much more securities,and there is private placement discounts.Financial institutes are attracted by it.But the securities are forbidden to exchange in 12 months after the offering,the illiquidity is risk for investors.Nowadays the Private Equity is becoming one of the most important investors in private placement market,and structured funds are funds they invested in this market.This paper is going to research the dependent variables which can infect the return of private investment in public equity by empirical analysis and theoretical analysis.The sample is private placement transactions completed by public companies between Jan and Aug 2015,and the duration before one can sell the securities is 12 months.To find out the factors,this paper studied all the research about return of private placement investment and researched theories of investment.I also summarized the laws and regulations about private placement.I analyzed how JR Fund Management Company made an investment decision,and how they tried to managed the risk.This paper is trying to advise JR Fund Management Company about their investment strategy of private placement,and trying to find a way to manage the market risk through hedge.