Hedge Funds and the Early Buffett Partnership
On a number of occasions, we've discussed Buffett's early partnerships—their performance, his investment style, or some other aspect of 1950s and 1960s Buffett. One of the great things about Buffett was that Warren put his money where his mouth was, unlike today's mutual fund manager that generally puts your money where his/her mouth is.
If you are considering starting a "hedge" fund, you might want to consider an Early Buffett Partnership structure.
WHAT IS A HEDGE FUND?
Mutual funds and hedge funds are very similar. An investor puts $10,000 into a mutual fund or hedge fund, and the manager uses that $10,000—along with the rest of the fund's capital—to buy and sell securities.
Though often shrouded in mystery, hedge funds are pretty easy to understand. A mutual fund has to register with the Securities and Exchange Commission; a hedge fund does not. Why? Hedge funds are exempt from registration because they generally operate under one of two exemptions provided by the Investment Company Act of 1940:
- Section 3(c)(1): Hedge funds are exempt from registration if they have "not more than one hundred" investors, all of which are accredited investors; or,
- Section 3(c)(7): Hedge funds are exempt from registration if all of their investors are qualified investors.
So...a hedge fund is little more than an unregistered mutual fund.
BUFFETT RAN A HEDGE FUND
In his early days of managing money, Buffett ran a hedge fund. His early partnerships were not registered with the SEC, allowing him to operate with very low overhead and a considerable amount of freedom.
At a minimum, registered mutual funds need boards of directors, exchange registration, audited financials...the list is long and expensive. Though hedge funds today are often seen as highfalutin, expensive operations, a hedge fund can operate for just a few hundred bucks a year.
Take, for example, Buffett's early partnerships. He ran them from his house for many years. Save the annual audit he opted to do for his investors, the cost to run the Buffett partnerships was little more than the cost of the transactions and Buffett's performance fee.
AREN'T HEDGE FUNDS AGGRESSIVE?
The term "hedge fund" is actually a gross misnomer. Today, any unregistered mutual fund is termed a "hedge" fund; but, a hedge fund does not have to be aggressive. In fact, I can start a hedge fund tomorrow and invest entirely in US treasuries; or, I can invest entirely in GM...on margin.
Hedge funds are getting beat up in today's news, many for good reason. But, not all hedge funds are aggressive, super-short, kill-the-markets funds.
THE "BUFFETT" HEDGE FUND VERSUS TODAY'S HEDGE FUND
Today's hedge fund typically charges a 2/20 fee—2% a year management fee and 20% of the profits above a certain level. Interestingly enough, I had a conversation with a hedge fund manager last week. I learned that many funds pay all of their bills, salaries, and bonuses off the 2% management fee. The 20% performance fee is merely gravy; so, there is no real incentive to perform short of keeping your investors.
Buffett went a different route.
In his early partnerships, Buffett decided to charge a 0/25 fee—no management fee, and 25% of profits above a certain level. (He had a few variations of this based on the certain level; but, he never charged a management fee. He was performance-only.)
For Buffett to pay his bills, pay salaries to his staff, or pay bonuses, his investors had to earn money. If they didn't make money, Buffett had to foot the bill out of his own savings. It was one heck of an incentive to protect and perform.
PUTTING HIS MONEY WHERE HIS MOUTH WAS
If you agreed with Buffett's investment philosophy, you'd be nuts not to invest with him. Buffett was offering a sweet deal: As an investor, you wouldn't pay Buffett a dime unless you were earning more than 6% on an annualized basis (the "hurdle rate"). Beyond that, you would split each dollar of profits: $0.75 for you, $0.25 for Buffett.
So, if you earned 5% or if you lost 10%, Buffett made nothing. If you earned 8%, Buffett made 0.5% and you took home 7.5%. If you earned 30%, you took home 24% and Buffett took home 6%.
Not to pick on American Funds, but the Investment Company of America is one of the largest mutual funds around. Over the past ten years, The Investment Company of America has returned, on average, 3.10% to investors—less if they paid a commission to buy it. From where it stood on October 31, 2008 and if Buffett were at the helm, it would have to grow 32% immediately before Buffett could even think about earning money.
But, the ICA is not an Early Buffett Partnership; so, the investment manager will take home about $140 million this year. American Funds will collect $200 to $300 million in distribution fees, plus another $50 million or so for postage, reports, "administrative" services and the likes.
THE HURDLE, THE FEE, AND THE HIGH WATER MARK
No...it's not the bedtime story I tell my kids. Buffett's early partnerships had three components you should be aware of if you are looking for a hedge fund or thinking of starting your own:
- Fees. Buffett charged no management fee, just a performance fee based on profits. It was a 0/25 hedge fund.
- Hurdle Rate. Before Buffett could earn his performance fee, investors had to earn more than 6% for the year.
- High Water Mark. If investors were not earning 6% annualized, Buffett couldn't charge a performance fee no matter how stellar a particular year was. Example: If Buffett lost 50% his first year, and then gained 80% his second, investors would have an annualized return of (5%). Even though his second year was stellar, Buffett could not charge a performance fee because his investors would have earned less than 6% annualized.
WHO RUNS AN EARLY BUFFETT PARTNERSHIP?
It's tough to find this answer because the SEC doesn't let hedge funds advertise. If you know of an Early Buffett Partnership, please post it in the comments or e-mail me. (If you run an Early Buffett Partnership, e-mail me.)
Also Filed Under "Miscellaneous"
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g said,
good timing!
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New Ponzio Capital site looks great, Joe, and good to see you back posting!
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kalidasa said,
in correction to an earlier post, it is Sham Gad(www.gadcapital.com) or www.shamgad.blogspot.com
Hedge Funds and the Early Buffett Partnership
Tue @ 3:29PM | View comment
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I think it got overheated. I still feel like it's a good long-term holding (if the buy price is right)....
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Dude, what happened to this stock? You would think in January this stock would be jumping through the roof...
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Chris
Dec 2nd, 2008
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Rona
Dec 2nd, 2008
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g
Dec 2nd, 2008
I dont know if there is any fund that guarantees part of the losses, or that loses money for simply breaking even. Further, WB's guarantee for the 1/4 of the losses was not limited to his capital....
(all in page 201-202 of The Snowball)
I would be very interested if people posted the names of these types of partnerships that exist today. I only know of Mohnish Pabrai's.
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Bpal
Dec 2nd, 2008
The best structure in my opinion is to register an LP with your State. You then have to register with your State's Registered Investment Advisory commission (or equivalent). Only if you plan on managing more than $50M do you have to register with the SEC, but most State's require you to register if you plan to manage money regardless of any dollar threshold. I planned to setup an LLC with myself as the sole member, and to establish this LLC as the advisory firm and general partner of the LP. The investors would be setup as the limited partners. I was going to do this as an added layer of protection to keep my personal assets outside of the LLC in case of a lawsuit.
I would then suggest putting together a Prospectus or Investment Offering document, which will lay out the details of the partnership arrangement, minimum contributions, investment strategy, admin, fees, reporting, etc. You could use a mutual fund's prospectus as a guide. Once you're set up with the State, you can open bank accounts, brokerage accounts, etc. in the name of the LP and LLC, hand out your prospectus to potential investors, and hang a shingle outside your door. AFter that it's pretty much like managing your own portfolio, but you'll end up sending monthly or quarterly statements to your limited partners, and will have to prepare and issue Schedule K-1s at tax time (or hire an accountant to do it).
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jeff
Dec 2nd, 2008
2 comments
On the same note, there is a division of WEST that has manages money, and will guarantee the first 25-30% of losses, if you lock in for something like 5 years.
Bpal-aren't there regulatory requirements for limited partnerships? I was under the impression that you couldn't advertise, or get anyone involved that didn't have a certain income/net worth.
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Andy
Dec 2nd, 2008
6 comments
There are a lot of these small fund managers out there. Just not known.
From my stand point, you have to run a relatively sizable fund to maintain a lifestyle. Depending on your own personal situation, I think it does or does not make sense.
Say you raise $1MM. If you return 10%, on a 0/25% basis you would make $25,000. Most college graduates can make much more than that out of school. If you provide any guarantee or preferred return it would create even more challenges if you have a down year in one of your first few years. I was looking at starting my own fund this past summer (real small much much less than $1MM) but decided the economics did not work and would rather focus on managing and perfecting my own performance before venturing out on managing others. Given the past 12 months my return is beating the negative 40% S&P 500 but is still negative ~20%. Hard to be happy with that performance!
I am certainly interested in hearing about others ventures into this arena as there are limited resources available without engaging a lawyer or an accountant.
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Mosguy
Dec 2nd, 2008
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MPC
Dec 3rd, 2008
2 comments
How much does it cost set up? How did you pick a lawyer?
Thanks.
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BPal
Dec 3rd, 2008
Andy - agreed it would be hard to do full-time and make much money unless you are going to be able to attract a lot of capital. My plan was to do it in my free time outside of my regular full-time job as supplemental income to start.
MPC - Setup costs would be a few hundred dollars for filing and registration fees, varying state by state. I never got far enough to pick a lawyer as my plans were put on hold before I actually took any definitite steps forward.
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Jason
Dec 3rd, 2008
Thanks
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market folly
Dec 4th, 2008
1 comment
BPal or Joe, so say you keep it under $25M and register with your state, you would need a series 65 to manage the money, correct?
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stockmanmarc
Dec 5th, 2008
1 comment
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Amit
Dec 7th, 2008
"""..decided the economics did not work and would rather focus on managing and perfecting my own performance before venturing out on managing others. Given the past 12 months my return is beating the negative 40% S&P 500 but is still negative ~20%. Hard to be happy with that performance!""""
IMO, this is where your contradicting a sound investment operation. First, you managed to lose significantly LESS THAN the market which is a GOOD thing...
still I can understand how this can be disappointing to you.
but your logic is flawed and you should be NEITHER content NOR discontent(you said you were "hardly happy").
1. The volatility in market quotation wether positive or negative should not affect your satisfaction at all.
That is if your making a sound investment operation at a satisfactory rate of return and protection.
In fact, you should be able to completely disregard the market quotations and width of the recession as long as you have CONSIDERED them when you made a PURCHASE at a "related" and "undervalued" price.(taking the future into consideration and how it would affect your intrinsic value projection).
my 2 cents
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pohick
Dec 7th, 2008
1 comment
Mohnish Pabrai -
http://financialphilosoph...
also
Shai Dardashti
unhappily, not Whitney Tilson
nice to meet them in Omaha
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SWW
Dec 10th, 2008
6 comments
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Se Chai
Dec 12th, 2008
1 comment
I agree with you SWW, if a fund unable to make an annualized return of more than 6% over a period of, let's say 5 years, the fund should not exist.
In my opinion, the terms on the right of the investors to withdraw from the fund are critically important to enable a value oriented fund to survive.
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Noel
Dec 12th, 2008
5 comments
There is a lot of speculation why he did not invest his money along side his investors in the beginning. One theory is that he need the income from his own investments to live, given he had no other income except what he might make from the partnerships, and if he had a down year he would have to draw on the capital and if he had invested the money he would have had to withdraw some money while expecting investors to stay invested and that would send a bad signal. So, he kept his own money separate for a number of years after he started his various partnerhips (which all had different fee structures. For some he made a 25% performance fee over any return over 4%. For some the hurdle rate was 6% and for some he guaranteed the losses).
But, anyway, my point is that he did not put his money where his mouth was. This could only have been true if he had invested alongside his investors, which he did not.
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Joe Ponzio
Dec 14th, 2008
Joe on twitter
Ponzio Capital
I have to take the other side of the argument. When I started my portfolio management firm, I had to keep my savings in cash to feed my family and pay my bills while I built the firm. Every month that went by where I wasn't making enough money to pay my bills, my savings would drop and my family would come closer to financial difficulty. To rectify the situation, I had to try to make sure that the investments performed well enough so that:
- My income would rise;
- Existing clients would stay; and,
- New clients would come aboard.
I couldn't invest along side my clients because I had to pay my bills. But....I risked everything, including my savings and a lot of years (if it went bad and I had to start from scratch or buried in debt later in life than my friends who worked 9-5 for steady pay right out of college). I would make investment decisions for clients knowing that I was personally losing money every month. And...I could have rectified the situation by merely charging commissions, churning accounts, or accepting mutual fund kickbacks; but, I didn't. Instead, I put my money where my mouth was...not theirs.In my opinion, Buffett's was an exemplary "put your money where your mouth is" statement. He was willing to risk his family's financial future on his ability to invest. The risk to his investors was the risk of loss of a portion of their portfolios (I doubt many people invested their entire life savings with Buffett in his earliest years). Buffett's risk was that he would lose everything. Instead of charging an ongoing management fee, commission, etc., he put his performance and life savings where his mouth was.
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Noel
Dec 18th, 2008
5 comments
Warren Buffett did not tell his clients he would invest in the same investments as them. In fact, he didn't. How this is putting his money where his mouth is, I don't know.
Of course, given what we all know about Warren Buffett, it is clear that his honesty was and is beyond reproach and that he is an ethical and moral person.
In any event, starting an investment management business and plunking your cash on the table alongside someone else and investing your pooled money together is 'putting your money where your mouth is'. Saying that shtarting an investment management business but keeping your money separate (however noble and honest that reason is) so that you can invest differently is stretching the meaning of that phrase a bit too broadly I feel. Talk is cheap. Actions are not.
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Potter CPA, CFP
Dec 18th, 2008
How else could a 25 or 30 year old "put his money where his mouth is" except like these guys did. I don't know many people that age that could invest alongside their investors.
I don't think either of them (I might be wrong) invested "differently" as you suggest. I'd bet that Buffett and Joe invested (and continue to invest) alongside their investors. The fact that they couldn't afford to in their early days doesn't prove any lack of commitment but a lack of funds. As a CPA and CFP, I can tell you that it would have been very irresponsible for any young manager to put his small amount of savings on the line if that was his only source of income. Smart money management tells you to have at least six months or a year worth of cash on hand for emergencies, and that's if you have a steady paycheck. If you don't have a paycheck, you have to be even more cautious.
I remember reading somewhere that Joe started his company with $10,000 and no paycheck which means he presumably didn't have millions sitting on the sidelines.
If I were starting a fund and not putting my money it, I would agree 100% with your statement. But I am independently wealthy and I could afford to invest. If you have some alternative structure or proof of commitment for a young manager with limited funds, I'm sure a lot of the young visitors here would love to hear your suggestions.
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Mike R
Dec 18th, 2008
1 comment
The fact that Buffett only contributed $100 to his first partnership is absolutely correct. Since Warren was aligned with his investors and did not charge a management fee, he had no choice but to rely on his net worth (to feed his family, pay the electric bill, etc.). At the time he had a net worth a little over $150,000 (a tidy sum in the mid 1950s).
Other than some monthly withdrawals from his early partnerships, Buffett kept most of his earned performance fee in the partnerships. According to his annual letter to partners dated January 25, 1967 (approximately 10 years after the formation of his first partnership), Buffett had around $10 million invested in Buffett Partnership, Ltd, which represented 90% of his net worth. His stake in the partnership was approximately 18.5% of the total assets. The fact that he left his hard earned (and I do mean HARD earned) performance fee in his partnerships clearly indicates he put his money where his mouth is, or as Warren says "We eat our own cooking." That same $10 million is now worth billions in Berkshire Hathaway (he has never sold a share--other than his charitable contributions).
Just my 2 cents.
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Jason J
Dec 18th, 2008
You both are wrong.
First of all Potter "CPA, CFP" leave those letters for your business cards. Nobody cases except yourself if you're a damn CPA, PhD, CFA, CFP, CAIA, CMT, etc. What matters is if you are managing money for people then you should be confident enough to invest your own money whether you have 10,000 dollars or 10,000,000 dollars. Any rational person would ask themselves, "Why should I put my money in this fund if the manager is not investing in his own skills?" If the manager does not believe in himself then he obviously does not truly believe he can make money.
Second of all Noel it is a bad idea to invest your money the same way as your clients. If you start a hedge fund you have an overall strategy. Investors by into the fund for the strategy. More likely than not the manager will believe he can make money in that strategy but perhaps he does not want the same exposure as the hedge fund strategy employs. In this case it is understandable to invest his own money on his own terms. Maybe he wants more risk then the strategy he employs for his client or perhaps less. Everyone has a different risk tolerance and just because a manager runs a fund based on a certain strategy does not mean he needs to invest exactly the same way.
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Noel
Dec 18th, 2008
5 comments
I am not saying an investment manager has to invest the same way as his clients, (and it can be understandable that he doesn't) but if he is going to say he is going to put his money where his mouth is, then I want him to do so and the only way he can do so is buying putting his money in the fund and having it pooled with mine so that it can be invested in exactly the same investments as mine. Because if his money isn't, then he should not be saying that phrase. He should be saying he's not investing in the pool with me for this reason and that reason, etc etc.
As for Warren, yes he eventually put almost his entire net worth into his partnership and when he did then he was indeed putting his money where his mouth was, but that was not until years after he started, not when he started. Also, what he is quoted as having said to his first prospective partnership investors was actually "I will manage your money as I would my own". A simple way to prove that unequivocally would have been to set aside the money he needed to live for the next 5 years or so aside (ie whatever sum of money he felt comfortable with) and invest the rest in the partnership, but he didn't for one reason or another. (Maybe it was for tax reasons as he had large gains and didn't want to crystallize the gain or any one of many other understandable reasons. The reason doesn't matter, only the fact he didn't invest). So, what he did was he left his money where it was before he started the partnership, and didn't put it anywhere else, let alone where his mouth was!
Don't fall into the trap of looking at Warren Buffett back in 1956 in hindsight. At the time he raised his first partnership he did not have a track record that was public. He was an awkward young man in his mied-twenties that looked like a kid. At the time, to any stranger, he would have been merely a private investor that could, at best, boast about a short successful track record of investing for his own account and having a bit of experience sellling stocks for his Dad's brokerage firm and working on Wall st. How many tens of thousands of people are there out there like that or who claim to be like that? Lots. Think about it, would any of you have had any initial faith in a young geeky-looking guy who you didn't know who was 1) working out of his apartment; 2) who was trying to get you to invest in his very first partnership; 3) Was trying to get you to invest on the basis that he said he invested his own money very successfully for 5 years 4) was working alone and 5) had $150,000 to his name in 1956 (when you needed less than $5,000 a year to live a very good life at that time) but refused to put any of that money in his own partnershp alongside you as a sign of faith? I don't think so. You might have been impressed but I think the first question you would then ask this young Warren Buffett who you didn't know from Adam would be "Um, tell me again much of your own money you are putting into the partnership that you want me to invest in?" When he replied "Well, nothing actually. I am not really investing in it but I want you to. I might put in $100", then you might listen to all his reasons but you'd really come away saying to yourself "The guy is worth $150,000 and is only putting in $100 when he only needs a few thousand a year to live? Something is fishy here. I am not investing". You would be very leery, regardless of his multitude of 'reasons'.
Remember, look at him as a stranger in 1956, albeit a seemingly successful one with a short track record, who wants your money, not from the vantage point you have now where you know who Warren Buffett is and his morals, ethics and investing prowess.
Indeed, it is therefore not surprising that the majority of money placed in his first partnership were from relatives and that ALL of the people who invested in his first partnership were relatives or people who already knew him very very well. Because, given he wasn't investing any of his sizeable net worth in his own first partnership, when he clearly had the means to do so by setting aside the money he needed to live and investing the remainder in the same partnership alongside his investors, the only people who would do trust and believe in him were relatives and close friends.
Alice Schroeder alludes to this in her very well researched book which I have just read. I highly recommend it.
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Amit
Dec 19th, 2008
"days doesn't prove any lack of commitment but a lack of funds. As a CPA and CFP, I can tell you that it would have been very irresponsible for any young manager to put his small amount of savings on the line if that was his only source of income. Smart money management tells you to have at least six months or a year worth of cash on hand for emergencies, and that's if you have a steady paycheck."
Well, honestly, most people here are looking for abnormal returns. As for people like me, I do not find it irresponsible to put my life savings on an investment that I TRUST. Regardless of what ANY CPA tells me, its a PERSONAL choice.
If you invest in a Warren Buffet-type partnership and your willing to bet your life savings, you might as well have someone who "Puts his money where his mouth is". Warren Does just that...
That's the POINT of this discussion.
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Amit
Dec 19th, 2008
Prove me WRONG but I will seriously question if your simply just arguing for the fun of it!
1- Guarantee a 7% annual return with no fees attached regardless
2- anything above that, take only 25%
3- if you make no money, he makes no money
Tell me how many Investment professionals, CPA,CFAs would agree to such a living?
In fact, I understand that most investment professionals WOULD LAUGH at this idea. It just doesn't make for "good business". Cant argue with any of this unless you LOVE arguing
In sum, Warren IS PUTTING MONEY WHERE IS MOUTH IS. He always has.
In fact, he's buying up companies just as we speak, he still PUTS money where his MOUTH has spoken about years and years ago.
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Dtt
Dec 19th, 2008
quote
"Buffett's risk was that he would lose everything. Instead of charging an ongoing management fee, commission, etc., he put his performance and life savings where his mouth was" (Joe, F*wallstreet)
Based on the book by Alice, you cant judge the man on a SPECIFIC date in the past.
How bout giving him CREDIT for the past 25 years instead?
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Jim
Dec 19th, 2008
4 comments
If you took $10 and lost 50% that $10 would now equal $5. Now if you added 80% to the $5, your initial $10 now equals $9 in year two. That's an annual return of -5.13%, not a positive 5%. Like I said, I could be wrong but I don't think so. Have a great weekend.
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Jim
Dec 19th, 2008
4 comments
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G
Dec 28th, 2008
As far as I can tell, reading different descriptions of Buffett Associates in particular, none of Buffett's early investors were either qualified, nor accredited investors. Which leads to the question, how did he setup a fund exempt from the Investment Act of 1940? As the Snowball and other books point out, Aunt Alice didn't have a lot of money, she was only able to put in $25,000. Bear in mind her investment is worth about 200k USD in today's dollars, but the accredited / qualified investor requirements is not inflation adjusted - you needed to make 200k USD per year (2008: 1.6 mil/yr) or be worth in excess of millions in 1940 to be an eligible investor in an exempt investment partnership. Did Buffett ignore the rules initially when setting up his fund?
Anyone have any insight into how his investors were either accredited or qualified? Or did he fall under a different exemption under the Act?
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BC
Jan 1st, 2009
1 comment
Buffet is an extraordinary case. And I believe you don't have to go that far to show you eat your own cooking.
Buffet started in a time when you could buy select companies with liquidation values greater than market price or with p/e of 2 to 5 times. Obviously, when the whole market gets overvalued, his partnership arrangement is likely to lead to bankruptcy.
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Drew
Jan 1st, 2009
Thank you very much for all the effort you have put into this website, it is well worth it for me and hopefully for you too.
My post is in response to BCs comment above about how Buffet was able to buy companies with liquidation values higher than market values and single digit PE ratios. Well there are plenty of companies out there today that exactly fit that description!
I have been studying and reading about value investing and Warren Buffet for many years now but it always seemed so difficult because I have hardly been able to find any "cigar butts" or even reasonably priced companies that I felt strongly about. So until now investing had been little more than a pastime or hobby. What has happened over the last 6 months has been wonderful for astute investors and I feel like its 1974 all over again that I used to read about and got depressed thinking that such bargains would never happen in my lifetime. Well now they are happening :)
So I am very excited about the opportunities there out there and am actively making purchases and have set up a company as an investment vehicle for my family.
Drew
Auckland, NZ
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Mark
Jan 4th, 2009
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kalidasa replied,
in correction to an earlier post, it is Sham Gad(www.gadcapital.com) or www.shamgad.blogspot.com
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2/3/10
robin
Jan 23rd, 2009
Comments appreicated...
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Noel
Jan 29th, 2009
5 comments
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Noel
Jan 31st, 2009
5 comments
Now imagine, given Don's view of Warren, if he also knew that Warren was worth hundreds of thousands of dollars and wasn't even putting in a penny of his own money (1960 is 4 years after Warren already had a $160,000 stock portfolio). Behind the scenes was Warren intelligent? Yes. Dedicated? Yes. An astute investor? Yes. But that was only proven years later. His behaviour with keeping all his vast resources separate when he formed his partnerships just doesn't paint a picture of a guy who is putting his money where his mouth is. And, in the end, talk is cheap, but putting your money on the line is unequivocal.
http://www.youtube.com/v/...
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Roman
Mar 4th, 2009
Thanks
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M Kishore
Mar 5th, 2009
I have set up an inv. partnershi based on the Buffett Partnership. I would like some inputs on selecting an attorney to get the partnership agrement and other legal docs done.
Any help would be appreciated with regards to what cost am I looking at etc.
www.kishorecapital.com
mk@kishorecapital.com
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Cory
Mar 12th, 2009
1 comment
Anyone have any insight into how his investors were either accredited or qualified? Or did he fall under a different exemption under the Act?
I'd like an answer to this issue as well.
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M Kishore
Mar 15th, 2009
for non acc. u can take only 2 % as fees for funds under mgt and no share of the profits.
please check with another atorney to verify
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Your Name
Feb 9th, 2010