Anyone Got Any Direct Experience with FISN?

[ShokWaveRider]

I have seen this mentioned before, But I have not heard from anyone who actiually uses them. Is there anyone out ther who does? Their portential CD returns appear to be great, and they are FDIC insured.

You can see the site at www.fisn.com

SWR

 

[Mr._johngalt]

FISN? Are we talking nuclear or like bass and stuff?

JG

 

[ShokWaveRider]

By the lack of response, I assume nobody has

 

[retire@40]

I'd be curious to know more about FISN too. They have some pretty high rates on some investments, but I'd want to know how valid all this stuff is.

For example under 1 YEAR FIXED RATE EXCHANGEABLE CORPORATE SECURITIES in the CD alternatives section I found this:

PalmOne Inc. (NASDAQ Symbol - PLMO) with 40% Downside Protection.

Credit Quality: S&P AA-
Fixed Term: 9 Mos
Annual Interest Rate: 17.00%
Payment: Quarterly
Minimum Investment: $25,000
Closing Date: 04/01/05

 

[MooreBonds]

I purchased some CDs through FISN for my parents. Everything seems to be fine. You can open an account in the name of a revocable trust, and get FDIC insurance for each beneficiary as well as account holder...so you could purchase a single CD well over $100,000 and still have full FDIC insurance of $100,000 per account owner/beneficiary.

The only problem is knowing how to decide on what to go with (20-year CD callable after 6 months, or going with a step-up).

I decided to diversify (as usual ), and spread it out among various CDs, including step-ups as well as the 20-year, callable-after-6 months varieties. Rates did go up a bit after I bought them, but not by too much...and it's a hell of a better deal than treasuries right now.

--Peter

 

[Hyperborea]

I'd be curious to know more about FISN too.  They have some pretty high rates on some investments, but I'd want to know how valid all this stuff is.

They look valid.  If you follow the disclosure link you can find out more.  These look to be backed by ABN Amro so that part seems ok.

For example under 1 YEAR FIXED RATE EXCHANGEABLE CORPORATE SECURITIES in the CD alternatives section I found this:

PalmOne Inc. (NASDAQ Symbol - PLMO) with 40% Downside Protection.

Now, the real question is what are you buying?  It's not really a bond though it may look like one.  What it seems that you are buying is somebody else's option risks.  If the price of the stock (in this case PalmOne) drops 40% at any time during the holding period even if it recovers before the end date you will not get your money back but instead will get some predetermined number of PalmOne shares.

Why do you only get the stock and not your money even if it recovers?  Because somebody will have exercised some options and delivered the stock to ABN Amro (or somebody else in this financial soup) and you're the one that has been sold that risk.

Now, as to whether you would want to hold PalmOne is another big question.  PalmSource (the other half of the original Palm company that does the operating system) is in serious trouble - they are losing licensees (Sony stopped making Palm devices) - and if they go down there will be nobody around to make the OS for the devices that PalmOne sells.  Top that off with the fact that the PDA market is dying (cell phones on one end and small laptops on the other are taking the market) and you have some seriously risky stock that could easily drop the 40% and leave you out a lot of principal.  

He's already buying the bonds of a dying car manufacturer so perhaps John Galt would be interested?

 

[Jarhead*]

They look valid.  If you follow the disclosure link you can find out more.  These look to be backed by ABN Amro so that part seems ok.


Now, the real question is what are you buying?  It's not really a bond though it may look like one.  What it seems that you are buying is somebody else's option risks.  If the price of the stock (in this case PalmOne) drops 40% at any time during the holding period even if it recovers before the end date you will not get your money back but instead will get some predetermined number of PalmOne shares.

Why do you only get the stock and not your money even if it recovers?  Because somebody will have exercised some options and delivered the stock to ABN Amro (or somebody else in this financial soup) and you're the one that has been sold that risk.

Now, as to whether you would want to hold PalmOne is another big question.  PalmSource (the other half of the original Palm company that does the operating system) is in serious trouble - they are losing licensees (Sony stopped making Palm devices) - and if they go down there will be nobody around to make the OS for the devices that PalmOne sells.  Top that off with the fact that the PDA market is dying (cell phones on end and small laptops on the other are taking the market) and you have some seriously risky stock that could easily drop the 40% and leave you out a lot of principal.  

He's already buying the bonds of a dying car manufacturer so perhaps John Galt would be interested?

Damn solid advice, and apparantly you have done some research on this investment.

For what it's worth, in the time I have had discreationary income to invest, (Especially on the credit side), if you are "permitted" to get far above the market rate for this type of investment, you are accepting mkt. risk, (and probably more than you can imagine).
In our current environment, I believe that it is best to allow the market to come to you. (Greed, especially chasing yields can (and will in most cases), have you talking to yourself.

 

[MooreBonds]

If the price of the stock (in this case PalmOne) drops 40% at any time during the holding period even if it recovers before the end date you will not get your money back but instead will get some predetermined number of PalmOne shares.

You are essentially correct, in that you are receiving ABN Amro's put option on the various stocks, and that the 'interest' you are getting paid is essentially the same as if the individual wrote a put. However, please refrain from the assertion that you are guaranteed to receive only stock back if the price were to drop and rise back up prior to maturity. The website clearly states that there is a chance that the option holder MAY exercise the stock and end up with the 'bond' holder receiving stock in lieu of cash at maturity....and in the option markets, there are no guarantees of what the future will bring until expiration arrives.

 

[Hyperborea]

However, please refrain from the assertion that you are guaranteed to receive only stock back if the price were to drop and rise back up prior to maturity. The website clearly states that there is a chance that the option holder MAY exercise the stock and end up with the 'bond' holder receiving stock in lieu of cash at maturity....and in the option markets, there are no guarantees of what the future will bring until expiration arrives.

Ok, so I simplified.  If you read the doc which I gave the link to then you are right that there is a chance you will get your cash back even if the stock dipped below the "knock-in level" but only if the price of the stock on the 3rd day before the end of the contract is equal to or more than the original amount.  So, what they are doing is to make sure that if there is any upside that the holder of this derivative doesn't get it.

You're right that options have no guarantees but I will guess that are probably quite a few market risk averse yield chasers who don't realize what they've bought exactly and are going to get burned.  If somebody really wants to invest in a derivative like this they are going to need to do a lot more fancy math than just look at the interest rate.

http://www.fisn.com/Disclosure/ABM AMRO RevExSec - PalmOne - 04-06-05.pdf

If the market price of the Underlying Shares on the primary U.S. exchange or market for the Underlying Shares falls to or below the knock-in level on any trading day from but not including the trade date to and including the determination date:

- we will deliver to you a number of Underlying Shares equal to the stock redemption amount, in the event that the closing price of the Underlying Shares on the determination date is below the initial price; or

- we will pay you the principal amount of each Security in cash, in the event that the closing price of the Underlying Shares on the determination date is at or above the initial price.

 

[ShokWaveRider]

I purchased some CDs through FISN for my parents. Everything seems to be fine. You can open an account in the name of a revocable trust, and get FDIC insurance for each beneficiary as well as account holder...so you could purchase a single CD well over $100,000 and still have full FDIC insurance of $100,000 per account owner/beneficiary.

The only problem is knowing how to decide on what to go with (20-year CD callable after 6 months, or going with a step-up).

I decided to diversify (as usual ), and spread it out among various CDs, including step-ups as well as the 20-year, callable-after-6 months varieties. Rates did go up a bit after I bought them, but not by too much...and it's a hell of a better deal than treasuries right now.

--Peter

Peter:

So you actually have invested with them. How long ago? Personally I am not interested in Corporates like all the other posts (Palm One). I am ONLY interested in Laddering some short term CDs. PArking Cash until life gets more interesting )).

Anyone Else?

Ian