What is the Real Purpose of Investment Firms Like Tera? Market Mechanisms Explained

If I need to explain cash-rich investment companies like Tera Yatırım from scratch, I can summarize them like this:

• Sector: Money
• Product: Money
• Raw Material: Money
• Goal: Money
• Tool: Money
• Vision: Money
• Mission: Money
• Fixture: Money

I could write much more, but it would go on forever. In short, they make money from money, but not at low rates like deposit dividends. They partner with small-cap companies in the stock market at rates like 10-15% and start inflating them, a term we call a "bubble."

To explain in more detail, let me give an example:

We all have relatives, spouses, and friends, and we all either work or do business to earn money. Imagine you have a lot of cash. Let's assume that a company owned or managed by your friend is fundamentally in bad financial shape, even though its business operations are going well. Yes, there is work, there is demand, but there is no money. The CEO of an investment firm (this is entirely an example) holds meetings with the board of directors of such companies.

They analyze where, in which field, and in which investments they need financial support. After the necessary analyses are done, they agree with the company and then establish a partnership. Since they have to file a public disclosure (KAP) for partnerships of 5% or more in equity markets, they cannot hide this. Since everything is legal anyway, they don't feel much need to hide it either. Looking at it up to this point, there is no problem; it looks like a very natural commercial agreement. However, as you know, there is a certain public float rate of the company in equity markets. For example, let's say an investment firm partnered with a company as in the example I gave and disclosed to the public that it bought an 11% stake. The fact that it has to disclose this already shows us that this company is traded in the stock market. Let's say it is a 20% publicly floated company and the investment firm became an 11% partner in this company.

The investment firm does not partner with this struggling company for nothing. It has 2 main goals it tries to achieve through the company:

1. To obtain real returns from the system, business connections, and market dominance established by the company in that sector. You might ask me: "Since they have a lot of money, inflate shares, and make huge amounts of money, why do they claim the profit margin of a company in trouble? Are they desperate for this?" At first glance, the question may seem logical, but there is a very important reason. Let me explain:

Even though such investment companies do everything legally, they ultimately inflate a bubble. In other words, they take a company with empty fundamentals and low market value and increase its market value 10 times. So, how does this happen in a short time?

This brings us to the 2nd item: Do the company's affairs improve and skyrocket as soon as they give money to the partner company? Of course not. They do this through the stock market via the publicly traded part of the company. We said the public float of the company is 20%, and for the sake of example, let's say the market value of the company before the investment firm arrived was 1 billion. It had already given 110 million and became an 11% partner. Now, they allocate 200 million to the equity markets, meaning the publicly traded part of the company, and collect its shares from the market. While collecting, the company starts a "limit-up" (tavan) series. Of course, nobody knew or invested before this series started because nobody enters a company with bad financials. But nobody can know that an institutional investment firm will come to that ticker either.

So, what about the spouse, friend, relative, and acquaintance I mentioned at the beginning? That is exactly where the main issue lies. Behind the scenes where we cannot see, secret agreements are made between investment companies and corporations. Those who follow the stock market closely know that the #kontr stock recently pulled back very sharply. The reason for this was that it was heavily leveraged. An investment firm announced its partnership with this company, and exactly what I just mentioned took place. The owners of the company wanted to access financing sources, clean their balance sheets, and get out of trouble by partnering with them. Let's say the owners of this company are going under, they need money, and they partner with an investment firm. But why does a giant investment firm give money to a struggling company? I gave the answer above. These guys have cash, but they don't have an operating company on the ground to show where they earn their money from. If these company owners don't eventually fill the inside of the bubbles they inflate, this train will not move forward. In my next post, I will dive a bit deeper into the subsidiaries of these companies.