I’m not proud of what I did…

  • Just one difference
  • It’s the same thing
  • ‘Forensic’ analysis
  • IPO ‘Hall of Fame’

I’ve just stepped out of a recording session.

It only took around 40 minutes to shoot. With edits, I doubt if it will be more than 30 minutes long. Maybe no longer than 20 minutes.

Regardless, we’re rushing the video out to you as soon as we can.

You should get it tomorrow afternoon.

It will be well worth tuning into it. It’s a short interview I conducted with Port Phillip Publishing’s Head of Research, Greg Canavan.

He explains how he’s found a way to help regular Aussie investors gain access to some of the most amazing investment opportunities around.

I can’t say much more than that…for now. Look out for the video tomorrow.

Markets

Over the weekend, the Dow Jones Industrial Average gained 141.82 points, or 0.69%.

The S&P 500 added 16.01 points, for a 0.68% gain.

In Europe, the Euro Stoxx 50 index closed up 24.79 points, or 0.7%. Meanwhile, the FTSE 100 added 0.46%, and Germany’s DAX index gained 0.39%.

In Asian markets, Japan’s Nikkei 225 index is up 61.26 points, or 0.31%. China’s CSI 300 is up 0.51%.

In Australia, the S&P/ASX 200 is up 47.59 points, or 0.83%.

On the commodities markets, West Texas Intermediate crude oil is US$50.88 per barrel. Brent crude is US$54.13 per barrel.

Gold is trading for US$1,253.06 (AU$1,683.65) per troy ounce. Silver is US$16.88 (AU$22.68) per troy ounce.

The Aussie dollar is 74.42 US cents.

Just one difference

You may have figured that the video I mentioned earlier has something to do with the ‘halo stocks’ you read about last week.

Well, halo stocks are a term I use to describe initial public offering (IPO) stocks.

I call them halo stocks due to the aura and mystique that surrounds them.

I doubt if there’s a single investor in the world who doesn’t dream of getting in on a stock before the rest of the market. Unfortunately, few get the opportunity.

For most investors, the world of IPOs is a closed-off network…it’s off-limits…it’s a no-go zone.

That’s not for the want of trying or desire. It’s because, for the average investor, it’s just not possible to get access to the best IPOs.

I can tell you that from my experience having been on the other side of the ledger.

During my broking years, IPO opportunities would often drop on my desk. Some of them were good, others were bad.

If I thought they were bad, I’d give them a wide berth (usually, the investment bank-created listed funds that were nothing more than a vehicle to charge exorbitant fees).

As for the good deals, I’d call clients and talk to them about it. But guess whom I’d call first? That’s right, those who had generated the biggest commissions for me.

I can’t say I’m proud of it. I’m just being honest. Brokers have to put food on the table too! You reward your best (highest commission generating) clients first.

That was the story then. I’m certain it’s the story now.

But, thanks to the work (hard work) and initiative of colleague Greg Canavan, we’re about to put a rocket up the socket of the IPO industry.

For the past year, Greg has worked on a project to help make the hottest IPO opportunities available to as wide a group of Aussie investors as possible.

Make no mistake; it has been a big job. Greg has spent hours each day for the last 12 months trying to make this happen. And the good news is that he’s just about to dot the final ‘I’ and cross the final ‘T’.

Of course, you may ask, why all the effort?

Can’t you make the same or similar sized returns just by buying the stocks after they list? Or just look for other stock market opportunities?

That’s certainly a strategy. It’s one that has worked well for me over the past 20 years. As a small-cap and microcap guy, I’m always looking for what I think are the market’s most exciting opportunities.

However, even though I’ve spent a lot of time scouting around the small-cap market, one part of that market was always off-limits to me — IPOs.

I just didn’t have the contacts, and I didn’t know how to make them. Call that a deficiency in networking skills, if you like.

That’s where Greg’s knowledge and contacts within the industry can help to fill the gap.

But, as to the point of whether it’s worth all the effort to buy the IPO or buy the stock after it lists, check this out…

If you bought Aurora Labs Ltd [ASX:A3D] at the open on its first day of trading, and held it until today, you would be up 148%. That’s a good return.

But if you bought at the IPO, you would be up 565%. That’s nearly four-times better the return.

If you bought GetSwift Ltd [ASX:GSW] at the open on its first day of trading, and held it until today, you would be up 183%. Not bad.

But if you bought at the IPO, you would now be up 295%. That’s more than half as good again. Pretty good for just having the right contact to be able to get in on the IPO, rather than with the rabble on the open.

If you bought Freedom Insurance Group Ltd [ASX:FIG] at the open on its first day of trading, and held it until today, you would be up 106%. That’s good.

But if you bought at the IPO, you would now be up 123%. On a $5,000 investment, that’s the difference between making a profit of $5,300 or a profit of $6,150.

That’s a big difference.

Or what about Class Ltd [ASX:CL1]. If you bought at the open on its first day of trading, and held it until today, you would be up 117%. Nice.

But if you bought at the IPO, you would now be up 202%. On a $5,000 investment, that’s the difference between making a profit of $5,850 or a profit of $10,100.

Which would you prefer?

Wouldn’t you prefer a profit of 10 grand instead of five grand? I know I would. And the only difference is your ability as an investor to access the right deal at the right time — before every other investor has the opportunity to buy.

As far as I’m concerned, this is about as exciting as it gets in the world of investing — the ability of getting into a stock early, before it lists, and then watching the stock price rise when the rest of the market gets to join in later.

Remember to check out the special video tomorrow.

It’s the same thing

Be clear on that. Buying into an IPO means purchasing exactly the same shares investors will buy after the listing. The only difference is that you’re buying them before they list.

This isn’t about buying an option over the stock. It’s not about using leverage, or trading CFDs, or using some kind of fancy trading system.

The difference in the returns I’ve shown you above is down to one thing: the ability to get into a deal (legally) before almost every other investor. Except, of course, for those other investors who are fortunate enough to get in on the deal with you.

‘Forensic’ analysis

I can hear some folks saying, ‘What about Myer and Dick Smith? Those IPOs have been terrible.’

True. Investors in Myer Holdings Ltd [ASX:MYR] who bought and have held on have lost 76% of their investment since the IPO.

Investors in the Dick Smith Holdings Ltd float who bought and held on until the bankruptcy lost everything.

That’s an important thing to remember — not every IPO will make you money. They certainly won’t all go up by triple-digit percentages in a short period of time.

That said, the IPOs that Greg is looking at will be at the smaller end of the market. He’s not looking at the equivalent of Myer, Medibank, Dick Smith or Telstra IPOs.

In comparison, it’s relatively easy for even the smallest investor to access deals like that. Most of the big deals will run through a big broker, or they’ll be big public offer deals, where almost anyone can get some shares.

The deals Greg is looking at will be at the other end of the spectrum. These will be deals normally reserved for the privileged few. The deals managed by boutique fund managers or brokers — the firms that generally only have high net worth (HNW) people as clients.

In a way, we see that exclusivity as an extra ‘filter’. If a boutique broker or fund manager is offering these deals to HNWs, you’d think they’re not likely to ‘sell them a dud’.

Of course, that’s not the only criteria. Even rich folks get lumped with bad investments from time to time. That’s why Greg, as an independent analyst, will run a fine-toothed comb over every deal before he recommends it.

It’s about as close as you can get to genuine ‘forensic’ stock analysis.

Now, doing all that fine research doesn’t guarantee every deal will be a winner, but I’ve worked with Greg for about seven years. I know his research. I know he has integrity.

And most of all, I know that he doesn’t recommend buying anything unless he’s convinced it’s the right investment for his subscribers.

Anyway, in my view, the package that Greg has put together is nothing short of stunning. I can’t wait to share more details with you. Check out the video tomorrow.

IPO ‘Hall of Fame’

It may be a bit of a cliché to bring up these ‘Hall of Fame’ IPOs, but it’s also fun to think about what ‘could have been’ if you had bought into these stocks and held on to them.

Check them out…

Microsoft Corp [NASDAQ:MSFT], up 70,789%:



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Source: Bloomberg
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Amazon.com Inc. [NASDAQ:AMZN], up 62,159%:



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Source: Bloomberg
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Oracle Corp [NYSE:ORCL], up 58,798%:



chart image

Source: Bloomberg
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Apple Inc. [NASDAQ:AAPL], up 38,640%:



chart image

Source: Bloomberg
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And closer to home, how about these IPO gems…

REA Group Ltd [ASX:REA], up 12,615% on the IPO price, and 8,012% on its opening market price:



chart image

Source: Bloomberg
Click to enlarge


Audio Pixels Holdings Ltd [ASX:AKP], up 7,550%:



chart image

Source: Bloomberg
Click to enlarge


Finally, Flight Centre Travel Group Ltd [ASX:FLT], up 3,059% on its first trade price, and 3,715% on its IPO price:



chart image

Source: Bloomberg
Click to enlarge


As I say, they don’t all turn out this way. But, based on the possibilities, I think you can see why I’m so excited by what Greg has to offer.

More details tomorrow.

Cheers,
Kris