From IPOs to ICOs…

Tuesday, 5 September 2017
Melbourne, Australia
By Bernd Struben

  • Setting new records
  • Predicting new records
  • Some good news for bitcoin…and some bad

I woke up with IPOs (initial public offerings) on the brain this morning.

Not because my entire life revolves around stock markets, I do have other interests. Really.

But IPOs came to mind because of something Time Trader’s Phil Anderson reminded me about on Monday. I’ll get back to that in a tick. First, I want to make sure we’re all on the same page.

As you probably know, an IPO is when a private company first offers its stock to outside investors by listing on a stock exchange. Once a company is listed (after the IPO) investors can freely trade its shares. Hence, the company has gone public.

Companies do this for various reasons.

Smaller companies often list when they’re looking for capital to grow their operations. IPOs are less common for larger companies. When large private companies do go public, you can bet they have an eye on increasing value for their formerly private stakeholders.

Now with that said, do you know which company holds the current record for the largest IPO? I’ll give you a hint. Though it listed on the New York Stock Exchange, the company is Chinese.

If you haven’t guessed yet, you can mull it over while we take a look at the markets.

Markets

Overnight, markets were closed in the US for the Labor Day holiday.

In Europe, the Euro Stoxx 50 index closed down 13.46 points, or 0.39%. Meanwhile, the FTSE 100 lost 0.36%, and Germany’s DAX index fell 0.33%.

In Asian markets, Japan’s Nikkei 225 index is down 119.11 points, or 0.61%. China’s CSI 300 is up 0.46%.

In Australia, the S&P/ASX 200 is down 1.00 points, or 0.02%.

On the commodities markets, West Texas Intermediate crude oil is US$47.38 per barrel. Brent crude is US$52.17 per barrel.

Gold is trading for US$1,334.64 (AU$1,679.00) per troy ounce. Silver is US$17.95 (AU$22.58) per troy ounce.

One bitcoin is worth US$4,180.73.

The Aussie dollar is worth 79.49 US cents.

Setting new records

So, what is the largest IPO to date?

If you said Alibaba Holdings Group [NYSE:BABA] go to the front of the class. With a similar business model to Amazon.com Inc. [NASDAQ:AMZN], Alibaba listed on the NYSE on 18 September, 2014 for a record US$21.8 billion.

According to Investopedia, four days later, underwriters exercised an option to sell more shares, bringing the total value of the IPO to US$25 billion.

Early investors have done well. Shares are up 82.17% since 26 September, 2014.

The current price to earnings (PE) ratio of 56.94 may sound like it’s in nose bleed territory. And it is, as investors price in major future growth opportunities. Although the stock looks like a bargain compared to Amazon, with its eye-watering PE ratio of 246.83.

Predicting new records

This brings us back to Phil Anderson…and Greg Canavan. And why I woke with IPOs in mind.

You’ve likely heard about Saudi Aramco. It’s Saudi Arabia’s state owned oil and gas company. You may have also heard about the Saudi’s plans to sell 5% of Saudi Aramco in an IPO sometime in 2018. The specific date has yet to be decided.

Now 5% may not sound like much. But as the Saudi’s place a US$2trillion price tag on the entire company, the IPO could be valued at over US$100 billion. That would dwarf Alibaba’s listing, making this the largest IPO on record.

If you subscribe to Crisis & Opportunity, you’ll know the ins-and-outs of the deal already. Greg Canavan has followed the story from day one. And he’s predicting some serious market manipulation in the lead up to the IPO.

This manipulation is intended to help the Saudi’s squeeze every dollar they can out of the listing. But it should also be a boon for select Aussie oil and gas stocks. Greg recently tipped three beaten down stocks that stand to gain the most from the wheeling and dealing.

And they’re already off to a flying start.

One is up nearly 60% from Greg’s initial recommendation just two weeks ago. Another is up 25%. And Greg thinks this is just the beginning. If you haven’t checked out the stocks tied into what Greg calls ‘The Aramco Fix’, you can find all the details here.

Those are impressive gains in only two weeks. But here’s something I find even more impressive.

Long before the Aramco IPO deal was ever announced, Phil Anderson detailed a series of events we should expect at this stage of the Grand Cycle. Specifically, he wrote that in 2018 we would get ‘the world’s largest IPO’.

Now the world’s biggest IPOs don’t come around every year. Before Alibaba in 2014, the world’s previous biggest IPO was the Agricultural Bank of China. It listed in 2010, raising US$19.23 billion.

So how did Phil — once again — accurately predict a major market event, years before it transpired? (Assuming, of course, the Aramco IPO goes ahead.)

I wish I had an easy answer. All I can tell you is that it has to do with his intricate knowledge of history, and the critical cycles that repeat in predictable patterns…if you know what to look for.

Phil uses his uncanny forecasting abilities for far more than just impressing friends…or your editor. He also applies them to the stock market, with remarkable results.

And Phil’s passionate about his trading. I shared this in Port Phillip Insider last week. But it’s worth repeating what Phil writes about trading.

My great passion… it’s not real estate, actually. My greatest passion is trading the stock market. Specifically, how to know — with sometimes great precision — what’s going to happen next, and how to make money from it.

But even better…

What to do if you don’t know what’s coming next — and to profit from this, too.’

In Time Trader, Phil not only shares all of his best stock tips, but he shares the secrets that allow him to uncover those stocks as well. You can find out how here.

Some good news for bitcoin…and some bad

When someone tells you they have good news and bad, which do you prefer to hear first?

Personally, I prefer to get the bad news first. That way I’m left with some uplifting news at the end. So, here’s the bad news for crypto currencies.

The following headline comes from Bloomberg, ‘Bitcoin Tumbles as PBOC Declares Initial Coin Offerings Illegal’. And the article continues:

Bitcoin tumbled the most since July after China’s central bank said initial coin offerings are illegal and asked all related fundraising activity to be halted immediately, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales…

Bitcoin tumbled as much as 11.4 percent, the most since July, to $4,326.75. The ethereum cryptocurrency was down more than 16 percent Monday, according to data from Coindesk.’

Although China’s central bank didn’t mention bitcoin, its continued to sell off today. As at writing, one bitcoin is worth US$4,180.73. Most likely this is just a kneejerk reaction from spooked investors. I don’t expect China to attempt to ban bitcoin. So, this may well present a good buying opportunity.

Especially with some good news for the world’s leading crypto coming in today as well.

The news? Bitcoin ATMs. You can’t get much more mainstream than that!

As The Australian Financial News reports, ‘Bitcoin ATMs deal makes Stargroup shares jump in joint venture with DigitalX’:

‘[ATM machine operator Stargroup] signed a joint venture agreement with DigitalX, a blockchain technology and advisory company, to jointly develop bitcoin ATMs for buying and selling the virtual currency…

In an ASX announcement, Todd Zani, Stargroup’s CEO and Executive Chairman said: “Stargroup is pleased to partner with DigitalX on this project and leverage its unique ownership of its ATM manufacturer to develop a two-way ATM where a Bitcoin owner can not only buy Bitcoin but more importantly can cash their bitcoin out. This development may also be able to be applied to other cryptocurrencies and be distributed internationally.”

And if that’s not enough there was this headline, also from the AFR: ‘Australian gold dealer sees the digital light and expands to bitcoin’. The article notes:

A Brisbane gold and silver bullion dealer has become the first in the country to start trading in bitcoin after 43 years in operation, following federal government recognition of it is as a legitimate currency and the removal of GST from the purchase of digital currencies…

Ainslie Bullion director Paul Engeman said he had been buying and selling bitcoin since August and the business has seen “strong demand” from new and existing customers.

“The surprise to us has been the extent to which self-managed superannuation funds have been the predominant cohort of buyers.”

China’s move is likely aimed at reining in the wave of Initial Coin Offerings hitting the markets this year. Many of which are dodgy, to say the least.

As investors digest the latest news and realise bitcoin remains the number one player in the crypto market, its meteoric rise should continue. But don’t take my word for it.

Nobody knows more about bitcoin and crypto currencies than tech guru Sam Volkering. He even wrote a book about it, ‘Crypto Revolution: Bitcoin, Cryptocurrency and the Future of Money’, released in July this year.

Subscribers to Sam Volkering’s Secret Crypto Network receive a complimentary digital version of the book.

Along with weekly updates on what lies ahead for bitcoin, ether and others, Sam also brings you his latest recommendations on cryptos to consider. And even more importantly, which ones to avoid.

You can find all of that here.

Cheers,
Bernd