How to score a knockout before the bell rings

Monday, 18 September 2017
Melbourne, Australia
By Bernd Struben

  • Greg Canavan’s Exclusive IPO Investor
  • What to look for with an IPO

You’ve probably never heard of Bojun Agriculture Holdings Ltd.

The company first popped onto my radar last Thursday, following their latest media announcement.

The media release offers a few details of interest about the company. Such as, Bojun Agriculture manufactures fermented beverages and snacks, using a patented process to ferment Nanfeng Mandarins.

Yummy!

Bojun Agriculture also notes:

Increased consumer wealth in China has led to increased living standards and heightened demand for healthy beverages, foods and snacks. This presents opportunities for the growth of the Company and its products, which are made from natural fruit produce and are associated with greater health benefits.’

If that all sounds a bit salesy, that’s because it is.

You see, the company just lodged its Prospectus with the Australian Securities and Investments Commission (ASIC), to raise up to $12 million. They aim to list on the Australian Securities Exchange (ASX), via an Initial Public Offering (IPO).

As the media release states:

The Prospectus offers 24 million shares at an issue price of $0.30 per share to raise up to $7.2 million, with up to $4.8 million of oversubscriptions representing the further issue of 16 million shares. At maximum subscription, the Company will have a market capitalisation of $40.8 million. The capital raising is expected to close on 27 October and trading of Bojun Agriculture shares is expected to commence on 6 November 2017.’

Why do I bring this to your attention today?

We’ll get back to that after a quick look at the markets.

Markets

Over the weekend, the Dow Jones Industrial Average gained 64.96 points, or 0.29%.

The S&P 500 added 4.61 points, or 0.18%.

In Europe, the Euro Stoxx 50 index finished down 10.93 points, or 0.31%. Meanwhile, the FTSE 100 lost 1.10% and Germany’s DAX index fell 0.17%.

In Asian markets, Japan’s Nikkei 225 index is up 102.06 points, or 0.52%. China’s CSI 300 is up 0.51%.

In Australia, the S&P/ASX 200 is up 22.58 points, or 0.40%.

On the commodities markets, West Texas Intermediate crude oil is US$49.84 per barrel. Brent crude is US$55.62 per barrel.

Gold is trading for US$1,321.60 (AU$1,651.17) per troy ounce. Silver is US$17.60 (AU$21.99) per troy ounce.

One bitcoin is worth US$3,744.01.

The Aussie dollar is worth US80.04 cents.

Greg Canavan’s Exclusive IPO Investor

I mentioned Bojun Agriculture to you above, because I’ve been keeping a sharp eye on new IPOs heading for the ASX.

That’s because earlier this year Port Phillip Publishing launched one of our most exciting new investment service in years. Perhaps ever.

It’s called Greg Canavan’s Exclusive IPO Investor. And as the name implies, Greg Canavan focuses on getting you into the most promising new companies listing on the ASX.

Now you may know Greg as a regular editor of our free e-letter, Money Morning. Or, you may know him as the editor of Crisis & Opportunity…or both.

What you may not know is that Greg is also the head of research here at Port Phillip Publishing, among other things. That means Greg runs his ruler over every new recommendation made in any of our other services. That’s a ton of market insight he analyses every day.

And he uses that insight to the benefit of his readers.

Atop his editorial and research roles, Greg’s been busy on another front. He spent much of the last a year putting Greg Canavan’s Exclusive IPO Investor, together.

Back in June this year, all that hard work paid off when he successfully launched the service to our Alliance members. Working closely with a few broker mates of his, Greg opened the door for subscribers to buy stock before a company’s shares are publicly traded, in what’s called a priority allocation.

I’ve underlined ‘before’, because that’s an important distinction to make. Most retail investors, like you and me, never have access to top IPOs until after the bell rings. Meaning after the first day, the company is publicly traded on an exchange.

Going back to Bojun Agriculture, the company plans to finish allocating its new shares by 27 October. Public trading of Bojun Agriculture shares is expected to commence on 6 November 2017.

That means the ‘insiders’, will have their shares allotted more than a week before the company trades a single share on the ASX.

Now I’ll tell you straight up that I haven’t done much research on Bojun Agriculture, beyond a quick check of their website and stats. The company’s shares may soar on the first day of trading…or not.

What I can tell you, is that last year the average return on IPOs in Australia was around 31%. That’s a heck of a lot better than the 8.8% ASX 200 returned.

And tech IPOs, like the one Greg has lined up and waiting for you now, did even better. In 2016, they delivered a 69.5% return to investors. And that’s including the duds!

Make no mistake. There are plenty of IPO duds.

What to look for with an IPO

As Greg writes:

The decision to bring a company to market doesn’t mean it’s a great deal. Very often, it’s not. But those tend to be the only ones retail investors get tipped off on.

If you’re an underwriter, you get paid a fee regardless of where a stock ends up a year down the line. Many, many deals are to the benefit of the sellers and underwriters, and not the buyers.

And these are pretty much the only IPOs retail investors will ever be offered shares in before the stock lists on the ASX, or any other exchange.’

I asked Greg how that stacks up with the fact that the average tech IPO returned 69.5% in 2016. He told me the returns from the really good ones, often in the triple digits, were enough to easily outweigh the duds.

Here’s what he writes:

IPOs can be absolute cash cows. But it’s completely uncharted territory, so they are also very risky.

Each deal I put in front of my subscribers goes through two levels of due diligence.

First, they will be vetted by my contacts.

They then go through an even more stringent cross-checking process by me and my team here at Port Phillip Publishing.

But it’s really the sources that the deals come from that are critical.’

Greg Canavan’s Exclusive IPO Investor isn’t about giving you access to every IPO that hits the market. It’s about finding those niche companies offering tremendous reward potential relative to risks.

And that’s where Greg’s years of market experience, hands on knowledge and extensive network can make all the difference.

Without a similar network, odds are you’ll never be offered a priority allocation of shares of any stock with explosive potential. And without an in-depth market knowledge and weeks of research, any retail investors who do get this opportunity, will be largely shooting in the dark.

For example, it’s crucial that you know why a company has decided to go public. Are they looking to grow the business, or just hoping to make enough cash from the float to keep the business running?

And what do you know about the management?

That, as we’ll cover in more detail tomorrow, is critical. And it’s why Greg engages in extensive discussions with the top management before ever considering recommending a new listing to his subscribers.

His goal is to get you into IPOs, like Afterpay Holdings Ltd [ASX:AFY]. Companies which, for a variety of reasons, are destined for greatness.

You’ll likely never hear about these new listings from your broker. At least, not until after a few connected insiders have been given special access to the stock before it begins trading.



chart image

Source: Google Finance
Click to enlarge


As you can see, Afterpay delivered a phenomenal 205% gain in just four months.

Since then, it’s given up a fair chunk of those gains, though it’s still up a healthy 114%.

That’s another huge benefit of having Greg Canavan in your corner. Not only will he give his all to try and get you into the top IPOs. He’ll keep an eagle on eye them once he makes the recommendation. And he’ll help you lock in profits by getting out of the big gainers when they show signs of turning down.

Greg is now accepting applications for priority shares in his latest IPO recommendation, growing US tech company engage:BDR. But the window on this opportunity is a short one.

Only 48 hours, to be precise.

At midnight this Wednesday, that window closes.

For all of the details and to find out of Greg’s new service is suitable for you, please go here.

Before signing off, if you’ve had any experience investing in IPOs — good experiences or bad — we’d love to hear from you. Just drop us a mail at letters@portphillipinsider.com.au

Cheers,
Bernd