three ways to capitalize on wall street’s hottest ipo’s · without new tech stock issues,...

INVESTOR’S REPORT

THREE WAYS TO CAPITALIZE ON WALL STREET’S HOTTEST IPO’s

Three Ways to Capitalize on Wall Street’s Hottest IPOs

The fever is in the air again.

And before things really take off for the segment I have in mind, I want to tell you straight up: With the right scenario, you can score gains of as much as 30%, 40%, 60%, or even 100% – in as quick as a day.

The types of plays involved here are the kind that Wall Street insiders typically reserve for their richest, most exclusive clients.

Not anymore.

I’ve spent decades in Silicon Valley, surrounded by some of the biggest names in tech. And my lifetime of experience in this realm has allowed me to fine tune a three-part method that can help you get around Wall Street’s barriers to entry. This represents a chance to grab a share of what I call the “rich man’s stock market.”

So I’ll show you these strategies that you can use to stake your own claim in this surging profit machine – now, and in the future.

But I’m also going to show you how I’ve used these strategies to unearth three plays you can make right away that’ll give you the best chance of becoming a millionaire.

So let’s get started…

The Market Needs New Issues

Of course I’m talking about initial public offerings (IPOs).

Investor’s ReportFrom: STI Research Team For: Strategic Tech Investor Subscribers

STRATEGIC TECH INVESTOR Investor’s Report

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IPOs are used by companies on the rise as a means to inject the sort of capital from public investors that’s needed to scale up their operations, invest in R&D, and hire new staff members.

And it’s the main way tech startup investors like angel investors, venture capitalists, and hedge funds get to cash out and make their own fortunes.

Now, you might have heard someone you know mention that IPOs are just a way for Wall Street to pull a fast one on naïve investors. But that’s just not the case.

I’ve been around Silicon Valley for more than 30 years, so watching IPOs has become second nature to what I do every day. And I’ve worked as a strategic consultant to many IPO-minded startups.

The fact remains that without IPOs as a platform to raise new cash, many young and hungry tech startups would never truly get off the ground.

And here’s the thing. The stock markets just wouldn’t work the same without new tech stock issues, either. They require new blood, as it were, to keep marching along their merry way in this generational bull market.

That’s why high-tech IPOs are so crucial for a healthy market overall. We’re talking about the next-generation, breakthrough technologies that will create new livelihoods, new ways of life, and fresh chances to capitalize on soaring stocks.

That’s why the bigtime investors are so willing to stake billions in these firms.

Thus, a vibrant and energetic IPO market is one key sign of a thriving stock market.

In 2018, IPO performance mostly mirrored the stock market’s, meaning it started off and remained strong through most of the year, until it started heading south, bottoming out on December 24, 2018. A volatile stock market, Trump administration tariffs on imported goods,


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a brewing trade war with China, and a late-year government shutdown made capital raises dicey, if not impossible, for some firms.

Still, in 2018, the market saw a 19% increase in IPOs to 190 raises and climbed 32% to $47 billion in terms of proceeds. It was the best year for IPOs since 2014.

Now, overall performance flagged toward the latter half of the year. From September 24, 2018 through December 24, 2018, the industry bellwether, the Renaissance IPO ETF (NYSE:IPO), dropped some 27%.

But just as with the stock market, the IPO market began to rise again from that Christmas Eve low, with the Renaissance ETF back up more than 34% so far according to Investor’s Business Daily.

And this year looks to be shaping up nicely, particularly for several important tech IPOs, including Uber, Airbnb, Lyft, Pinterest, and WeWork.

Each of these tech giants already have valuations over $10 billion, while Uber is anticipated to grab as much as $120 billion, according to BDO.

Company Date of Last Reported Valuation Last Reported Valutaion

Uber October 18 $120 Billion

Palantir October 18 $41 Billion

Airbnb March 17 $31 Billion

Lyft June 18 $15 Billion

Pinterest June 17 $12 Billion

Slack August 18 $7 Billion

Postmates February 19 $2 Billion

Sources: CNBC, Strategic Tech Investor staff


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In fact, I’m expecting the tech sector in general to dominate IPO activity this year as it has in past years.

And I’m not alone. Almost half of 100 investment banking executives surveyed by BDO expect 2019 will equal or exceed 2018’s IPO results. In 2018, tech offerings raised $18.4 billion according to Renaissance Capital.

This year, Renaissance is watching 226 private companies that are planning on going public, representing a value of $697 billion.

That number has to be taken into perspective – it could wind up breaking the past capital raise records set in 1999 and 2000.

And of those 226 private firms, 119 are considered “unicorns,” or private firms with valuations over $1 billion, CNBC said. Firms like GE Healthcare, valued at $65 billion, and Palantir ($41 billion).

But the actual number of IPOs – and their potential valuations – could be even higher.

That’s why I’m watching the IPO market so closely this year.

Continued positive returnsfrom IPO’s

Continued regulatory burdensunder Trump admin.

Pricing of a major oppurtunity

Tax reform

Worse private valuations

The Likely Catalysts to 2019 IPO Activity

Sources: BDO, Strategic Tech Investor staff


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Now, permit me to be frank with you.

The IPO market can present pitfalls.

Yes, you can make a lot of money. But if you don’t know what you’re doing, you can get crushed. And those high-net-worth insiders I mentioned earlier have a big advantage: They get access to all the best deals, making it very tough for retail players to profit.

Like I said, Wall Street tends to reserve the hottest issues for its “best” customers – the “ultimate insiders” of the U.S. financial markets – so IPO deals can be tough for retail investors to get into.

And even if you do manage to grab a few shares, there are still difficult decisions to make – such as how long you should hold on… or under what circumstances you should sell.

To profit – and win – in the IPO market, you need a strategy. And that’s just what my three-part “Go-To IPO Investing Guide” gives you.

But, before I share these strategies with you, let’s look at how this go-to guide brought me to three of the biggest IPOs set to hit the market – and pad out your wallet – this year.

Blockbuster IPO Number One: UberUber’s been talking about a potential IPO for years now and has

made the moves in recent years to bring this vision to a reality in 2019.

In 2017, the firm hired former Expedia Group Inc. (Nasdaq:EXPE) CEO Dara Khosrowshahi as a replacement for founder Travis Kalanick as the firm faced numerous scandals and board infighting. Among Khosrowshahi’s first steps was to recruit former Merrill Lynch CFO Nelson Chai to help the firm get its finances straight for an IPO in the first half of 2019.

The firm is essentially in a neck-and-neck race to IPO with lead competitor ride-hailing firm Lyft. Now, whether or not Uber beats Lyft to the punch, there are several reasons to believe it’ll outshine its competitor, at least in the near term.


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For starters, Uber is older, meaning they had the time to build up a solid customer base – and a global one, too. In 2018, Uber reported service in over 600 cities, spanning 65 countries.

Lyft spans half as many cities and is only available in the United States and two pockets of Canada.

Moreover, Uber’s ride-hailing service connects 75 million customers with one of their three million drivers. In its 10 years of operation, five billion trips have been completed worldwide, and that figure is rapidly growing. Uber delivers nearly 15 million trips every day.

Overall, Uber is simply the most popular ride-hailing service. Its nearly 500,000 daily trips in New York City beat out Lyft’s 100,000 trips – and even spiked ahead of traditional taxi cabs’ 300,000 trips.

With such a wide customer base, Uber is only looking to pump up its business plan. It’s aiming to be the “Amazon of transportation,” offering everything from ride hailing to electronic scooters and bicycles that can be checked out with the smartphone app. Uber is also looking to sync its app to the train schedules, adding a way to pay fares.

“We can’t really be the Amazon of transportation without the biggest mode of transportation out there, which is public transportation,” Uber transit team leader David Reich said.

Lyft isn’t doing that.

With a valuation of about $120 billion, Uber is the blockbuster IPO to watch out for this year.

Blockbuster IPO Number Two: SlackPopular work collaboration/messaging app Slack recently registered

for what many in the tech space believe will be one of the hottest IPOs this year.

In early February, the firm announced its intention to IPO, though it didn’t disclose any details about its formal plans.


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The Silicon Valley juggernaut was founded about 10 years ago and has climbed to reach what PitchBook estimates will be a $7.1 billion valuation.

Last year, the firm said it had eight million daily active users and three million paid users.

Now, one of the intriguing aspects of Slack is its method to IPO. The firm has said it might pursue a direct listing instead of listing in the more traditional way of selling shares at a set price – and securing those elite investors before the public can get in.

With this move, shareholders – rather than the company – can sell their shares directly in the public offering. Spotify had a successful direct listing last year, and companies in general take this route in order to avoid steep fees from investment banks and lockup periods for insider shareholders.

Slack started in 2009 as a project from a failed game company called Tiny Speck. The team didn’t like the communication tools it was using, so they built the foundations of what became Slack.

Over the last five years or so, Slack has managed to steal market share and outperform nearly all of its competitors. Atlassian Corp. Plc, for instance, recently decided to give up its competing HipChat and Stride services in a partnership with Slack and to migrate its customers to the firm. In the deal, Atlassian even took a small equity stake in Slack.

In 2016, Microsoft Corp. (Nasdaq:MSFT) tried but failed to buy Slack for $8 billion. Today, Crunchbase estimates the firm’s value at around $7 billion, though that could be a low estimate.

Blockbuster IPO Number Three: PalantirPalantir Technologies Inc., the secretive data analytics and

intelligence firm that was co-founded by legendary billionaire investor Peter Thiel, has been one of Wall Street’s most anticipated IPOs for years.

But many expect 2019 will be the year it all happens. That anticipation was recently boosted when the firm reported it pulled in $800 million in revenue in 2018, up from about $600 million the year prior, and


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higher than the firm’s expected $750 million. The buzzed-about firm has yet to record a profit, but its leaders expect it will this year.

The 15-year-old firm has long been known for its government clients – it reportedly played a major role in the 2011 capture of Osama bin Laden. But it’s also built out a cadre of corporate clients in recent years, including Fiat Chrysler Automobiles NV, Airbus SE, and Credit Suisse Group AG. Its off-the-rack software system, called Foundry, is easier and cheaper for big business clients to use.

In fact, company executives recently told employees that about two-thirds of its revenue now come from corporate clients, according to The Wall Street Journal. Palantir’s “cash received” metric climbed 42% in 2018.

The firm was last valued in 2015 at roughly $20 billion, while a more recent estimate from Bloomberg values the business at $11 billion. Meanwhile, Morgan Stanley, which is vying to take part in the IPO, predicts it could be as high as $41 billion.

Now that I’ve shown you which IPOs you’ll need to keep your eye on this year, let’s get right to my three go-to strategies for picking windfall opportunities while lowering your risk by nearly a third.

IPO “Go-To” Strategy Number One: Do Your Homework

It’s crucial that you realize off the bat that determining the “true value” of many high-tech IPOs is as much an art as it is a science.

That’s because while many of these firms are growing rapidly, their most current sales and profit outlooks can vary widely.

Figuring out the market a specific company is involved in – ad tech, cloud computing, or cancer drugs, for instance – will give you a better sense of how well it’s competing with its peers, which in turn can at least give you a good ballpark figure for what the IPO’s “fair” price range should be.


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Facts always have to come before hype… and you’ll likely see plenty of pre-deal hype following the best IPOs.

So forgetting to do your homework and just following along with Wall Street talking heads can turn into a recipe for disaster.

Doing the basic research is a must.

You can start by visiting the company’s website to get an overview of the business. Check out the firm’s management team, recent customer growth, awards, and news. Financial websites also typically provide information about a firm’s competitors and how they stack up. Follow solid news sources like Money Morning and Bloomberg Business.

Doing all this legwork will give you a solid foundation of how the stock will be priced, what the post-IPO demand should look like, and what the company’s prospects will be.

IPO “Go-To” Strategy Number Two: Don’t Jump the Gun

It’s not going to be easy to get your hands on shares of the best IPO deals before they trade in the aftermarket unless you’re an insider or high-net-worth investor, which is where any investor can buy them.

But that fact makes many investors rush in too early and buy the stock as soon as it begins trading as a public venture. Worse still, some folks decide to put in an order to buy “at the market” shortly before the stock begins trading to the public.

Fair warning – doing that exposes you to a massive risk and could leave you holding the bag.

Here’s why. If the stock opens up 50% higher, you’ll likely have to pay that price. If the price drops back by half and closes its first day of trading with a 25% gain, you’ll be left crying into your beer while the Wall Street insiders celebrate a huge gain on the “successful” IPO deal.

I tell folks to avoid all of this potential headache and put in a “limit order” that’s absolutely no more than 10% higher than the offering price.


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Anything more than that is asking for trouble.

Over the years, I’ve seen too many investors hear about a big pop for a new issue and then chase after those gains. But remember, the pre-IPO “insiders” very often want to sell into the rally.

You don’t want to become the person who buys at the top. In the long run, you’ll do much better letting that stock go and looking for another, more viable play.

Having read this, I’m betting many of you might want to avoid IPOs completely – either because you think the field is too risky or because you don’t have the time to do your homework.

Don’t make that mistake.

You see, rule number three takes care of all of that for you.

IPO “Go-To” Strategy Number Three: Don’t Ignore ETF’s

You should never overlook exchange-traded funds (ETFs) – they’re a great way to profit from the IPO market. You don’t have to be an insider or a billionaire to get in, and you don’t have to bother with the emotions that lead to poor decision-making.

The First Trust U.S. Equity Opportunities ETF (NYSE:FPX) is an ETF that specifically targets IPOs. This investment is a market beater: It’s up 19% since the market bottom on December 24, 2018, compared to a 13% gain for the S&P 500 Index.

Launched in 2006, FPX was the first “IPO ETF” – and it seeks to mirror the IPOX-100 U.S. Index and the broad market for new issues. The fund’s managers buy its holdings shortly after their first day of trading – they don’t buy on that first day in order to avoid thin trading and volatile stocks. And then they generally hold those stocks for their first 1,000 days on the public market.

Now, FPX doesn’t focus exclusively on tech – the fund seeks to mirror the broader market for new stocks across all sectors.


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But that’s okay: As a broad play on new issues (IPOs), about a third of the fund’s holdings will be in tech and health care.

That’s why you can think of this play as a “twofer.” You get the blazing new tech and broad diversification. FPX holds positions in tech, finance, real estate, basic materials, industrials, healthcare, and utilities.

This ETF is also not your run-of-the-mill offering.

I’m a big fan of rules-based investing – if only because it defines your strategy and creates a structured discipline, or methodology, that makes you decisive and helps squeeze emotions out of the investing equation.

The managers of FPX describe the fund as being “rules-based.” These folks only invest in a stock after doing a thorough review of the underlying company’s financials. And the fund sells each stock after holding it for 1,000 days.

By definition, it doesn’t invest heavily in the sexiest small- and micro-cap firms. Instead, it is weighted toward mid- to large-cap firms, with an average market value of roughly $25 billion.

It holds 99 stocks. Here are a few examples…

• Takeda Pharmaceutical Co. Ltd (NYSE:TAK), which listed to the New York Stock Exchange for the first time on December 24, 2018, is FPX’s second largest allocation, comprising 4.9% of the portfolio. The firm is Japan’s largest drug maker, with a focus on oncology, gerontology, neuroscience, and rare-disease and plasma-derived therapies.

• PayPal Holdings Inc. (Nasdaq:PYPL), which went public in July 2015 as a spin-off from eBay Inc. (Nasdaq:EBAY), is FPX’s largest holding, representing 8.94% of the portfolio. In its most recent earnings report, the firm noted it has 267 million active accounts, a 17% jump from the year-ago quarter, while its total payment volume growth expanded 25% and reached $578 billion in annual payment volume.


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• Salesforce.com Inc. (NYSE:CRM), which accounts for 2.81% of the FPX portfolio, IPO’ed in June 2004, and the stocks have climbed steadily since. Even though Salesforce is one of the largest enterprise software companies on the market, with a market cap of around $120 billion, it’s still anticipating double-digit growth. And it’s been adding tuck-in acquisition plays on its cloud-based software services at a rapid clip.

Currently trading at around $70, FPX is still cheaper than many of its holdings, making it a cost-effective way to cash in on the 2019 IPO rebound, all while sparing you time, energy, and worry.

Of course, I believe it will make you a lot of money and help you build your net worth, the sort that can give you the life of your dreams.

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