This ad has been floating around for a few weeks now and I haven’t had a chance to dig into it — but that ends today. The good folks at Stansberry & Associates are using it to sell their flagship Stansberry’s Investment Advisory service (recently renamed, since it’s now written by Braden Copeland instead of founder Porter Stansberry).

And Mr. Copeland tells us that he’s got a prime investment idea — one that lets you get in underneath the ground floor on the next hot crop of IPOs … and even to get discounted shares of stocks that have already gone public.

Here’s the pitch:

“An Instant 1,823%

“One of California’s hottest new tech stocks is about to go public (likely at $10 or more). Here’s how to get a stake in pre-IPO shares, today, for just 78 cents apiece….

“In February, a tiny videogame rental company called Gamefly (often called the “Netflix of videogames”) filed IPO papers with the SEC.

“The company’s plan is to go public sometime this year, in a transaction valued at $50 million.

“Based on the way these IPO events usually work, when this stock goes public, it will likely be for $10 or more. Last year, the average IPO was around $15.

“But right now, you could get a stake in pre-IPO shares for just 78 cents.”

And he goes on, also saying that this investment is a way to buy shares of recently IPO’d SPS Commerce for just 98 cents (it’s trading around $10 now). But the examples don’t stop there:

“A backdoor, yet completely legal way to take a stake in, not just Gamefly — but shares of hundreds of pre-IPO stocks… for pennies apiece.

“For example, using this secret, you can own shares of a tiny tech company called Energy and Power Solutions.

“On March 31st, they filed IPO papers with the SEC. And I expect they could go public before the end of the year, likely at $10 or more.

“But right now, you could get a stake in this firm — BEFORE they go public — for just $1.72.

“A $10 IPO could mean an instant 481% gain.”

Sounds pretty exciting, right? Most folks will recognize what Copeland eventually goes on to describe in a bit more detail, that these teased companies are firms that benefitted from venture capital funding, and as one of the terms of that funding they gave warrants to their bankers and investors — so this teased stock must hold warrants in Gamefly that let them buy the shares for 78 cents, and shares of SPS Commerce (SPSC) for 98 cents, and so on.

This is how Copeland puts it in the ad:

“In order to grow and promote their businesses, these guys routinely hand out rights to purchase pre-IPO shares of their company to venture capitalists (VCs) and other Wall Street players.

“These pre-IPO shares are called ‘warrants.’ And these deals are strictly private… normally.

“But I’ve discovered a backdoor way to join these VCs, and potentially profit from their deals.

“You see, the way you can get in is by buying a stake in a very unique type of ‘shell’ operation, run by a team of Silicon Valley bankers.

“I’m not talking about a mutual fund or hedge fund or any kind of fund for that matter.

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“In fact, I call it a ‘shell’ operation because, on the surface, you’d have no idea what was going on inside…

“Rest assured, however, this operation is completely legal and regulated by the SEC.

“Here’s how it works…

“Thanks to this operation’s location (in the heart of Silicon Valley), and business dealings, these guys routinely receive the right to purchase massive volumes of pre-IPO shares.

“I’m talking about warrants to buy hundreds of thousands of shares — from over 1,000 different tech firms.

“These warrants are essentially like options. They give this operation the right to buy shares of these tiny tech firms at a significant discount — even if they’ve already gone public and exploded in price. ”

And yes, it might sound a little crazy that you could buy that kind of early stage investment — after all, the venture capital world is indeed largely dominated by big funds that, similar to hedge funds, charge high fees and court only institutional investors and extraordinarily wealthy individuals.

But there’s a little section of Copeland’s letter that provides us with a little map we can use to find the path to some clearer thinking:

“When Netflix IPO’d, for example, Merrill Lynch did the honors. The stock went public at $15. Today, it’s worth about $120.

“Merrill Lynch made millions.

“If the same thing happens to Gamefly, these 78 cent shares could immediately be worth 1,823% more…

“With a potential return of 15,284%.”

What am I talking about? Merrill Lynch. Yes, we need to remember that a lot of the big investment banks (and small ones, for that matter) are either venture capital investors themselves, or get warrants or shares in exchange for investment banking services (including IPO transactions). And many investment banks, including Merrill, can be owned by investors (OK, you’d have to buy Merrill Lynch by buying Bank of America shares now … but when Netflix IPO’d you could have certainly owned Merrill the stand-alone investment bank).

But perhaps more importantly, no one was buying Merrill just to get access to Netflix shares… and if Merrill Lynch did indeed “make millions” from either investment banking or warrants in Netflix as a result of their business relationship, it probably didn’t move the needle for Merrill’s earnings in any significant way.

Copeland says that this stock owns similar warrants in 1,000 or more small silicon valley companies, and they didn’t get those warrants in exchange for ham sandwiches and hot coffee — they got them in exchange for investing in these start-up companies or lending them money. So you clearly need to have several very profitable IPOs or other “exits” (those would be the ones you hear about, like Netflix or, potentially, Gamefly) to make a lot of money on venture capital investing, since the assumption always has to be that most startups will eventually burn through all their money, fail to find a buyer or entice investors or generate any revenue, and quietly disappear (those are the ones you never hear about).

So that’s some of the “caveat” stuff for this one, just sharing it up front in case you were too excited. Want to know who the company is that owns warrants on all these stocks (yes, including SPSC and Gamefly and the others)?

That must be: SVB Financial (SIVB)

That’s the holding company for Silicon Valley Bank, which is essentially a business-focused bank in the Valley, but also under the umbrella are several venture capital and investment banking-type operations. This is certainly a bank, to the extent that they did even take a bit of bailout money from the federal trough a while back (which they repaid, I think), and they are profitable if a bit expensive — it’s a small financial company, with a market cap of just under $2 billion, and they trade at a price/book of about 1.5 and a trailing Price/Earnings ratio of about 26 (analysts think they’ll grow earnings, so the forward PE is 17). About 10% of the shares are sold short, and almost all the shares are owned by institutional investors.

And yes, SIVB does hold warrants to buy SPS Commerce at about 98 cents — the exercise price is actually 97.875 cents per share, and the initial grant of warrants was made in 2004, giving SIVB the right to purchase 20,435 shares at that price before the warrants expire in May of 2011. So that is hugely profitable, certainly, and if SPSC stays at this price ($10ish) or goes up before SIVB chooses to exercise their warrants, they’ll make a lot of money.

But to keep it in perspective, that’s just one example from the 1,000+ deals they apparently have in their portfolio, and it’s only about $180,000 in profit at this point if I’m doing my math correctly (they may have other batches of warrants on SPSC as well, didn’t check) — that would be a huge percentage gain, but in the end it’s worth remembering that SIVB has about 41 million shares outstanding, so that’s less than a half cent per share.

SIVB, at least according to recent filings, makes a lot more money lending money than they do investing, so interest income is a far more important part of their income statement than are their investments … and last quarter they made about $18 million, so you can see how they’d need a huge number of big-money warrant deals to move the needle in any considerable way for their investors … as, we can imagine, Merrill Lynch would have had to make a lot of great deals to be profitable back when they made money from Netflix’s early days, one good deal — even one great deal — doesn’t make a great investment bank.

So that’s just a little context for you — the clues lead me to SIVB and I’m pretty sure this must be Braden Copeland’s special secret IPO, but do remember that there are a bunch of layers between the IPOs they may profit from, and the profit that trickles down to SIVB shareholders — they could easily make 1,823% from Gamefly, but that doesn’t mean you will.

I haven’t dug all that deeply into SIVB’s books, but my initial impression is that the direction of interest rates and the rate of default of silicon valley businesses is going to do a lot more to predict their future than the performance of the IPO market (though all those factors may be intertwined) … so please feel free to share your thoughts if you’ve given these guys a look and can generate an opinion.

And yes, Copeland did tease some other stuff, including some other venture capital-style investments that pay dividends (SIVB does not), in the same recent ad — I’ll try to get to the others in the near future.

If you’re interested, you can see reviews of Stansberry’s Investment Advisory here (or share your own thoughts), and also a few reviews of the S&A letter that Copeland started out with, Inside Strategist.