The folks at RiskHedge are out with a new IPO-focused newsletter called IPO Insider ($2,997/yr is the promoted price), aiming to find “Hidden IPOs for Extreme Wealth” using Justin Spittler’s “SONAR” system for identifying the best IPO opportunities. Spittler used to write for a newsletter or two for Doug Casey’s firm, we’ve covered a few of his pitches in the past few years, mostly for cryptocurrencies and mining and marijuana stocks, but it sounds like he’s moved on to a new job.
And, naturally, the ad included hints about one of the IPOs they’re recommending — so I thought we’d chew on those a bit and see if we can get you started on your research.
The basic premise is that Justin follows his “proprietary system” for identifying the IPOs that are most appealing, and the dream is that this turns into you buying into the best new companies and eschewing the rest (which I guess would mean buying Beyond Meat and Roku, and skipping Uber and Slack).
That “SONAR” system breaks down like this:
“S” for “size” — he thinks that a market cap around $1.5 billion offers the most opportunity.
“O” for “organic growth” — companies who are growing revenue rapidly without acquisitions.
“N” for “network of bankers” — identifying the bankers who routinely underprice the IPOs they back and therefore give the company a chance to have what he calls a “lucrative honeymoon phase.”
“A” for “abnormal activity” you want to avoid — like companies whose insiders sell a lot of shares before the IPO, like WeWork or Groupon, or other odd warning signs.
“R” for “rapid growth” — which seems like they really just wanted to use the acronym “SONAR”… yes, of course, you usually want to buy a new company only if its growing quickly.
And he says that his back testing leads him to think there are about 10 IPOs a year where “SONAR” would give the “green light”… and they give a freebie recommendation of a soon-to-come IPO…
“The first company is called Rubrik.
“Rubrik is a private data management company that’s getting ready to go public….
“Justin’s research shows it should go public in the next 3 to 12 months. And he’s confident that, like the other Hidden IPOs we’ve shown you, Rubrik can jump 100% or more, right out of the gate.”
So you can keep an eye out for that one if you like, it doesn’t look like they’ve filed their S-1 yet (that’s the registration filing with the SEC that really starts the “going public” process, and usually includes the first ‘real’ numbers most investors will have seen from the company).
But the tease in the ad was for something else, a company that went public recently that you can buy now. Here are the hints from the pitch:
“A fantastic buying opportunity….
“Justin calls this company “the other search giant.”
“That’s because while Google gets the lion’s share of search engine traffic…
“This little known company provides the backbone for searches on some of the biggest websites in the world.
“So, when you search for