“This company is about to IPO – for $100 Billion … If you follow the insiders you could turn every $1,000 you invest into $1,650 in the exciting weeks ahead.”
That’s the lead-in to the latest pitch from the Oxford Club folks, which, in short, tells us that facebook is going to IPO soon … but that the suckers will rush in to the IPO and lose money by buying at the top, and the smarties (like you and me, naturally), will be making far wiser investments that play off of that facebook enthusiasm.
They’d like you to subscribe to the Oxford Club, naturally, and if you do so they’ll tell you about their favorite ideas for getting rich from this “facebook effect.” Here at Stock Gumshoe, of course, we like to come up with those answers without falling prey to the lust-worthy output of the fine copywriters who toil in the newsletter world.
So let’s try to suss out some answers on our own, shall we?
What follows is the basic foundation of the argument from the shady figure (literally — they shadow his face to make him seem more mysteriou) who signs this letter and who calls himself “Lee McNeal,” a member of the Oxford Club but apparently not one of the analysts who we often hear from in that stable. I have no idea who he is, or whether or not he’s really an expert on silicon valley/venture capital investing.
“In a couple weeks, Facebook will officially become a public company. The next day, founder Mark Zuckerberg will ring the opening bell on the NASDAQ stock exchange. He’ll be worth $21 billion or so.
“And the insiders who got thousands of shares at the ‘grant price’ Facebook set ($29.73 a share) will soon be shopping for Bentleys and boathouses.
“That we all know.
“But the dirty little Silicon Valley secret is:
“On the day Facebook goes public… it will already be fully valued.
“There isn’t a single insider I’ve talked to who believes otherwise…
“If Facebook with its ticker symbol “FB” opens the day at, say, $50 a share, it should end the day at $60, maybe $70.
“Oh sure, it could go higher – because thousands of investors will be scratching at the door, itching to get their hands on some shares at any price…
“But the insiders know ‘FB’ is already ‘FV’ (fully valued).
“Early investors and the bankers squeezed out every penny for themselves – pre-IPO. Every insider knows it.
“Tim Keating, one of Silicon Valley’s sharpest venture capitalists, sees Facebook as ‘quasi-public already’ and its value has been fully realized in the private phase….
“Plenty of insiders will be getting rich from the OVERVALUED Facebook IPO.
“Plenty more insiders will be getting rich from UNDERVALUED companies poised to soar because of the IPO.
“We call these types of undervalued companies “remora stocks.” Like the little remora fish that ride whales and sharks, they stay in the shadows. They enjoy protection from danger. They get fatter and fatter – with almost no effort!”
That’s the pitch, then — suckers will buy facebook shares, but you should buy these “remora stocks” … I don’t know whether or not they’re right about this (Google, after all, was also called “wildly overvalued” when it IPO’d, to the extent that the shares went public at a depressed price of just $85, it’s easy to undervalue a company that has a dominant “mind share” if you’re not sure how the revenue will grow). But I do want to know what picks they’re flacking, so what are our clues?
The first one is a company that they say is “selling shovels to internet miners” …
“the announcement in February that Facebook had officially filed for an IPO sent certain remora stocks soaring.Are you getting our free Daily Update
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