That’s the headline behind the most recent ad for Penny Stock Fortunes, a small cap stock-picking newsletter run by Jonas Elmerraji at Agora Financial.
The spiel is all about a back-door way to get into the world of venture capital and buy in “before the IPO”, so it caught my eye because we’ve seen several similar teasers along these lines in recent weeks — from the “Alibaba backdoor” to the “President’s Stock Market” or the “Silicon Valley Bank” — all of which promised, in one way or another, a way to buy into hot new companies before they go public.
So what is it this time around?
Here’s the first part of the pitch:
“The truth is you can bag far higher returns, get rich a lot faster and beat the bankers to the punch well before they take home outrageous fees for taking a company public.
“Get in before the bankers… while the companies are still private… at a huge discount.
“And if you win, the rewards could be life-changing.
“In fact, you may even laugh when ‘all’ you get is a triple.
“And 10-baggers may not even excite you that much.”
So what is this investment he’s teasing?
“… recently… a few savvy Silicon Valley venture capital pros started a firm that lets you play private companies and potentially make absurd profits when they go public.
“In short, they created a way for regular Americans like you and me to level Wall Street’s playing field and trounce the bankers….
“Because of this little-known firm, now you could play some of the most valuable tech startups in the world… BEFORE they go public….
“All you have to do is buy one security and you’ll have SEVERAL chances to hit a grand slam.”
We’re told that this firm being teased held both facebook and Twitter, which despite their ups and downs have certainly been huge winners for early stage investors… and that they’re currently holding some red-hot private companies that are just itching to make us rich. More from teh ad:
“Palantir is just one of 49 companies you could play before they go public.
“And the best part is that you can get in dirt-cheap. A piece of Palantir could be yours for about 21 cents through this unique business development company.
“Meaning you could be set up for a potential windfall in 2014, as Palantir could soon file for an IPO.
“Now you have the potential to make 10, 20 or even 50 times your money if the IPO pops. Maybe even much more.”
So yes, like a couple of the stocks we looked at last week this is a Business Development Company — but it’s one of the rare ones that is not focused on lending money and paying dividends.
Which one? Well, let’s dredge the moat for a few more clues:
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“… this specific BDC is run by experienced technology insiders.
“Among them is a board member of Apple…
“Another is the former head of George Soros’ private equity portfolios….”
And a couple more of their hot portfolio companies that they say you’re paying about 21 cents each for, with Dropbox and Jawbone among the named ones…
“In October 2011, Dropbox was valued at $4 billion, but about two years later, it was valued at $10 billion. So obviously, private investors are valuing their growth.
“But the best part is an IPO could unlock the true value of Dropbox”
And of course, the ultimate money-maker in recent years (for investors, at least — I don’t want to imply that the company itself has actually made any real money) has been Tesla (TSLA). So that’s part of the lure, that you might catch the next ballistic missile of a stock:
“… if you could have gotten into Tesla before it went public, the gains could have potentially been enough to retire on.
“You could have that opportunity available today. You can play Jawbone, along with Palantir and Dropbox… for about 21 cents each!”
So what is this firm that lets you buy some hot names like Jawbone, Palantir and Dropbox for 21 cents? Thinkolator sez it’s: GSV Capital (GSVC)
You may well have heard of GSV Capital — particularly around the time of the facebook IPO or, more recently in the month before the Twitter IPO, because they are a big TWTR owner.
Actually, that’s not really true — they are a small Twitter owner in the grand scheme of things, they own less than one half of one percent of the company, but Twitter is a huge part of GSV’s portfolio and is by far their largest holding. The portfolio is very top-weighted in general: Twitter, Dropbox and Palantir together account for more than 50% of the value of the portfolio, the top ten holdings account for about 80% of their net asset value, and they have a large number of investments that are just 1-2% positions. You can see the distribution of their portfolio here, they say they’re focused on the Cloud, Social/Mobile, and Education, with a secondary focus on sustainability/alternative energy and internet commerce, but it strikes me that the bet on new education technology is their biggest sector bet, with lots of companies in the portfolio (they sponsored a big education tech conference and gave an interesting keynote, you can see the slides here to get more sense of where they think the world is going). There are other household names in their portfolio, they still own a tiny slice of facebook and they have positions in Spotify, Coursera, Gilt Groupe and a few others that you might have heard of. Eight of their portfolio companies (out of 52) are now publicly traded.
And yes, they are an investor in Jawbone, which is often touted as a potential winner of the move toward wearable computing — though that’s one of their smallest holdings at 0.3% of the portfolio.
GSV trades at a substantial discount to what they call their net asset value, which is a combination of the easily ascertained value of their publicly traded investments (like Twitter shares) and the difficult-to-value holdings in early-stage private companies, which don’t seem to get updated as frequently — those might just update when there a