What is an IPO?
An IPO is an (Initial Public Offering), also referred to as a “public offering.” In our opinion, it should be labeled as UPO – or an Unfair Public Offering. It is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be issued by large, privately-owned companies looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps the issuer determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.
Let’s take Facebook as an example, which was most one of the most highly anticipated IPOs of all time…
Morgan Stanley was the lead underwriter for Facebook, or in other terms was the “Distributor” of shares to its choice of Investment Bankers. These investment bankers, in turn, sold their cut of shares to wealthy clients. YOU, being the average investor, are left in the cold unless you had an account at one of these special banks and had deep pockets.
Now here is where it gets nefariously unfair to you as an average investor:
The first day Facebook started trading, it immediately gapped up with a 14% premium over its $38 IPO price that all our rich friends were able to get. You, the average investor, are buying at inflated premiums while our rich friends are enjoying their easy 14% – and then dumping their stock on you!
All of this dilution drives the stock lower and lower, and you are the loser. Three months later, what is called the “Lock Up Period” is released, and then company insiders and angel investors are allowed to dump their basically FREE stock, which further plummets the share price! This sums up every IPO, even the new Twitter IPO (Unless You are the Special One that Got a Piece Before the Crowd).
Profit BIG From Special IPO’s!
A “Special IPO” is one of the best-kept secrets on Wall Street. I define a “Special IPO” as a brand new, publicly traded company or reverse merger that does not go through the traditional road show and underwriting that a traditional IPO undergoes. There are only 3-4 Special IPO’s a year and some years only 1 will take place. It’s a Phenomenon that only a handful of wealthy investors will know about, or can even find out about these “Special IPO’s.”
Why are these Special IPO’s so successful and why do they surge up so quickly?
- Simple Answer… they are basically the opposite of a Traditional IPO!
- They do NOT have underwritings. Remember, that’s where our rich friends get shares before it starts trading, and then dump it on us at a premium.
One website exclusively devoted to tracking and recommending these special IPO’s is IPOSociety.com . They track the market for these rare opportunities and then alert their subscribers to the latest picks. The site’s track record is pretty amazing. The last Special IPO that they alerted to members, three months ago, closed green 60 days of the first 64 days it traded and gave back 424% over that time!
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The hottest possible IPO right now is Allerayde SAB, Inc (ASAB). This is IPOSociety’s current stock pick. ASAB Is the LAST Special IPO scheduled for 2013 and you need to take action right now! Subscribers can potentially make thousands every day as this stock keeps rising higher and higher.
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CytoDyn Inc (OTCMKTS:CYDY) Regains Momentum After The Big Announcement
Now that the market seems to be coming back into his elements, it could be time for investors to start looking into penny stocks more closely. These stocks may often be risky, but if one makes the right choice, then the rewards could be enormous. One penny stock that could be put into the watch list at this point in time is that of CytoDyn Inc (OTCMKTS:CYDY).
The late-stage biotechnology company, which is developing the coronavirus medicine leronlimab, announced last week that it had filed a comprehensive application for uplisting on NASDAQ. The company announced that it believes that its application satisfies the myriad listing requirements of the NASDAQ Capital Market.
The Chief Executive Officer and President of the company Nader Pourhassan stated that while it is true that the entire process is expected to take many weeks, CytoDyn is hopeful of success in this matter.
He went on to state that a listing on NASDAQ will not only provide shareholders with more liquidity but also give CytoDyn much bigger access to fresh capital. It is a significant development for the company, and the market participants realized it as well. After the announcement was made, the stock rallied by as much as 50%. Investors could do well to keep an eye on the stock this week.
While the rally following this announcement was a welcome relief for the company, it is important to point out that earlier on in the week, the stock has fallen considerably following a setback. Last Monday, the company announced that the United States Food and Drug Administration handed CytoDyn a refusal to file a letter with regards to the usage of leronlimab to treat HIV.
However, at the same time, investors should be noted that the company did announce that it is confident of furnishing the agency with all the further details that have been demanded. It is one of the penny stocks that have performed remarkably well this year so far, and investors could keep an eye on it.
These 3 Pot Stocks Are Up Big Since May: What’s the Buzz?
Over the course of the past year or so, pot stocks had generally struggled, but during the past month, those stocks have recovered nicely. The stock market suffered a historic fall due to the economic turmoil caused by the coronavirus pandemic. It is believed that investors who are looking for value have descended on the beaten-down pot stocks. On the flip side, these stocks could also have been identified as defensive plays in an uncertain market environment.
That being said, it should be noted that despite the gains recorded by many stocks, most of those stocks are still considerably lower than the all-time highs. In such a situation, it could be worthwhile for investors to take a closer look at some of the strongest and more stable cannabis companies in the industry. Here is a look at three pot stocks that made significant moves in May and could be tracked by investors at this point.
1. HEXO Stock Jumps Ahead of Earnings
HEXO Corp (TSX:HEXO) (NYSE:HEXO) is one of those cannabis companies which have had a particularly tough time over the past year or so. However, the stock has emerged as one of the bigger gainers among pot stocks in recent trading sessions. The Hexo stock has gained as much as 120% over the course of the past month. The company is all set to release its financial results for the fiscal third quarter on Thursday, and hence, it could be a big week for the stock.
The recent surge in the Hexo stock may have come as a major boost to investors, but it should be noted that over the past year, it recorded considerable losses. The beaten-down nature of the stock may have contributed to the stock becoming more attractive for investors. However, the trajectory of the Hexo stock in the near term is going to depend a lot on its third-quarter earnings.
The company had made a loss of $298 million in the previous quarter, and while it is almost certain that it is going to make a loss again, the size of the loss is going to be keenly watched. Additionally, any writedowns are also going to be harmful to the stock. Investors should also keep an eye on sales growth.
2 Organigram gains Momentum on Value Buying
Organigram Holdings (TSX:OGI) (NASDAQ:OGI) is another pot stock that has made significant gains in the past month. Since May 13, the stock has gained as much as 80%. In April, the company announced its fiscal second-quarter results, but it had been a disappointment.
Revenues dropped by 13.7% year on year to hit CA$23.2 million, and losses widened to CA$6.8 million from CA$6.4 million in the prior-year period. However, one significant cause for optimism for Organigram investors is the fact that in the second quarter, cannabis 2.0 products made up as much as 13% of its revenue. That has opened up a whole new opportunity for the company.
Wholesale cannabis revenue made up 24% of the net, and that is again a new source of revenue. The company blamed the lower volumes of flower as well as cannabis oil for the drop in sales. Organigram reported cash and cash equivalents of CA$41.1 million as of February 29. Considering the fact that it has burned CA$25 million in the past six months, investors should not use that the cash balance does not paint a pretty picture.
3 Aphria Recovers Following Solid Earnings
Aphria (TSX:APHA) (NYSE:APHA), on the other hand, managed to perform relatively well in its fiscal third quarter. The net sales rose by as much as 19.7% sequentially to hit CA$144.4 million, and more importantly, the company also managed to record a profit for the third time in four quarters. On top of that, it should be noted that although the Canadian cannabis company spends CA$124.4 million on its operations in the nine months trailing that quarter, it still reported a cash balance of CA$515 million.
The performance seems to have buoyed market participants as well, and the stock has rallied by as much as 75% since the middle of May. One of the most important things that investors are going to be looking into is whether Aphria is going to be able to maintain its profitability.
However, due to the turmoil caused by the coronavirus pandemic, it might prove difficult. That being said, it should be noted that the pandemic is going to have an equally damaging effect across the sector.
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