I got my first big break on Wall Street at Lehman Brothers when I was 18 years old.
Lehman Brothers was a key player in the IPO market for over a century. An IPO is short for initial public offering. That’s when a private company lists its shares on a public exchange like Nasdaq or NYSE.
Lehman took some massive companies public, including Merrill Lynch in 1971.
From Lehman, I went to Cowen & Co. It was recently ranked one of the top IPO banks in the world.
And what I quickly learned from these firms’ deals was this: Follow the money.
For example… In 1995, all eyes were on a small tech company preparing to go public on the Nasdaq. That company was Netscape.
On the day it went public, Main Street’s IPO-day return was 108%… not bad at all.
But pre-IPO investors made 16,600% that day.
In fact, Netscape founder Jim Clark invested $3 million in the company while it was still private. And he made half a billion dollars on IPO day… that’s just shy of $1 billion in today’s dollars.
Now compare that to retail investors… Wall Street told them to buy on Netscape’s IPO day. And if they did, they would’ve turned $1,000 into $2,080.
But if they had the same opportunity as Clark, they’d have seen a windfall of $167,000.
Unfortunately, these private deals weren’t open to Main Street investors back then. Only high net-worth accredited investors had access.
So Main Street was stuck with Wall Street’s IPO-day table scraps… but not anymore.
Thanks to a rule change, everyday investors can access the same deals Clark used to make billions.
Wall Street’s Dirtiest Secret
If you want to move the needle on your net worth, you need to know the right way to buy IPOs…
It’s true that buying a company on IPO day can occasionally produce a decent return… Like the 108% Netscape gain I mentioned above.
But if you want to make gains like Jim Clark, you need to buy a company before it goes public – what I call a “pre-IPO.” That’s how you make 16,600%.
Buying an IPO is the path most retail investors take… while buying pre-IPOs is how Wall Street elites and well-connected Silicon Valley insiders make their fortunes.
Making the right choice can mean the difference between total financial freedom and working past your retirement age to stay afloat.
Let’s go back to Netscape…
Clark made his 16,600% return because he got his shares for less than a dollar. But On IPO day, when retail investors were finally allowed to buy Netscape, they had to pay at least $28 per share.
Netscape could do this because of the powerhouse firm behind it: Morgan Stanley. It was the banker that helped bring Netscape to market.
And by “help,” I mean Morgan Stanley made sure their favorite clients got a huge payday.
Here’s a quote from a 1996 article in The Standard-Times, a Massachusetts newspaper:
Like a sports fan awaiting World Series tickets, Robert Norsworthy had longed for one of the hottest tickets in the investment arena – shares of Netscape Communications Corp. when it finally went public…
But, as the Houston man would discover, last year’s IPO, or initial public offering of stock, stood more for “Important People Only.” “My Merrill Lynch broker told me ‘No way,”’ he said. “She couldn’t even get it for her larger clients.”
[He] had to forgo Netscape because the price jumped far out of his reach in the first trading day.
Why did Morgan Stanley keep out ordinary people like Robert Norsworthy?
So they could offload their 16,000%-gain stock onto you and say you got a great deal.
You crack a bottle of champagne and feel like Superman… while they fund their next mega yacht or vacation in Dubai.
It’s one of Wall Street’s dirtiest secrets.
Let’s look at another example…
In 1996, the biggest tech deal was Yahoo.
Sequoia Capital bought pre-IPO Yahoo shares at $0.37.
On IPO day, the value of the shares soared to $33. An 8,920% gain.
But what did IPO-day investors get?
Thanks to Goldman Sachs, the lead banker on the deal, they got shares for $24.50 and a 154% gain on IPO day.
Another example is Amazon…
In 1997, public investors in Amazon saw 31% on IPO day, while insiders saw 9,165% following the pre-IPO path.
And that difference gets even wider over time…
If you were incredibly disciplined and never sold, you would’ve made 11,200% as a retail investor in Amazon – an amazing move.
But it’s nothing compared to the 3,800,000% pre-IPO investors would’ve seen.
Same stock. Same holding period. A difference of tens of millions of dollars or more.
How to Get Your Seat at the Table
Pre-IPOs used to be the playground for Wall Street fat cats and Silicon Valley Insiders.
But thanks to some regulatory changes, Main Street investors like you can finally get a piece of those gains.
The problem is not every deal is created equal. As with any asset class, there are dozens of bad deals for every good one.
There also aren’t many opportunities for Main Street investors to invest in quality pre-IPO companies.
And it’s even rarer for a Wall Street powerhouse to back them.
That’s why I’m excited to announce that my team has uncovered a pre-IPO deal with major Wall Street backing… a firm with some of the most profitable opportunities of the past 150 years.
And the timing couldn’t be better…
This tiny company in the American Heartland is creating a revolutionary energy breakthrough.
Led by a legendary engineer and CEO, it has found a way to produce environmentally sound oil – without drilling and fracking – cheaper than anywhere else in the world.
So it’s no surprise that a Wall Street powerhouse has already written a check to become its largest shareholder.
I’ll give you all the details this Wednesday, March 23, at 8 p.m. ET at my first-ever U.S. Energy Independence Summit.
I’ll tell you which Wall Street giant has its backing (you’ll be surprised)… and I’ll show you can alongside this financial powerhouse… and at the same terms.
You can get into it at $1.25 per share. However, as with all private companies, shares are strictly limited.
One of the last private deals I recommended sold out in 12 hours. I expect this deal could go even faster.
So click here to reserve your seat at the table.
Let the Game Come to You!
Teeka Tiwari
Editor, Palm Beach Daily