The IPO Money Manager

But back then, long before I thought of myself as “The IPO Money Manager”, I rode around on my bike collecting glass soft drink bottles. I found them at construction sites, and on road shoulders. You see, when you bought soft drinks at the store, you paid a bottle deposit, and when you brought the bottles back to any store, you got 2 cents per bottle.

So in a sense, that was my start in the venture capital business, a precursor for “The IPO Money Manager” if you have a good imagination.

Home then was in New Orleans, and when you grow up in Louisiana and could start to walk, I walked around with a baby bottle in one hand and a crawfish in the other, not even thinking of collecting soft drink bottles yet.

Living in front of a large wooded area and on the edge of a dead-end street gave me and my friends a reason to ponder a new venture capital endeavor by building a snow ball (snow cone) stand to sell snow balls after school and on weekends in the hot weather months. We gathered some old gray boards near rot we found in the woods and some clean ones at construction sites and nailed them together as best we could at ages 11-13. An electric snow ball ice shaver and 4 quart bottles of different flavor syrup and presto we were in the venture capital snow ball business. (Oh, and we got the blocks of ice for free because one of the boys’ fathers was a milk delivery man and when he came home about 2pm, we confiscated the blocks of ice from his milk truck, hosed them off, and were in business with free ice.) (It’s too late to call the New Orleans Board of Health on me now.)

We shut the snow ball stand down after 3-4 months for other interests, but each of us boys netted $25 dollars profit after expenses. Again, learning how to make money. So this was my second venture capital adventure before becoming “The IPO Money Manager”.

Later in life I began my career as a financial planner with a large wire house firm in Houston. I didn’t know much then about stocks and bonds, so I scrambled to learn as much as I could as fast as I could. In a few weeks I learned the value of the growth of revenue and growth of earnings and their utmost importance in the growth of a company’s stock price. And that is the basis of my fundamental Einstein-like equation:

HR + HE = HSPA²

High Revenue Growth + High Earnings Growth = High Stock Price appreciation

Within my aggressive learning mode, I learned immediately and with trial and error and observation experience that IPOs, Initial Public Offerings, were a good nitch in equities to potentially see my formula hard at work. The earnings part was often not there, but I learned that high revenue growth and a disruptive business plan to get earnings were big keys to big price appreciation.

So, utilizing IPOs became a part of my equity plan most of my 35 years in financial services. I found the IPO gems then and continue to find the IPO gems now.

So, in a sense, no, matter-of-factly, I am “The IPO Money Manager” today. 

I buy IPOs when they are not IPOs. That is, once they begin trading. At that point they have become just common stocks.

I, “The IPO Money Manager”, look at every IPO that comes each week, with the exception of blank check companies, SPACS, and China stocks. I spend 2-4 hours studying an IPO before it comes public and begins trading. My research includes looking at their website, watching company presentations, googling for news stories, and reviewing every page of each prospectus, typically 200-450 pages each.

Oh, and it does not stop there. My ongoing monitoring once IPOs are common stock trading continues with me monitoring their earnings reports as a public company, press releases, speaking events, etc.

To be true to “The IPO Money Manager” status, this follow-up is central in earning and keeping "The IPO Money Manager” title with which I crowned myself, as others began to give me that nickname.

You see, I want big growth of earnings and big growth of revenue and a sound disruptive element to their peers in their business plan as these elements all add to the potential makings of a standout, at the top of the IPO price appreciation list for several years.

Often I set a price target on the IPOs that “The IPO Money Manager”, me, chooses to add to client equity portfolios. My targets are set prior to the IPO pricing date, and are often a 3-6 month target and 1 year price target. My theory as “The IPO Money Manager” is if you know where you are going, and how long it will take to get there, you have a better chance of success.

Here is an example of my tenacity regarding a medical device company that came public in August of 2019: After studying the company prior to the IPO first trading day, I was jumping up and down mentally thinking this was indeed a ‘hot’ IPO and was thinking it would likely open up between 30%-100%. My estimate was that from the $14 pricing it would likely trade between $30-$50 in the first 3-6 months. It opened, instead, just a little above $14 and went up slowly to the mid $15 range by afternoon. I did not buy in the morning and with 50 minutes before the market close, frustrated, I looked over my research notes again. I remained perplexed at the limp price action but remained convinced and convicted of my short term price target. I entered buy orders 20 cents below the IPO price and got filled 10-20 minutes before the market close. Part of my conviction was due to the revolutionary medical device technology, the FDA had approved 5 of their medical devices, the president of the company was adamant in his conviction to not make another medical device unless they could achieve with it a minimum 85% profit margin, worldwide sales, positive earnings coming public and my forward estimate of their 12 month likely earnings range, and therefore my aggressive price targets. After 1.5 years as a public company, this IPO as of February 11, 2021 hit a new high:

8/7/2019         $14             IPO Day

2/11/2021       $73            +421.42% (Actual new high)

6/07/2021       $93.91      +570.78% (Actual new high)

7/30/2021      $117.39     +738.5% (Actual new high)

8/27/2021      $134.11     +857.92% (Actual new high)

?/??/20??        $140          +1000% (Hypothetical future potential return if the stock reached $140)

9/27/2021      $180          +1,185.71% (Actual new high)

10/1/2021                         (split 2 for 1= two times the shares at one half the price)

11/2/2021      $99.27         +1,318.14% (Actual new high)

YES! And it is still a part of my “The New Galaxy” managed client account as of 11/15/2021, (see “The New Galaxy” tab on my website home page for more details).

So, as “The IPO Money Manager”, yours, this is basically (without telling you all of my secrets)
why “The IPO Money Manager”, me, should be part of your investment advisor family.

HR + HE = HSPA²

High Revenue Growth + High Earnings Growth = High Stock Price appreciation

P.S. I see IPOs, in general, as the opposite or final stage of the venture capital space occupied by many disruptive companies.

^{Past performance does not guarantee future results.}