A Groupon for Stocks?
- Joshua M Brown
- February 7th, 2011
When I’m not leaning against wet paint, singing Def Leppard songs in the shower or drinking diet ginger ale, I think deeply. And out of the million or so instances in which I am in deep thought, every once in a while, something interesting and possibly actionable comes out of it.
My latest idea is for a Groupon-like service in which traders and investors across the country can band together and be issued deeply-discounted shares in a stock.
Imagine an email inviting you to grab a quick 7% discount on shares of Nvidia ($NVDA) or Tractor Supply Co ($TSCO)? And you didn’t have to be the full price-paying client of a certain broker or at a Connecticut hedge fund or little Scotty Blankfein’s college roommate (made him up, but you know).
It would almost be like a reverse secondary offering:
1. The network is in touch with a bunch of small to mid cap companies
2. These companies are not necessarily looking to do an actual secondary offering, but would be interested to offload treasury stock or shelf offering shares (but without the hassle of regulatory filing or the typical 10% i-banker fees)
3. Offers are put out to everyone on the network with a specific discount to market price – take it or leave it, first come first serve
4. The network can then approach the company and make their offer, the deal would be like an unsolicited PIPE (Private Investment in a Public Equity) as no investors had shares “sold” to them by a broker or company rep
5. As smaller companies begin participating, the big stocks will start to take notice and ask themselves why they bother dealing with bankers and paying underwriting fees when investors are coming directly to them in a democratized reverse-inquiry process
6. Me and whoever runs with this idea collect a nobel prize or get a lunch with Art Cashin or something (I would def wear suspenders and one of those two-tone shirts with the white collars at that lunch and it better be at The 21 Club)
I don’t know, aside from that last bit of ridiculousness, can’t or shouldn’t this be done somehow? What am I missing?
And if you like my idea get in touch
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.