Tuesday, June 24, 2008

The Rare Investor

99.99% of Internet TV companies have lost over 50% of their values after going public. Almost all have lost 75%.

What does this tell you? Well, the market makers would rather believe a liar with a hole in the ground (or mining stocks as they’re often called), or to go short than invest in the future. It might also tell you that these stocks aren't any good and have bad management.

Whatever, shorting is so much easier than going long and your gains are so much larger. So, the result is that micorcaps in this sector are totally, totally screwed.

As a result, if you turn over under $500m and aren’t growing at 20% pa, don’t even think of going public. Your advisers will laugh all the way to the bank and your shareholders will cry as they reach out to the same institution to cash in their losses The markets in the US are biased against growth and indulging in them is a bad mistake under any circumstance, I’d say. You’ll do better, but not much better in London. But doing better means no liquidity and loosing over 50% of your company’s value in a short period.

Anyone working in this space should work towards a trade sale. The public markets are effectively moribund... Whilst the market makers applaud the frauds, cheats and thieves who make up our public markets these days.

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