By Thom Calandra
The only difference between the stock market and the race track is ... in the market, you get to watch 'em come 'round again.
-- My friend and fellow journalist, Walter K. Lopez
Years ago, when I was a freshly scrubbed newspaper reporter, a close friend showed me how deceit and greed work together to pull off a neat hat trick.
I think my pal's dem
onstration sets the stage for this book, an actionable bullet list of fiscal tricks favored by the planet's most cunning money merchants. One or two of the maneuvers barely, just barely, trace what's legal in financial markets. But that's OK. Trust me.
I'll get to my friend's demo, a cute little stunt actually, in a moment. But first, I'd like to pull the curtain back, so you can see whether you want to buy into Actionable & LARGE and the principles of the buyside code.
At the heart of this book is what I call the golden ticker: a buyside code of protocols that investors must crack if they are to swipe their chosen stock at the right price, and from the very laptops of the silk-suited money merchants who control large blocks of it. Those merchants are hedge fund managers, mutual fund chiefs and asset wizards of one type or another. They are geniuses at what I call Pump, Stump & Win, the art of talking up their own buyside book of dirt-cheap stocks, talking their own portfolios up BIG, whenever they have a podium, then stumping the Wall Street analysts, confounding the brokerages and doink, the dunce-capped experts and in-the-dark journalists as their anointed stocks levitate to the clouds ... and sometimes beyond.
But these market sorcerers make mistakes too: big blow-up boners. That's what makes the buyside code actionable, as we'll see in a moment.
I intend to show how many investors have no idea how to make money, especially big money, in markets. Few ordinary Joes and Josephines, working their bums off to make ends meet, can tell us what it means to master the buyside code and apply it to their holdings.
The only difference between the stock market and the race track is ... in the market, you get to watch 'em come 'round again.
-- My friend and fellow journalist, Walter K. Lopez
Years ago, when I was a freshly scrubbed newspaper reporter, a close friend showed me how deceit and greed work together to pull off a neat hat trick.
I think my pal's dem
onstration sets the stage for this book, an actionable bullet list of fiscal tricks favored by the planet's most cunning money merchants. One or two of the maneuvers barely, just barely, trace what's legal in financial markets. But that's OK. Trust me.I'll get to my friend's demo, a cute little stunt actually, in a moment. But first, I'd like to pull the curtain back, so you can see whether you want to buy into Actionable & LARGE and the principles of the buyside code.
At the heart of this book is what I call the golden ticker: a buyside code of protocols that investors must crack if they are to swipe their chosen stock at the right price, and from the very laptops of the silk-suited money merchants who control large blocks of it. Those merchants are hedge fund managers, mutual fund chiefs and asset wizards of one type or another. They are geniuses at what I call Pump, Stump & Win, the art of talking up their own buyside book of dirt-cheap stocks, talking their own portfolios up BIG, whenever they have a podium, then stumping the Wall Street analysts, confounding the brokerages and doink, the dunce-capped experts and in-the-dark journalists as their anointed stocks levitate to the clouds ... and sometimes beyond.
But these market sorcerers make mistakes too: big blow-up boners. That's what makes the buyside code actionable, as we'll see in a moment.
I intend to show how many investors have no idea how to make money, especially big money, in markets. Few ordinary Joes and Josephines, working their bums off to make ends meet, can tell us what it means to master the buyside code and apply it to their holdings.
I'll do my best to illustrate these (entirely legal) concepts:
1. Pump (Promote), Stump (Confound the Experts) and Win
2. Secure "Inside" Information, Legally (Getting Your Phone Calls Answered)
3. Bet A Bunch When You've Got a Hunch (Actionable & LARGE!)
4. Do What the Executives Do, Not What They Say (Magic of Form 4s)
5. Use extended market trading to seize on the mistakes of the crowd
6. Reap EXTREME Gains from Reverse Transfers and Penny Stocks (EXTREME RISK!)
7. Profit from Dilution and Other Enemies of the Shareholder
8. Benefit Big from PIPEs (Private Placements) and SPACs (Special Purpose Acquisition Corporations)
9. Discover Who Else Holds Stock and What They Really Think
10. Steal The Stock: Buy LARGE When Everyone Else Is Selling (CRACKING THE BUYSIDE CODE!)
This nonfiction book will demonstrate as well why the financial press is practically worthless to the common folk. I'll examine, for instance, why fair disclosure rules and other recent re-toolings of the system are stock market sleights of hand that most garage investors interpret absolutely the wrong way.
Many of the maneuvers, such as year-end stock crosses between hedge and mutual funds, are not likely to be in the repertoire of my intended audience: ordinary folks in their garage lofts, using their laptops to add a unit or two to their net worth and retire in style, get the grand-kids some extra tuition cash, or maybe pay off their small slice of the national debt. I'll show how to execute your own fund-to-fund crosses to save on taxes and keep your portfolio dreams intact.
What's more, much of the buyside code is hidden behind curtains, shielded by secretive hedge funds and venture capitalists, or by mutual fund bureaucracy, and again left unreported by those, doink, those dunce-cap financial writers and beat reporters. Case in point: no one I know is reporting on the great advantages of using extended market trading to benefit from quarterly earnings blow-ups and other bad (and seemingly) positve corporate news.
There's drama, too. And sweet, sweet music. Maybe not on a Broadway scale, but who needs "Spring Awakening" when you're cracking a big-money code?
The other rainy day here, on the lip of Richardson Bay within wind-assisted spitting distance of the Golden Gate Bridge, I was dutifully dropping off our little girl at her grade school just north of our home in Tiburon, California. Once back home, what do I see on my little Queen of Toshiba computer screen, which sits cuddled into a corner of our family room? Shares of one of my absolute deadbeat stocks of this new century, Airspan Networks, were hitting the skids yet again.
Now, if I told you that from time to time, I had bought shares of this microscopic telecommunications company from Florida at $4.50 apiece ... and that over a couple of years' time, they had withered to $1 (rainy January 2008), would you bother continuing with this book? Well, guess what? The expert money merchants were buying the stock BIG at $2 a share (Autumn 2007), in what Wall Street calls a secondary stock offering of 15 million shares.
1. Pump (Promote), Stump (Confound the Experts) and Win
2. Secure "Inside" Information, Legally (Getting Your Phone Calls Answered)
3. Bet A Bunch When You've Got a Hunch (Actionable & LARGE!)
4. Do What the Executives Do, Not What They Say (Magic of Form 4s)
5. Use extended market trading to seize on the mistakes of the crowd
6. Reap EXTREME Gains from Reverse Transfers and Penny Stocks (EXTREME RISK!)
7. Profit from Dilution and Other Enemies of the Shareholder
8. Benefit Big from PIPEs (Private Placements) and SPACs (Special Purpose Acquisition Corporations)
9. Discover Who Else Holds Stock and What They Really Think
10. Steal The Stock: Buy LARGE When Everyone Else Is Selling (CRACKING THE BUYSIDE CODE!)
This nonfiction book will demonstrate as well why the financial press is practically worthless to the common folk. I'll examine, for instance, why fair disclosure rules and other recent re-toolings of the system are stock market sleights of hand that most garage investors interpret absolutely the wrong way.
Many of the maneuvers, such as year-end stock crosses between hedge and mutual funds, are not likely to be in the repertoire of my intended audience: ordinary folks in their garage lofts, using their laptops to add a unit or two to their net worth and retire in style, get the grand-kids some extra tuition cash, or maybe pay off their small slice of the national debt. I'll show how to execute your own fund-to-fund crosses to save on taxes and keep your portfolio dreams intact.
What's more, much of the buyside code is hidden behind curtains, shielded by secretive hedge funds and venture capitalists, or by mutual fund bureaucracy, and again left unreported by those, doink, those dunce-cap financial writers and beat reporters. Case in point: no one I know is reporting on the great advantages of using extended market trading to benefit from quarterly earnings blow-ups and other bad (and seemingly) positve corporate news.
There's drama, too. And sweet, sweet music. Maybe not on a Broadway scale, but who needs "Spring Awakening" when you're cracking a big-money code?
The other rainy day here, on the lip of Richardson Bay within wind-assisted spitting distance of the Golden Gate Bridge, I was dutifully dropping off our little girl at her grade school just north of our home in Tiburon, California. Once back home, what do I see on my little Queen of Toshiba computer screen, which sits cuddled into a corner of our family room? Shares of one of my absolute deadbeat stocks of this new century, Airspan Networks, were hitting the skids yet again.
Now, if I told you that from time to time, I had bought shares of this microscopic telecommunications company from Florida at $4.50 apiece ... and that over a couple of years' time, they had withered to $1 (rainy January 2008), would you bother continuing with this book? Well, guess what? The expert money merchants were buying the stock BIG at $2 a share (Autumn 2007), in what Wall Street calls a secondary stock offering of 15 million shares.
The reason why Airspan stock (AIRN on Nasdaq), on what Lemony Snicket might call this awful terrible wonderful day, was getting its stock market bum smacked was an unknown to 99 percent of the planet. The zero-point-zero-zero-zero-zero-one of the planet who actually cared about this little maker of so-called WiMAX Internet equipment, they were clueless about the stock's precipitous drop as well. And then there was me. I knew the reason Airspan shares yet again were under assault was because some vast and storied venture capital firm was breaking up the partnership and selling its shares -- "sloppy, like a pig," one of my hedge fund friends had told me when I called seeking the lowdown on the low down. 
Translation: The bipolar stock had become paper origami and in no way represented a company that was providing the parts necessary for wireless broadband networks in the 3.65 gigahertz band.
The fund most likely ditching its Airspan shares, according to my research Sevin Rosen Funds in California's Silicon Valley, not far from where we live, was once part of a superstar venture firm. Sevin Rosen Funds famously sank money into Compaq Computer Corp. and Lotus Development Corp. more than 20 years ago, and that money gushed higher than an east Texas wild well. Now, Sevin Rosen's main honchos were packing their bags -- presumably dissolving the partnership after many profitable years. But at least two of the firm's venture funds had owned Airspan since at least as far back as Valentine's Day of 2001, and probably longer than that. The prices those funds paid for shares of the troubled company, A LOT of shares, almost 1.5 million shares as far as I could reckon, were a lot higher than my $4.50 a share. At least, back then.
On that wet January morning of 2008, I plunked down another $10,000 and change for yet another 10,000 shares of what I figured were Sevin Rosen's Airspan stock, just when the stock was sinking lower than Tijuana's poverty line, to $1. There was absolutely zero news under the Airspan ticker about some VC fund liquidating its position in the company.
As I had done numerous times before, I had cracked the buyside code and gotten actionable and LARGE. Cheap stock. Distressed seller. No news. Tell me these days who actually tries to discover the identity of their desired stock's SELLERS, and I'll show you a stock market Sherlock, worthy of their detective license.
To be sure, I was holding a dirt-cheap stock. I was still losing money on this, after a couple of years. My average price for 50,000 or so shares was still higher than $2, and the stock was selling for about $1. I had scooped up the 10,000 shares for $1.09 each.
But as my Dad used to say after he'd worked 18 hours straight driving an 18-wheeler, then come home and taken a steaming hot shower, "I feel like a million dollars." I didn't care if the stock went below $1. (Airspan shares the next day were trading at $1.27, but the story there is far from over, and I’m not going anywhere.) In fact, if the stock kept bailing, I'd probably buy more, knowing what I knew about Airspan's WiMAX telecom boxes, base stations and rigorous standards testing and certifications. I mean, for the sake of sweet Mother Mary, the Nasdaq-traded shares were selling for less than 75 percent of total revenue, and the company had just raised, what, $30 million?
I was practicing what I preached: stealing someone else's stock at giveaway prices, swiping it right from their fat-assed, money-losing portfolio.
My very, very good friend and best man at my wedding, Dave, who had just left his years-long position as a buyside banking analyst at a large San Francisco hedge fund, said to me over herbal tea the next day at our favorite Boulange, "Thom that's not stealing. That's Wall and Broad streets." Whatever. I went into the other room after the Airspan theft and dialed our family iPod to the soundtrack of the Broadway musical, "Spring Awakening." The song was "The Bitch of Living," and it was a rocker.
So I'll level with you. I still could be wrong about this one, this Airspan. Broadband WiMAX might turn into the washout of all time, the biggest boner since that little scooter that was supposed to eliminate cars from cities. All of these countries, such as Ghana and the Ukraine, adapting wide-area Internet broadband, installing their Airspan smart antenna systems and backhaul networks, just so they can avoid spending billions of dollars ripping up their roads and sewers, they might be dead wrong. But you know, I don't think so. I think I'm right. Otherwise I would not be writing this book.
In fact, some 10 days later, still January 2008, but sunny as California was made to be this day, Airspan stock was back to $1.10 or so a share in a terrible awful wonderful stock market bloodbath. So I bought another 10,000 shares, knowing that any Internet provider on a metropolitan/regional/countrywide scale had to make Airpsan its first choice for the innards of the broadband network it intended to erect. My friend Dave, who prefers chasing lofty dividends from massacred preferred-trust bank stocks, and who is very good at it, said to me a second time, over a cheese-melt croissant and some cauliflower soup at Boulange there in Strawberry Village, that this wasn't stealing, this buying stock at distressed levels, so please don't call it that.
Whatever.
For the record, it's not stealing when brokers, with a wink at the company, try to shake shares loose before a hugely positive news event? I knew one company that actually made calls to shareholders, looking for shares to "round up." The Canadian mining companies are especially good at this. I sometimes see a stock nose-dive before the filing of a 43-101 resource report, which by law must identify the geology of ore and mineral deposits at a site. Call the company and its execs won't say a thing, of course. But call an underwriter or a broker or what I call in this book a money merchant (promoters, financiers, investment bankers and so on) connected to the company and they'll say, 'Well, the 43-101 is due out.' Nothing else, just that.
The stock keeps falling, and those poor Bolsheviks out in the garage, living in some Indianapolis suburb that is about 11,000 miles from the prospective mine they've invested in, they're worried because the tuition money is going down the 43-101 drain pipe. When the company's resource report is finally released, it shows that 5 percent of all the planet's (pick one) gold/silver/platinum/copper is on the company property. The stock quadruples or does a quint in two days, and all those brokers and savvy folks who have actually visited the mine, they've bought all of the petrified garage-lofters' shares the previous day. That's not stealing?
The newspapers say the 43-101 mineral resource classification, which I consider a noble and necessary thing, was legislated after Canada's Bre-X Minerals scandal, when shareholders, many of them in North America, lost everything after the company's Indonesia mine proved to be an utter fraud. You see, to me that multi-billion-dollar swindle wasn't a scandal, what happened to gold investors in 1997. No. Bre-X was a scam, pure and simple, even ludicrous the way those corporate thieves and drunken geologists coated ore samples with cheap gold crumble from pilfered jewelry. What's a scandal in my book, in this book, is how knowledgeable and sometimes conniving money merchants steal my beloved garage-lofters' stock by playing coy or silent with what they know, or think they know.
That's the scandal. I am on this planet to show Joseph and Josephine G. Loft how to steal stock tat-for-tit.
Some of the maneuvers in this book, like diving into the Airspan junk heap for yet more shares, are extremely HIGH-RISK. Or perhaps buying what looks like a worthless shell company trading at 20 cents a share and watching it sink to 10 cents or pence or pesos or centavos ... before it kicks into high-dollar gear, that is. One or two of my strategies might be seen by some as disingenuous, such as promoting a stock's virtues out the gazoo and then selling the rug out from under it at the -- no, not the first, but the -- second sign of trouble.
And yes, for sure and certainly, I still consider having the resolve to chase after your losers when they're spitting gravel into your face, and hoarding as much of their stock as you can bear emotionally and financially, knowing all the while that the sellers are the ones who are distressed, not the company, I still consider that stealing. Or at the very least, victimizing the sellers.
All of the bullets in the buyside code we're going to crack in this book are actionable, and all of them have made me money. All of these maneuvers, might I add, have swept me off my feet in fits of joy and despair since I first opened a brokerage account 24 years ago.
In other words: without the heartache that comes with winning LARGE, there is no action, and without the action, there is no actionable.
-- Thom Calandra in Tiburon (See ThomCalandra.com)
Translation: The bipolar stock had become paper origami and in no way represented a company that was providing the parts necessary for wireless broadband networks in the 3.65 gigahertz band.
The fund most likely ditching its Airspan shares, according to my research Sevin Rosen Funds in California's Silicon Valley, not far from where we live, was once part of a superstar venture firm. Sevin Rosen Funds famously sank money into Compaq Computer Corp. and Lotus Development Corp. more than 20 years ago, and that money gushed higher than an east Texas wild well. Now, Sevin Rosen's main honchos were packing their bags -- presumably dissolving the partnership after many profitable years. But at least two of the firm's venture funds had owned Airspan since at least as far back as Valentine's Day of 2001, and probably longer than that. The prices those funds paid for shares of the troubled company, A LOT of shares, almost 1.5 million shares as far as I could reckon, were a lot higher than my $4.50 a share. At least, back then.
On that wet January morning of 2008, I plunked down another $10,000 and change for yet another 10,000 shares of what I figured were Sevin Rosen's Airspan stock, just when the stock was sinking lower than Tijuana's poverty line, to $1. There was absolutely zero news under the Airspan ticker about some VC fund liquidating its position in the company.
As I had done numerous times before, I had cracked the buyside code and gotten actionable and LARGE. Cheap stock. Distressed seller. No news. Tell me these days who actually tries to discover the identity of their desired stock's SELLERS, and I'll show you a stock market Sherlock, worthy of their detective license.
To be sure, I was holding a dirt-cheap stock. I was still losing money on this, after a couple of years. My average price for 50,000 or so shares was still higher than $2, and the stock was selling for about $1. I had scooped up the 10,000 shares for $1.09 each.
But as my Dad used to say after he'd worked 18 hours straight driving an 18-wheeler, then come home and taken a steaming hot shower, "I feel like a million dollars." I didn't care if the stock went below $1. (Airspan shares the next day were trading at $1.27, but the story there is far from over, and I’m not going anywhere.) In fact, if the stock kept bailing, I'd probably buy more, knowing what I knew about Airspan's WiMAX telecom boxes, base stations and rigorous standards testing and certifications. I mean, for the sake of sweet Mother Mary, the Nasdaq-traded shares were selling for less than 75 percent of total revenue, and the company had just raised, what, $30 million?
I was practicing what I preached: stealing someone else's stock at giveaway prices, swiping it right from their fat-assed, money-losing portfolio.
My very, very good friend and best man at my wedding, Dave, who had just left his years-long position as a buyside banking analyst at a large San Francisco hedge fund, said to me over herbal tea the next day at our favorite Boulange, "Thom that's not stealing. That's Wall and Broad streets." Whatever. I went into the other room after the Airspan theft and dialed our family iPod to the soundtrack of the Broadway musical, "Spring Awakening." The song was "The Bitch of Living," and it was a rocker.
So I'll level with you. I still could be wrong about this one, this Airspan. Broadband WiMAX might turn into the washout of all time, the biggest boner since that little scooter that was supposed to eliminate cars from cities. All of these countries, such as Ghana and the Ukraine, adapting wide-area Internet broadband, installing their Airspan smart antenna systems and backhaul networks, just so they can avoid spending billions of dollars ripping up their roads and sewers, they might be dead wrong. But you know, I don't think so. I think I'm right. Otherwise I would not be writing this book.
In fact, some 10 days later, still January 2008, but sunny as California was made to be this day, Airspan stock was back to $1.10 or so a share in a terrible awful wonderful stock market bloodbath. So I bought another 10,000 shares, knowing that any Internet provider on a metropolitan/regional/countrywide scale had to make Airpsan its first choice for the innards of the broadband network it intended to erect. My friend Dave, who prefers chasing lofty dividends from massacred preferred-trust bank stocks, and who is very good at it, said to me a second time, over a cheese-melt croissant and some cauliflower soup at Boulange there in Strawberry Village, that this wasn't stealing, this buying stock at distressed levels, so please don't call it that.
Whatever.
For the record, it's not stealing when brokers, with a wink at the company, try to shake shares loose before a hugely positive news event? I knew one company that actually made calls to shareholders, looking for shares to "round up." The Canadian mining companies are especially good at this. I sometimes see a stock nose-dive before the filing of a 43-101 resource report, which by law must identify the geology of ore and mineral deposits at a site. Call the company and its execs won't say a thing, of course. But call an underwriter or a broker or what I call in this book a money merchant (promoters, financiers, investment bankers and so on) connected to the company and they'll say, 'Well, the 43-101 is due out.' Nothing else, just that.
The stock keeps falling, and those poor Bolsheviks out in the garage, living in some Indianapolis suburb that is about 11,000 miles from the prospective mine they've invested in, they're worried because the tuition money is going down the 43-101 drain pipe. When the company's resource report is finally released, it shows that 5 percent of all the planet's (pick one) gold/silver/platinum/copper is on the company property. The stock quadruples or does a quint in two days, and all those brokers and savvy folks who have actually visited the mine, they've bought all of the petrified garage-lofters' shares the previous day. That's not stealing?
The newspapers say the 43-101 mineral resource classification, which I consider a noble and necessary thing, was legislated after Canada's Bre-X Minerals scandal, when shareholders, many of them in North America, lost everything after the company's Indonesia mine proved to be an utter fraud. You see, to me that multi-billion-dollar swindle wasn't a scandal, what happened to gold investors in 1997. No. Bre-X was a scam, pure and simple, even ludicrous the way those corporate thieves and drunken geologists coated ore samples with cheap gold crumble from pilfered jewelry. What's a scandal in my book, in this book, is how knowledgeable and sometimes conniving money merchants steal my beloved garage-lofters' stock by playing coy or silent with what they know, or think they know.
That's the scandal. I am on this planet to show Joseph and Josephine G. Loft how to steal stock tat-for-tit.
Some of the maneuvers in this book, like diving into the Airspan junk heap for yet more shares, are extremely HIGH-RISK. Or perhaps buying what looks like a worthless shell company trading at 20 cents a share and watching it sink to 10 cents or pence or pesos or centavos ... before it kicks into high-dollar gear, that is. One or two of my strategies might be seen by some as disingenuous, such as promoting a stock's virtues out the gazoo and then selling the rug out from under it at the -- no, not the first, but the -- second sign of trouble.
And yes, for sure and certainly, I still consider having the resolve to chase after your losers when they're spitting gravel into your face, and hoarding as much of their stock as you can bear emotionally and financially, knowing all the while that the sellers are the ones who are distressed, not the company, I still consider that stealing. Or at the very least, victimizing the sellers.
All of the bullets in the buyside code we're going to crack in this book are actionable, and all of them have made me money. All of these maneuvers, might I add, have swept me off my feet in fits of joy and despair since I first opened a brokerage account 24 years ago.
In other words: without the heartache that comes with winning LARGE, there is no action, and without the action, there is no actionable.
-- Thom Calandra in Tiburon (See ThomCalandra.com)
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