Our Expert’s Hottest Opportunities For 2021
Earlier this week, while the rest of the market was obsessively following the battle between hedge funds and individual retail investors from Reddit, I was doing something different.
Something that’s definitely more worthy of your time — not to mention potentially profitable for you.
So while I could weigh in on the controversy over GameStop and several other beleaguered stocks, I think that’s best saved for another time. (If you haven’t been following, this article provides a decent summary.)
Instead, I read through the latest Predictions report from my colleague Jimmy Butts and his research team.
Now, this report has generated quite a bit of controversy in the past. Not even close to the level we’ve seen with this week’s saga, mind you. But when we began doing issuing a list of investment predictions, people told us we were crazy.
“You’re bound to be wrong sometimes,” they said.
“It’s going to kill your sales.”
But we think it’s important to alert investors to the market’s most pressing dangers and profitable opportunities. And since we’ve been doing this report for years now, this sort of attitude we got in the early days has faded.
I think that’s because it’s selling our readers short. At the end of the day, investors want clear, thoughtful, and profitable forecasts… They know you’re not always going to be right, and we didn’t have anything to hide.
So we decided “screw it,” and went ahead. As it turns out, investors have enjoyed reading our Predictions report. Everyone wants to get a handle on the future. And when they saw the thought that went into our analysis, not to mention that a good many (though not all) of our forecasts came true, it turned out to be a success.
In the following conversation, Jimmy and I talk about the latest high-upside recommendation he’s made over at Top Stock Advisor. We also discuss why we consider his report — 7 Shocking Investment Predictions For 2021 — required reading for growth-minded investors.
In a recent issue of Top Stock Advisor, you introduced readers to the world of SPACs. Tell us a little about what they are and why they’re worth a look…
Last year was the biggest year for initial public offerings (IPOs) in terms of proceeds, filings, and completed deals since 2014. Just look at the recent IPOs of Airbnb (ABNB) and DoorDash (DASH), which went public on December 9 and December 8, respectively. They came to the market sporting massive market capitalizations of more than $90 billion and $50 billion, respectively.
But it wasn’t just the size of IPOs that made 2020 unique. It was the rise in popularity of a special purpose acquisition company, or “SPAC”. Often called “blank-check companies,” 2020 was also a record year for SPACs.
Think of SPACs as sort of a “backdoor” into becoming a publicly-traded company. They are shell companies whose sole purpose is to raise money through an initial public offering to buy or merge with another (real) company.
Once a target company is identified, shareholders in the SPAC vote on the deal… and if it passes, the SPAC’s target does a reverse merger into the SPAC.
Once a SPAC lists on the public market, it typically has 18 to 24 months to identify and close a deal.
I’ll give you an example. The popular sports betting company DraftKings (Nasdaq: DKNG) went public in April via SPAC. First, shell company Diamond Eagle Acquisition (DEAC) raised money on the market, then merged with DraftKings and SBTech Limited, after which DraftKings began trading (essentially in the place of DEAC) as DraftKings (DKNG).
I realize it can be sort of confusing… but in the end, DraftKings was brought to the public marketplace through a merger with Diamond Eagle Acquisition.
Right now, a lot of individual investors are unfamiliar with SPACs. And those that do tend to think they’re risky. Are they right?
First off, SPACs aren’t anything new. They’ve been around for decades. They’ve just simply made a comeback of sorts. And one of the most well-known SPAC deals of all time goes back to 2017.
Back then, it was Chamath Palihapitiya — an early Facebook executive-turned venture capital investor who used his SPAC to merge with Richard Branson’s space-exploration company to form Virgin Galactic (NYSE: SPCE).
Fast forward to today, and Palihapitiya remains as board chairman. He’s sort of known as the SPAC “king” now, having raised six more SPACs. One merged with property tech company Opendoor (Nasdaq: OPEN), while another merged with health insurer Clover Health Investments (Nasdaq: CLOV).
Earlier this month, another one of his SPACs announced its acquired target company. And as you already know, that company is this month’s recommendation in Top Stock Advisor.
But you’re right to point out that SPACs can be highly speculative investments. And that’s why our pick will go into our Game-Changing Stocks portfolio, which is reserved for high-upside plays like this.
I believe this investment has great prospects, but it doesn’t come without risks. SPACs often see a lot of volatility as the transaction takes place and folks began understanding what the underlying company of the SPAC will be.
In this case, we already know. Our pick over at Top Stock Advisor could be a key player in revolutionizing the entire financial industry — from banking to insurance and much more.
But similar to a regular IPO, there’s a lot of fluctuation in share price as investors place a value on the company. So it’s pertinent to take smaller than normal position sizes when investing in more speculative plays like this one.
Why is it worth looking for a real “game-changers” like these?
Think about it like this… In today’s environment — where information, ideas, and technology are spreading at the speed of light —the opportunities are greater than ever. The very world is changing right before our eyes.
Think of everything we know today that has changed over just the course of a few years:
We have tiny computers in our pocket or purse that are capable of accessing virtually all of the world’s knowledge… Facebook became a household name… China transformed itself into a global power… the cord-cutting trend has taken over living rooms everywhere… Electric vehicles are commercially available… And we’re on the cusp of curing genetic diseases with DNA sequencing…
I could go on and on. But the important point is that I’d bet you wouldn’t have thought half this was possible a little more than a decade ago.
That’s why it’s important to periodically take a step back and think about the future. Where are things going? Anybody can offer an opinion, but if you really put some thoughtful analysis into this instead of spending all of your time investing in what you already know, you’ll be miles ahead of the average investor. That’s why we do things like our annual Predictions report.
I’m glad you mentioned that. You’ve long argued that high-growth opportunities have their place in a well-balanced approach. How does your report fit into that?
Yeah, this report is a little different than what we usually do… But if just a couple of these predictions come true — they could make a lot of money for investors. The upside is just too good to ignore.
You’re right to point out that these should have their proper place. They are, after all, predictions. While our annual Top picks report is full of more well-known picks based on fundamental research, our Predictions report allows us to put on our forecasting hats and think about the future.
Our entire goal with this is to uncover select opportunities that could become life-changing investments. Of course, to identify a groundbreaking idea, you have to be forward-thinking… and you have to go out on a limb.
You may not always be right. But if you allocate your investments properly, all it takes is a couple of these to pan out to really turbocharge your portfolio. If we can uncover just a handful of these gems before the rest of the crowd, the returns could be spectacular.
I’d like to thank Jimmy for joining me today. We’ll have much more to cover on some of the topics we discussed down the road…
As we mentioned, Jimmy’s brand-new report just went out to his subscribers, and it’s already creating a buzz with his readers.