That's how Peter Mallouk handles investing in newly public companies for his clients. The founder and president of Creative Planning, Mallouk manages $40 billion in wealth for clients with anywhere from $500,000 to more than $100 million in assets. Barron's also named him theIf one of his clients is intrigued by a new stock like Uber, Lyft, or Peloton, he tells them to wait a year so they can learn more about the company's business.
Companies are required by law to disclose far more information about their businesses once they file for an IPO and go public, while standards for private companies are much lower. Mallouk says some investors take brutal advantage of this, which makes it essentially a stroke of luck that the public didn't lose a lot of money"It's also an example of the crap that Wall Street will dump on the American public," he said.
"You want the stock to go through some public scrutiny," he said. "We can usually invest at a lower price and having a much better understanding of what the company is about once it's had to go through a few quarterly calls and we see what the insiders do.", which will almost always drive the stock price down for a time. How much they sell can be an important indicator of how much confidence people with the most knowledge have in the stock.
That's certainly been the case this year, even though the poor performance of several unicorn IPOs has caused some alarm.That list of concerns might create the impression that Mallouk wouldn't invest in a company that's losing money, or that he steers clear of the private market. He says that's not the case, and he's not opposed to putting a client's money in a company that's unprofitable as long as it has a path to making money in the future.
Why are we calling companies that bleed billions a day, have faultering business models, toxic work cultures, etc ‘unicorns’?
In UBER I trust