A field guide to private placements

Joshua Brown tells you about Private Placements so that you don't need to do the hard lifting yourself.  As it turns out, its really quite simple

Because I'm in the business of helping people, I thought I'd offer up my own 3-step guide for stockbrokers when conducting due diligence on private placements:

Step 1:  Make sure you have a copy of the Private Placement Memorandum (also referred to as the PPM).  You're going to want to light this PPM on fire and drop it into a Hazmat dumpster at least five miles from your office.

Step 2: Tell the banker/firm owner/branch manager or whoever brought it to you to go fuck himself.

Step 3: Head over to Dunkin Donuts, get yourself a Coffee Coolatta.  Yes, I know they've got hundreds of calories - but you're worth it.  You've done some good this day.

And seriously, having been on the receiving end of too many of these pitches, I can pretty much concur with Josh. As he puts it

I've seen hundreds of private placements touted to brokers, never once have any of them resulted in smiles.

I don't mean most privates didn't work - I literally and actually mean that I've seen a zero-percent success rate and a one hundred-percent failure rate.

The company that raises the cash burns through it or steals it.  Then the updates stop coming and the brokers are left taking calls from customers wondering what's up.  Then the phone line at the company is disconnected.  Then the customers go to the regulators and the brokers get jammed up.

Every single motherfucking time.  It never fails.

I've seen fast food restaurant privates, home improvement privates, luxury resort hotel privates, Chinese privates, celebrity media company privates, clothing company privates, oil and gas privates, coal mining privates and on and on and on.  The one thing they all have in common is that they failed.  You've probably had the same experience.

So yeah, the bottom line is -

Private Placement?  Just Say "Fuck No".