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What are good books to help me invest in value plays?
The first book I would read (and, if you have already read the book, it is probably worth reading again) is One Up on Wall Street, by Peter Lynch. Lynch was the famed money manager of the mega Fidelity Fund.
Basically, he provides easy-to-understand analytical tools to make money from undervalued companies. Also, he recently wrote a revision to the book that - interestingly enough - talks about Internet stocks.
Next, take a look at The Vulture Investors (revised edition), written by Hilary Rosenberg. This is a fun read. Basically, you get a history of the legendary vulture investors, such as Michael Price, Carl Icahn and Sam Zell.
It is also critical that you have a firm understanding of balance sheets, income statements and cash flow statements. A good book on the subject is Understanding Balance Sheets, written by Thomas Friedlob and Franklin Plewa. The book is clear and concise and covers everything you need to know, such as cash, inventory, long-term debt, payables, receivables and so on.
How do I find out about public companies that get private financing, such as through PIPEs, equity lines and convertibles?
At internet.com, we have a newsletter called VC Buzz, written by Mary Evelyn Arnold. It's a daily run-down on the latest deals in the VC world. It is a great way to see what the "smart money" is doing. And yes, you'll see PIPEs, equity lines and convertibles. To get more info on VC buzz, click here.
Do you plan to write any more articles on rollup opportunities?
Absolutely. I intend to write a piece at least every month surveying the latest deals and seeing which ones look promising. Also, next week I will write an article on reverse mergers, which I predict will become a much more common form of financing for high-tech companies.
I got the following note, which clarifies the parameters of PIPEs:
Just a note regarding PIPEs, that I believe you may not have gotten totally right. In most PIPE transactions the selling company gets the money upon closing. The investor is locked up until the stock is registered.
Finally, Harlan Kleiman, the CEO of Shoreline Pacific Institutional Finance (which deals primarily with PIPEs), had this to say:
A popular misconception is that a company is in dire straits if they utilize a PIPE transaction. This is inaccurate. Private placements are alternative investments to the public market.
Private placements can be an excellent vehicle for companies to raise cash. It is imperative, however, that the company understand what type of deal structure and investor is best for it.