Wednesday, March 08, 2006

Buying Stocks before they Go Public

Is it really possible to buy stocks before they go public, without being a venture capitalist? Absolutely, I did it myself with Apple Computer. How, you might ask? Many years ago, when the Apple II Plus computer came out, I had read in Forbes Magazine that a closed end mutual fund, called the Nautilus Fund, invested a large chunk of money in, what was at that time, the private Apple Computer Corporation. Nautilus, in addition to owning regular publicly traded stocks, also took positions in private companies.

So I bought some shares of Nautilus, and after several months, Apple went public and the Nautilus Fund spun off shares of Apple to all their shareholders in proportionate amounts. What a great way to get in on a new issue before it goes public.

There are plenty of private companies out there that may consider going public (Fry's Electronics, Fidelity, Bose, LL Bean, etc.). Unfortunately, not all of them are partially owned by venture capital oriented closed end funds. And even more unfortunate, for some of the companies that are, they may not tell you that information about who owns them. I will be doing some research on some of these companies to see if some similar opportunities exist and will keep you posted on what I find.

1 comment:

Nate said...

I am new to looking at stocks. I'm 24 and have only been involved in Mutual Fund through my Roth IRA and my wife's 401K. I have some conections that may offer me to buy stock in a particular company that is planning on going public sometime next year. My question is probably longer than should be for this blog, could you send me an email at Naraskog@oru.edu so I could discus this in further detail. Thank you it would be greatly appreciated!