Inside This Issue of The IPO Explorer:
The unfortunate reason why I went dark for 3 months
The ONE question I couldn't answer about my own investing thesis
The Benjamin Graham-style project I started last week (Everyone I've told about it has looked at me like I'm out of my mind)
Why the weekly breakdowns aren't coming yet (and what's replacing them)
Important Update For The IPO Explorer
“Write a f*&$%!g article for your newsletter.” - Rob Braddock.
No kidding. What I’m about to write next brings me no joy but it must be done.
So, let’s rip off the bandaid.
Since the first issue of The IPO Explorer, there have been 24 IPO’s. None of which that I’ve covered. And one in particular that went up as much as 500% in a few days.
Insanity.
So where the hell have I been?
Where are the weekly breakdowns of these IPO’s I promised?
And why are you already talking about major changes coming to The IPO Explorer?
Let’s get into it.
“So, where the hell have I been?”
To refresh your memory from issue #1, I wrote that:
“Right now, I’m juggling two long form sales letters for work. For those if you in the know, you understand how hectic my life looks right now. And for those of you not, just know, I’m as helter-skelter can be at the moment.”
Let me tell you, helter-skelter it was. I was working a solid 12 hours a day for nearly two weeks straight to close out February. And by then, I was showing signs of burnout.
I’m talking about ripping opening a packet of sugar, pouring it into the trash, watching myself do this and saying “you know, you can stop doing this at any time.”
I’m talking about falling asleep in mere seconds while doing a yoga stretch, waking up 10 minutes later being like “what in the world just happened.”
I’m talking about getting disgustingly sick for two solid weeks where I then barely slept.
Point is, I was in a pretty bad spot energy wise that I just shut it down for March.
“Damn, that sucks dawg but what about April?”
Well, when I did get back to my desk in April, I still didn’t have any time to dig into these IPO’s because I had a client that was just taking up so much of my energy and effort.
It frustrated the hell out of me because I was seeing what was going on with some newly listed stocks in the market but I genuinely didn’t have any time to dig into them.
Taking stock of my situation I realized, if I want to make this work, if I want to truly discover the next hot newly listed stock BEFORE it becomes headline news…
Then I have to change something.
And change something I did.
In just the last week, I let that second client I had go. And for the first time in months, I felt like my brain just opening up, granting me access to tons of mental resources…
And room to look at my own plan honestly…
Which is when I saw the problem.
The Hole I Just Saw In My Own Plan
In issue #1, I gave you my thesis:
New and different is better than better.
Newly listed stocks with genuinely new, genuinely different products — the Grails, the Palantirs, the Sezzles of the world — are the ones that go on to do 5X, 10X, even 15X.
And I still believe it. Honestly, looking at Swarmer's run, I believe it more than ever.
A company doing AI swarm coordination for drones in active combat, with tech already used in over 100,000 missions, in a world tilting harder toward defense tech every quarter? That's about as "new and different" as it gets.
But here's what I didn't have when I wrote issue #1: any actual way to prove the thesis.
Like… zero way.
I have some kind of instinct. I have made some great calls to myself, friends and family.
I had my gut feel from 7 years inside the investment newsletter industry.
But what I didn't have was one single data point showing that this "new and different" pattern actually correlates with outsized returns.
And for me, that's a BIG BIG problem.
Because if I'm going to sit down every week and tell you "this stock's going to be a banger because it's got a new and different product…" you'd be right to ask:
"Cool Manuel. But has that actually worked historically?"
And the honest answer, two weeks ago, was:
"Uhhh… I think so?"
And that’s not good enough. Not for you. Not for me.
So last week — right after the client situation cleared — I started building the thing I should've built from day one:
Introducing The IPO Ledger
Let me tell you something, The IPO Ledger is a beast.
Every single person I’ve told about this undertaking looked at me like I was absolutely batshit insane.
I can’t blame them. Because with The IPO Ledger, I’m going to be breaking down every single IPO since 1998.
With spin-offs and reverse mergers included, this works out to 8,689 companies where I’m looking at:
IPO price and first open price: Look, the IPO price is the number Wall Street gets. The first open is what you and I actually get to buy at. Every return in The Ledger is measured from that first open, because any framework we build has to actually work at the price we can buy at.
Market cap at IPO: Do the 10-baggers tend to come from small-caps? Mid-caps? Large-caps? If there's a sweet spot, that's a filter. If there isn't, we stop worrying about it and move on.
Revenue at IPO: Can a pre-revenue moonshot win at the same rate as a company already doing real sales? I have no idea! But the data's gonna tell us, and that answer shapes whether "must have revenue" is a real rule or not.
Revenue growth rate at IPO: If the winners consistently show up already growing 40%+ year over year, boom, hard filter. If not, growth rate isn't doing the work we think it's doing.
P/S ratio at IPO: Does paying up on valuation actually cost you returns? Or do the quality companies just earn their premium and keep delivering? This is one I genuinely don't know the answer to yet either. But again, we will find out.
Secondary-to-primary ratio: When insiders cash out heavy at IPO, does the stock underperform? When they mostly hold, does it outperform? If there's a pattern, that's another filter and it's one most retail investors never even look at.
Revenue per dollar raised: This one's about capital efficiency. A company that raised $50M and does $100M in revenue is a completely different animal than one that raised $500M and does the same $100M. Did management build a business, or did they just burn cash? This idea came from someone I talked to who has a 89% hit rate from angel investing. Figured why not?
Quarters to profitability: How many quarters after IPO did the company actually turn a profit? Or if it never became profitable at all.
Return from profitability: and then the follow-up question: once a company actually turns profitable, does that kick off a new leg up, or is the move already priced in by the time they get there? If that's a repeating pattern, then waiting for profitability might be the perfect buying signal than buying at IPO.
Sector momentum (trailing 12 months): Is the tailwind doing most of the work? If novel companies only win when the sector's already on fire, then timing the sector matters as much as picking the stock. That changes everything.
Thematic tag: The short label for the story driving a sector at IPO. 1999 tech was internet mania. 2020 tech was remote-work. Same "hot sector" on paper, totally different reason whys for the “hotness.”
Returns at 1 year, 3 years, and 5 years: The scoreboard. Here we separate the early pops from the durable winners. This is to make it easy to sort.
All-time high and ATH date: However, if we sort by "return to today," that will hide the stock that ran 800% and gave it all back. The peak tells us whether a pattern needs to be bought and sold on a schedule, not just bought and held.
And the piece I'm most excited about, a classification I'm calling Novelty Type.
This is where the thesis from issue #1 actually gets tested.
The thesis, spelled out one more time: A company with a new, different and 10X dramatically better product for their market will crush incremental improvement.
Again, in my 7 years of selling investment newsletters, I’ve seen that same exact principle play out with regards to the best-selling products and sales letters.
But will that same principle work with stock returns?
Right now, I have no idea but with this data I’m gathering, I’m going to find out…
Because at the time of listing, every IPO will be slotted into one of these four buckets:
New Category: The company built something the market didn't have before. There are no direct competitors, or competitors only solving fragments of what this company does whole. This is the strongest version of "new and different."
Category Disruptor: The market exists, but this company's approach is structurally different from everyone playing in it. Different technology, different delivery, different unit economics. Still strong on the "new and different" axis.
Incremental Improvement: This company is faster or cheaper or better on specific dimensions, but plays inside the category's existing rules. Their competitors essentially sell the same thing without much differentiation. If the thesis is right, these will not end up producing the 10-baggers.
Me-Too: This type of company offers no real differentiation. They are entering into an established market to take market share on execution alone. If the thesis holds, these are the clearest "avoid" companies in the whole framework. This already sounds like an uphill battle of the most extreme kind.
From here, then we track how each bucket actually performed over 1, 3, and 5 years.
If the thesis holds, the 10-baggers will cluster in the “New Category” and “Category Disruptor” buckets.
And the real discovery is probably coming in the overlap of two variables.
My guess is once we have this data set and filter for “Novelty type” along with “Sector Tailwind,” we’re going to see HUGE revenue growth in these kinds of stocks…
Along with some truly eye-popping gains…
Meanwhile, the avoidable losses are probably going to be the “me-too” companies that listed into a headwind.
However, if the data says something different, great! That's not a problem.
In fact, that's the whole point.
With The IPO Ledger built out, we're going to know what actually works.
What To Expect Over The Coming Weeks
This means a change to what I originally promised.
Instead of weekly stock breakdowns starting now, the next few issues are going to be me documenting my findings with The IPO Ledger in real time… the patterns, the surprises, the places my gut was right, and the places the data embarrasses me.
Essentially, I’ll be documenting my whole journey getting CLEAR answers on what makes a newly listed stock worth investing into long BEFORE it hits headline news.
Then, with those answers in hand, we can start breaking down the newly listed stocks of the week.
I know, I know. Sorry for the tease.
But if I started breaking down stocks for you right now, honestly? I wouldn't really know what I was breaking down. For example, there were 8 IPOs last week.
I looked at all of them. And I had no idea what I was actually looking for. Let alone write.
What am I going to send you… some Chat-GPT write up of them?
Hell no.
So bear with me. We're building the real thing out here.
And that’s a wrap!
To the original 7 – and everybody who's joined since – thank you for still being here.
I honestly wouldn't have blamed you if you'd unsubscribed during the silence. The fact that you didn't means more than you know.
If you're still in, know that I'm ALL-IN on this.
And if you know somebody who'd want to be part of a newsletter that's actually trying to figure this stuff out, send them my way. It would mean the world.
Till next time.
From Your IPO Explorer,
Manuel