need some help with stock offering

[Beachgrl]

I've never bought a stock from an offering, I have a mutual fund but nothing individual so I need some help.

This is what the webpage of the company i'd like to invest in says: "Up to 250,000 shares of Non-Voting Preferred Stock

including

Up to 34,182 shares of Non-Voting Preferred Stock sold by a selling shareholder (1)"

Non-Voting Class A Preferred Stock, per share/unit $ 100
Sales of these securities will commence on or about January 30, 2019.

My question is, I can't figure out if this is a publicly traded company. And what is non voting preferred stock? I'm just pretty clueless when it comes to this. Any help is much appreciated. I know this is a risky endeavor but it's a company I believe in and have some personal experience with.

 

[OldShooter]

Do not buy anything you do not understand. Never buy initial public offerings. Any questions?


A good company is not necessarily a good investment.

 

[Oz investor]

ALL INVESTING is risky ( including bank deposits )

otherwise they wouldn't pay you interest/dividends to put money there

i suggest you do a crash education course ( i live in Australia , several important laws are different here )

sorry the only simpled answer here is TAKE CARE ( whether you are an experienced investor or not ) even Buffet tears up cash occasionally in this area

start with Investopedia

https://www.investopedia.com/dictionary/

one concept to learn early is risk v. reward ( what are the chances of total or partial capital loss )

i have done well in this area ( in Australia ) but others have had terrible outcomes .

i would suggest you RESEARCH DEEPLY ( whether you seek expert advice or not )

 

[Aerides]

It's not an IPO, it's not a public company. It looks like a private company doing a RegA offering to raise capital for acquisitions and staffing, as filed with the SEC last year. If they wanted to IPO in the future you'd likely get bought out.

It looks like shareholders will receive dividends. I wouldn't think you'd want to tie up any significant amount of your assets, but a token investment / passion project sort of thing?

 

[LOL!]

Google is a wonderful thing, so we now all know the name of the entity that the OP would be giving their money to.

I would consider it a charitable donation and expect to write off the entire investment as a total loss.

 

[jazz4cash]

What is it? Why all the mystery?

 

[corn18]

TerraCycle. Link to SEC filing:

https://www.sec.gov/Archives/edgar/data/1714781/000114420418001138/tv482819_partiiandiii.htm

 

[Col. Klink]

I agree with the others. Do the research. There are many types of preferred stocks. A basic question is whether this is a cumulative preferred or non-cumulative? What is the financial status of the company? The prospectus should have a page that lists risks that the board of directors present as things you should be aware of with respect to the offering.

As noted, Investopedia is a good place to start. Preferred stocks can be a good thing for an individual investor looking for income. However, even though I own some individual preferreds, I also have preferred stock etf's that offer diversification away from simply owning shares in one company.

 

[wmc1000]

This would scare me off:

From the prospectus:

●Up to thirty percent of the proceeds of this Offering may be used for non-company purposes.
●We can exercise a repurchase option to repurchase the Preferred Stock sold in this Offering.
●We have one key executive upon which the company is highly dependent.
●We are controlled by our founder and three major investors.
●Investors in this Offering will have no voting rights, and therefore will have no ability to influence the management or the direction of the company.
●We have a complicated business model.
●A material weakness of internal controls over financial reporting was noted during the audits which resulted in adjustments to our financial statements.
●There may not be enough demand for our recycling programs.
●A downturn in economy could adversely affect our business.
●We rely on certain third-party services, and our business will be negatively impacted if we are not able to access their services.
●We are subject to federal and state laws regulating waste management and there could be adverse effects if we are not in compliance with all applicable laws.
●Our revenues from material sales will fluctuate based on routine changes in commodity prices, complexity of materials collected, and varying deal sizes.
●Our business depends on our reputation and the value of our brand.
●A cybersecurity incident could negatively impact our business and our relationships with customers.
●We may not realize the synergies and growth opportunities that are anticipated from acquisitions.
●There has been no active public market for our stock prior to this Offering and an active trading market may not be developed or sustained following this Offering.

 

[pb4uski]

I wouldn't go anywhere near this dog. Woof-woof.

 

[corn18]

This would scare me off:

From the prospectus:

●Up to thirty percent of the proceeds of this Offering may be used for non-company purposes.
●We can exercise a repurchase option to repurchase the Preferred Stock sold in this Offering.
●We have one key executive upon which the company is highly dependent.
●We are controlled by our founder and three major investors.
●Investors in this Offering will have no voting rights, and therefore will have no ability to influence the management or the direction of the company.
●We have a complicated business model.
●A material weakness of internal controls over financial reporting was noted during the audits which resulted in adjustments to our financial statements.
●There may not be enough demand for our recycling programs.
●A downturn in economy could adversely affect our business.
●We rely on certain third-party services, and our business will be negatively impacted if we are not able to access their services.
●We are subject to federal and state laws regulating waste management and there could be adverse effects if we are not in compliance with all applicable laws.
●Our revenues from material sales will fluctuate based on routine changes in commodity prices, complexity of materials collected, and varying deal sizes.
●Our business depends on our reputation and the value of our brand.
●A cybersecurity incident could negatively impact our business and our relationships with customers.
●We may not realize the synergies and growth opportunities that are anticipated from acquisitions.
●There has been no active public market for our stock prior to this Offering and an active trading market may not be developed or sustained following this Offering.

If you only read the risk section of any SEC filing, you would never invest in anything. Read any of the FAANG 10-Q or 10-K statements. Amazing how they make any money at all with all those scary risks.

 

[cathy63]

Everything in that list looks completely ordinary for investing a small startup (and almost all of them apply to the Fortune 500 list as well), except this:
* Up to thirty percent of the proceeds of this Offering may be used for non-company purposes.

 

[OldShooter]

@Beachgrl, I am 99% certain that your interest in this stinker is because someone is trying to sell it to you. That's how it works; small investors are offered IPOs only when they are so stinky that the broker's institutional and heavy-hitter customers won't buy. They always get first chance.

Stop talking to this person; he/she does not have your best interests in mind. If you have other investments with this person, move them someplace safe like Schwab or Fidelity. Run, don't walk. You can move the assets by simply filling out a form at Schwab or Fidelity. You do not even have to talk to this crook ever again.

Also, good on you for having the wisdom to ask here. You are getting good advice.

 

[OldShooter]

Everything in that list looks completely ordinary for investing a small startup (and almost all of them apply to the Fortune 500 list as well), except this:
* Up to thirty percent of the proceeds of this Offering may be used for non-company purposes.

True enough. Key phrase is "investing in a small startup." "Small startups" are not investments. They are gambles.

William Bernstein on investing for retirement: “Make no mistake about it: The object of this particular game is not to get rich – It’s to not get poor.”

 

[Beachgrl]

Do not buy anything you do not understand. Never buy initial public offerings. Any questions?


A good company is not necessarily a good investment.

that is good advice.

 

[Beachgrl]

ALL INVESTING is risky ( including bank deposits )

otherwise they wouldn't pay you interest/dividends to put money there

i suggest you do a crash education course ( i live in Australia , several important laws are different here )

sorry the only simpled answer here is TAKE CARE ( whether you are an experienced investor or not ) even Buffet tears up cash occasionally in this area

start with Investopedia

https://www.investopedia.com/dictionary/

one concept to learn early is risk v. reward ( what are the chances of total or partial capital loss )

i have done well in this area ( in Australia ) but others have had terrible outcomes .

i would suggest you RESEARCH DEEPLY ( whether you seek expert advice or not )

thanks I will start reading up!

 

[Beachgrl]

It's not an IPO, it's not a public company. It looks like a private company doing a RegA offering to raise capital for acquisitions and staffing, as filed with the SEC last year. If they wanted to IPO in the future you'd likely get bought out.

It looks like shareholders will receive dividends. I wouldn't think you'd want to tie up any significant amount of your assets, but a token investment / passion project sort of thing?

my question then would be if they did the ipo and i got bought out, is that a bad thing? I don't know the mechanics of such a transaction.

definitely a passion project! and was hoping for some $ in the process but from what i'm reading here might be a pipe dream

 

[Beachgrl]

Google is a wonderful thing, so we now all know the name of the entity that the OP would be giving their money to.

I would consider it a charitable donation and expect to write off the entire investment as a total loss.

ok

 

[Beachgrl]

TerraCycle. Link to SEC filing:

https://www.sec.gov/Archives/edgar/data/1714781/000114420418001138/tv482819_partiiandiii.htm

yes! Terracycle. I've been working on a recycling project with them for a while now and they are really making moves to keep plastics and even cigarette butts out of the waste stream and oceans.

 

[Beachgrl]

I agree with the others. Do the research. There are many types of preferred stocks. A basic question is whether this is a cumulative preferred or non-cumulative? What is the financial status of the company? The prospectus should have a page that lists risks that the board of directors present as things you should be aware of with respect to the offering.

As noted, Investopedia is a good place to start. Preferred stocks can be a good thing for an individual investor looking for income. However, even though I own some individual preferreds, I also have preferred stock etf's that offer diversification away from simply owning shares in one company.

good advice and questions. i have more reading to do. thanks

 

[Aerides]

my question then would be if they did the ipo and i got bought out, is that a bad thing? I don't know the mechanics of such a transaction.

definitely a passion project! and was hoping for some $ in the process but from what i'm reading here might be a pipe dream

That's what I'd focus on researching - what can go wrong. Simply put, if you buy these private shares at say, $100, and then 3 years from now they IPO at $50...welp you have some losses to offset your other capital gains that year. Looks like the company has been around for many years, and you have direct experience with them. Sometimes that's good, sometimes it blinds us.

I wouldn't invest any more than you'd consider as a healthy donation. If there is ever a payback/dividends, great, if not, eh you've contributed to a cause you believe in. And there are worse ways to blow the dough.

 

[Beachgrl]

I wouldn't go anywhere near this dog. Woof-woof.

ok that's fair

 

[Beachgrl]

Everything in that list looks completely ordinary for investing a small startup (and almost all of them apply to the Fortune 500 list as well), except this:
* Up to thirty percent of the proceeds of this Offering may be used for non-company purposes.

yeah hmm

 

[Beachgrl]

@Beachgrl, I am 99% certain that your interest in this stinker is because someone is trying to sell it to you. That's how it works; small investors are offered IPOs only when they are so stinky that the broker's institutional and heavy-hitter customers won't buy. They always get first chance.

Stop talking to this person; he/she does not have your best interests in mind. If you have other investments with this person, move them someplace safe like Schwab or Fidelity. Run, don't walk. You can move the assets by simply filling out a form at Schwab or Fidelity. You do not even have to talk to this crook ever again.

Also, good on you for having the wisdom to ask here. You are getting good advice.

As a skeptical native NY'er, i'd be inclined to agree with you that someone was trying to sell me on this; however I merely went on their website and saw the investment opportunity and was looking into it.

I figured folks on here have way more experience and knowledge than me. Seems I was right. glad i asked

 

[easysurfer]

You chose a mutual fund instead of stocks for a reason. Nothing wrong with that.

As others said, I'd go with the rule of thumb of not investing in anything I don't understand.

Remember, if it sounds too good to be true ... .