www.investingdaily.com Open in urlscan Pro
34.74.49.45  Public Scan

Form analysis
2 forms found in the DOM

GET /search/

<form id="header-search-form" method="get" action="/search/" class="row justify-content-center justify-content-lg-end cbn-ignore">
  <div id="header-search">
    <input id="header-search-input" class="search" name="s" value="" autocomplete="off" type="text" placeholder="Search for Articles &amp; Stocks">
    <label for="header-search-input"><a class="icon search icon-search-gray"></a></label>
  </div>
</form>

POST /get-pdf

<form id="form-generate-pdf" action="/get-pdf" class="cbn-ignore" target="_blank" method="post">
  <input type="hidden" value="128757" name="articleid">
  <button id="btn-pdf-print-submit" href="#" class="btn btn-link" type="submit">
    <img class="img-fluid" src="https://cdn1.investingdaily.com/webimages/icons/pdf_icon_30x30.png" alt="PDF"> Printable PDF </button>
</form>

Text Content

 * Investing Daily
 * Premium Services
   * Wealth Society
   * Crypto Trend Investor
   * Income Forecaster
   * Investing Daily
   * Investing Daily Insider
   * Jim Fink's Inner Circle
   * Jim Fink's Options Bootcamp
   * Marijuana Profit Alert
   * Mayhem Trader
   * Options for Income
   * Personal Finance
   * Personal Finance Pro
   * Profit Catalyst Alert
   * Rapier's Income Accelerator
   * Real World Investing
   * Seasonal Stock Alert
   * The Complete Investor
   * Utility Forecaster
   * Velocity Trader
 * Investing Topics
   * Stock Market Investing
   * Stocks to Watch
   * Options Trades
   * Marijuana Investing
   * Cryptocurrency Investing
 * Analysts
   * Jim Pearce
   * Jim Fink
   * Robert Rapier
   * Stephen Leeb
   * Scott Chan
   * John Persinos
   * Alex Benfield
 * Help Center
 * Log In

 * Menu

 * Help Center
 * Log In

 * Premium Services
   * Wealth Society
   * Crypto Trend Investor
   * Income Forecaster
   * Investing Daily
   * Investing Daily Insider
   * Jim Fink's Inner Circle
   * Jim Fink's Options Bootcamp
   * Marijuana Profit Alert
   * Mayhem Trader
   * Options for Income
   * Personal Finance
   * Personal Finance Pro
   * Profit Catalyst Alert
   * Rapier's Income Accelerator
   * Real World Investing
   * Seasonal Stock Alert
   * The Complete Investor
   * Utility Forecaster
   * Velocity Trader
 * Investing Topics
   * Stock Market Investing
   * Stocks to Watch
   * Options Trades
   * Marijuana Investing
   * Cryptocurrency Investing
 * Analysts
   * Jim Pearce
   * Jim Fink
   * Robert Rapier
   * Stephen Leeb
   * Scott Chan
   * John Persinos
   * Alex Benfield




THE BILLIONAIRE’S PLAYBOOK: HOW TO WIN BIG WITH “UNICORNS”

By John Persinos • October 7, 2024 • Stocks to Watch

Printable PDF

Editor’s Note: One of my greatest joys is reading bedtime stories to my twin
eight-year-old grandsons. These tales are often full of mythical creatures and
fantastical adventures. A favorite of ours is The Unicorn and His Friends, which
tells the story of a magical unicorn that learns to fly.

For investors, unicorns are far from being mythological creatures. These private
companies have a history of generating huge profits for investors lucky enough
to get in on the ground floor.

As a retail investor, you may think you’re locked out of these unlisted
companies. Think again. Below, I pinpoint an easy but effective way to tap the
growth potential of unicorns, with mitigated risk. But first, some context.

--------------------------------------------------------------------------------

WHAT IS A UNICORN?

In the investment world, a “unicorn” refers to a privately-held startup company
that is valued at $1 billion or more. The term was first coined by venture
capitalist Aileen Lee in 2013 to describe these rare, highly successful
startups.

Lee discovered that the startups that made the most money for venture
capitalists often hit the $1 billion threshold in valuation while they were
still private companies. Because of their scarcity and nearly mythical aura, she
dubbed these companies “unicorns.”

Unicorns are associated with high-growth industries, particularly technology,
and often receive significant venture capital investment to fuel their rapid
expansion. They tend to get a lot of coverage in the financial press, making
them “story stocks.”

Unicorns typically operate in innovative sectors such as technology, fintech,
biotech, or software, and they often disrupt traditional industries with their
unique business models.

The best unicorns receive multiple rounds of funding from venture capitalists or
private equity firms, enabling them to scale quickly and sometimes operate at a
loss in the short term while building market share. Many unicorns eventually go
public through initial public offerings (IPOs) or get acquired.

For venture capitalists and other early stage investors, putting money into
unicorns can be risky due to the uncertainties in their business models, but
they also offer the potential for outsized returns if they succeed.

The combined value of the world’s unicorns currently hovers at $3.8 trillion,
more than the gross domestic product (GDP) of India. The following graphic
depicts the most valuable unicorn companies in the world, as of October 2024:



There are over 1,200 unicorns around the world. Well-known former unicorns
include Airbnb (NSDQ: ABNB), Facebook parent Meta Platforms (NSDQ: META), and
Google parent Alphabet (NSDQ: GOOGL). Today, six of the 10 most valuable
unicorns are based in the United States.

The mania over artificial intelligence (AI) has waxed and waned this year, but
it still represents a huge magnet for investment capital. Case in point:
Following the success of ChatGPT, San Francisco-based OpenAI has emerged as the
third most valuable unicorn.

OpenAI announced on October 2 that it had raised $6.6 billion in new funding,
bringing its post-money valuation to $157 billion. “Post money” is a company’s
estimated worth after outside financing and other capital infusions are added to
its balance sheet.

On October 4, OpenAI announced that it had set up a $4 billion revolving credit
line with several banks, further enhancing its financial firepower.

THE FED BOOSTS GROWTH-ORIENTED SECTORS


The Federal Reserve recently provided unicorns with a powerful tailwind. At the
September 2024 Federal Open Market Committee (FOMC) meeting, the Fed slashed
interest rates by 50 basis points (0.50%), easing monetary policy for the first
time in four years.

The Fed felt comfortable making a jumbo-sized cut, due to progress on its dual
mandate of sustaining employment while curbing inflation. This lowered the
central bank’s interest rate target to a range of 4.75% to 5%.

When interest rates decrease, borrowing becomes cheaper for companies. Growth
companies, especially tech names, often rely on external financing to fund
research and development, expansion, and innovation. Lower interest rates reduce
their cost of capital, allowing them to invest more aggressively in growth
initiatives.

Tech stocks, in particular, tend to be valued based on future earnings and cash
flows, which are discounted to their present value using interest rates. When
interest rates are cut, the discount rate is lower, making future earnings
appear more valuable. This leads to higher stock valuations.

As bond yields drop, investors are willing to accept lower returns from stocks,
driving more capital into the equity markets, especially in sectors where
innovation and growth drive returns.

MY FAVORITE PLAY ON UNICORNS

Perhaps you’re itching to invest like a big-shot venture capitalist. Why should
billionaires have all the fun? It’s possible to supercharge your portfolio with
unicorn exposure, by purchasing shares of mutual funds or exchange-traded funds
(ETFs) with ownership stakes in the startups. Anyone can buy shares and
liquidity is high. These funds hold a diversified portfolio of unicorns, which
reduces risk through diversification.

In my view, the best-of-breed fund to leverage the promise of unicorns is the
Renaissance IPO ETF (IPO). This ETF primarily focuses on newly public companies,
many of which were previously unicorns. While it doesn’t exclusively invest in
unicorns, it provides exposure to many companies that started as unicorns before
their IPOs. Through this indirect but well-researched exposure, you can avoid a
lot of the hype surrounding many unicorns.

With net assets of $156.7 million, the Renaissance IPO ETF tracks an index of
U.S. and international IPOs, generally holding these companies for two years
after their listing. This approach captures the early stages of public trading,
often when growth potential is highest.

Companies within the Renaissance IPO ETF come from a broad spectrum of
industries, including technology, health care, consumer goods, and financial
services. This ETF dynamically adjusts its holdings, adding newly public
companies on a quarterly basis while removing those that have been listed for
over two years.

The ETF offers exposure to some of the most innovative companies worldwide. Its
top five holdings, in order of portfolio percentage, are Nu Holdings (NYSE: NU),
which provides digital banking platforms; Kenvue (NYSE: KVUE), a consumer health
company; Arm Holdings (NSDQ: ARM), a chipmaker heavily involved in AI; Robinhood
Markets (NSDQ: HOOD), a financial services provider with a focus on
cryptocurrency; and Rivian Automotive (NSDQ: RIVN), an electric vehicle (EV)
maker.

By providing access to a diversified portfolio of recent IPOs, the ETF allows
average investors to benefit from the potential upside of companies making their
public market debuts, all while managing risk through diversification and expert
selection.

The fund has racked up a year-to-date return of 11.02% and a one-year return of
36.82%. The expense ratio is a reasonable 0.60%.

As interest rates fall, economic growth gains traction, and technological
innovation accelerates, the Renaissance IPO ETF is poised for a banner year in
2025…and beyond.

Read This Story: How to Beat Wall Street…Under All Investing Conditions

PS: Interested in juicing your portfolio, by trading options? The smartest
options trader I know is my colleague, Jim Fink.

In a new presentation, Jim Fink can show you how to receive regular payments of
$2,950 or more. He calls it his “I.V.L. System” and it generates winners at a
mind-boggling clip. Want to earn life-changing income? Click here.

--------------------------------------------------------------------------------

John Persinos is the editorial director of Investing Daily.

Subscribe to John’s video channel:

 


ABOUT THE AUTHOR

John Persinos
Bio | Archive
John Persinos is the editorial director of Investing Daily, overseeing such
publications as Personal Finance, Utility Forecaster, Profit Catalyst Alert,
Rapier's Income Accelerator, Income Forecaster, and Marijuana Investing Daily,
among others. John also writes the Mind Over Markets daily stock market recap,
and he's the chief investment strategist of Marijuana Profit Alert.

 
John has decades of experience in the technology and political realms. He has
worked as a staff editor at Inc. and Venture magazines, and written for
Kiplinger's, Street Authority, Investing Answers, and TheStreet.com, to name a
few. In a career that has spanned more than 40 years, John has been diligently
and prolifically covering the news and its impact on investors.

 
John also has experience with the inner-workings of Capitol Hill, serving as a
press secretary to U.S. Rep. Byron Dorgan (D-ND). John started his career as a
daily newspaperman with The Orlando Sentinel.

 
John holds undergraduate and graduate degrees from Boston University. He also
completed the Davenport Fellowship in Business and Economics Reporting at the
University of Missouri (Columbia).

Free E-letters


We offer a variety of FREE analysis delivered straight  to your inbox. Please
enter your email below.


Submit

We do not sell or share your information with anyone.





MARKET OVERVIEW

Financial Markets by TradingView
 * Home
 * Events
 * Terms and Conditions
 * Media Inquiries
 * White List

 * Privacy Policy
 * About Us
 * Contact Us

Investing Daily is not a registered investment adviser or broker/dealer. All
information provided on the Investing Daily network of websites is provided
as-is and does not represent personalized investment advice. These sites do not
constitute a representation by the publisher or a solicitation for the purchase
or sale of securities. All opinions provided are based on sources believed to be
reliable and are written in good faith, but no warranty or representation,
expressed or implied, is made as to their accuracy. There are risks associated
with any investment and we strongly encourage readers to supplement the
information in these articles, special reports, and newsletters with independent
research and other professional advice before investing in any security.
Copyright © 2024 Investing Daily, a division of Capitol Information Group, Inc.
All rights reserved.



We'd like to show you notifications for the latest news and updates.


AllowCancel