Saturday, September 13, 2008

More of Mark Cuban on Stocks

Another excerpt from Mark Cuban's compilation of posts, "Talking Stocks",

On presenting his company Broadcast.com to institutional investors during the roadshow he and his partner Todd Wagner went on before its IPO:

Prior to the road show, we put together an amazing presentation. We hired consultants to help us. We practiced and practiced. We argued about what we should and shouldn't say. We had Morgan Stanley and others ask us every possible question they could think of so we wouldn't look stupid when we sat in front of these savvy investors.

Savvy investors? I was shocked. Of the 63 companies and 400-plus participants we visited, I would be exaggerating if I said we got 10 good questions about our business and how it worked. The vast majority of people in the meetings had no clue who we were or what we did. They just knew that there were a lot of people talking about the company and they should be there.

The lack of knowledge at the meetings got to be such a joke between Todd and I that we used to purposely mess up to see if anyone noticed. Or we would have pet lines that we would make up to crack each other up. Did we ruin our chance for the IPO? Was our product so complicated that no one got it and as a result no one bought the stock? Hell no. They might not have had a clue, but that didn't stop them from buying the stock. We batted 1.000. Every single investor we talked to placed the maximum order allowable for the stock.

On July 18, 1998, Broadcast.com went public as BCST, priced at 18 dollars a share. It closed at $62.75, a gain of almost 250 percent, which at the time was the largest one day rise of a new offering in the history of the stock market. The same mutual fund managers who were completely clueless about our company placed multimillion orders for our stock.

4 comments:

J K said...

Great find Dave. Will add his blog to my list of sites to check daily.

You might also be interested in his website Sharesleuth. Along the lines of our previous convo, he also smells funny business in some US listed chinese stocks.

DaveinHackensack said...

Thanks, J.K. Just to clarify, you meant to write "this" website, not "his" website, right? Sharesleuth doesn't have any connection with Cuban, does it?

J K said...

Mark Cuban owns the site. He frequently shorts the companies they dig up.

DaveinHackensack said...

Ah, OK. Thanks for the clarification. I had clicked over to the site briefly and saw that someone else had written a post there.