Hunting for Fake Sales in IPOs

Now that the initial public offering ('IPO') calendar is heating up, a word of warning before you get too excited about all those reported sales numbers... At some companies, they may very well be an illusion. You just have to search for details on reported sales, and don't expect the companies to make it easy... […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Hunting for Fake Sales in IPOs By Herb Greenberg --------------------------------------------------------------- [Test-drive powerful AI stock system for 90 days]( InvestorPlace just launched a powerful AI driven stock system called Prometheus. They spent two years developing this system and invested well over $4 million to make it incredibly accurate at finding stocks that go up 100%, 200%, or 300% in one month. And you can test drive it for 90 days if you act now. [Click here now](. --------------------------------------------------------------- Now that the initial public offering ('IPO') calendar is heating up, a word of warning before you get too excited about all those reported sales numbers... At some companies, they may very well be an illusion. You just have to search for details on reported sales, and don't expect the companies to make it easy... There's the letter of the law on disclosure and the spirit of the law, and a huge gray area in between. A perfect example is VinFast Auto (VFS), the Vietnamese electric vehicle ("EV") maker that recently went public in the U.S. Since its IPO a month ago, the stock has gone from boom to bust... as investors took a closer look at what they were really buying. I've mentioned it a few times here at Empire Financial Daily, with a few spicy tidbits, but never done a deep dive on it. And even if I had, short of doing a line-by-line review, I may have missed one of the most important disclosures that, while buried, was hiding in plain sight. Yet to the best of my knowledge, nobody (including me) mentioned it until this week – when it was first mentioned publicly earlier in the week by Barron's, and then the Financial Times. But there's a bigger story here, which is why I'm writing about it... For VinFast, it's that more than half its sales so far have come from a related party – a taxi business owned by Vingroup, the Vietnamese conglomerate that also owns VinFast itself. Investors have become so complacent about reading regulatory filings that it's easy to miss or simply ignore related-party dealings. Just because they're related parties doesn't always matter. There are plenty of what I would call "legit" related-party transactions. But intercompany sales are an enormous red flag, because they're not sales to outside independent customers... so you don't know what the real market for the products are. What's worse is when they're not easy to quickly find, which was the case with VinFast... and which is why it wasn't likely immediately flagged. Smart companies, or those with nothing to hide, will highlight potentially controversial transactions in summaries or high in a report or in related-party disclosures. That's smart, because by outing themselves, in a sense, it can become less of a news story. --------------------------------------------------------------- Recommended Link: ['The Prophet' issues a MAJOR warning...]( He called the exact day that Bitcoin peaked... He predicted the exact hour marijuana stocks would begin their collapse... He even predicted the exact day the market would bottom after the COVID collapse... He's nailed so many major market moves with such accuracy that CNBC called him "The Prophet"... Now, he's issuing the boldest warning of his career... right down to the hour. He's predicting an EXTREMELY rare event is set to occur... one that hasn't happened for 15 years. Millions of Americans will be taken by surprise when this happens. But you have an opportunity to prepare yourself NOW. [Click here to reveal his message in full](. --------------------------------------------------------------- But burying it is akin to hoping nobody will see it... VinFast didn't just bury it, but it threw dirt, rocks, and all sorts of greenery on top of it. As it stands, depending on the filing, the taxi deal it struck with its parent was reported midway through roughly 10 pages of related-party disclosures. In the most recent filing this week, the actual transaction was spelled out on page 193. In the main prospectus filed in July, which was twice as big, it was on page 291. I can tell you with great certainty that in world where most investors never read the first page of an IPO filing, the great majority probably don't get to pages 193 or 291... or spend the time to untangle what in this case is a big mess. That's something to keep in mind as the floodgate of IPOs stats to open wider. After all, it's easy to be fooled by all the confetti that falls when a company rings the opening bell the day of its IPO... Which got me thinking... Seeing the recent Arm (ARM) IPO and all of the confetti that fell – and thinking about [my Empire Financial Daily essay earlier this week]( on investor overconfidence – maybe the real moral of the story should be: Beware of confetti at the opening bell of an IPO. On another note, one of my ongoing themes of interest is longevity. One reason, obviously, is my age... At 71, I still think I'm 40. At least that's where brain keeps telling me I am. But I'm now wearing a boot for several weeks because of a mere toe issue. It's nothing serious... In fact, it's more a belt-and-suspenders approach to hopefully put an end to a yearslong problem. But as I joked with friends... How you know you're getting old: You're over 70, still feel 40, but one toe goes and suddenly you're in a boot. No matter what your brain may think, your body knows the truth. I'm sure more than a few of you can relate... What are you doing to live a healthier and longer life? Let me know via e-mail by [clicking here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Herb). Regards, Herb Greenberg September 15, 2023 P.S. My brand-new recommendation for my Empire Real Wealth newsletter plays into the longevity theme – it's a company that not only creates an incredible device to treat a life-threatening medical issue, but also has big upside potential. The whole story will be in the September issue of Empire Real Wealth, publishing this evening – if you aren't already a subscriber, find out how to get on the list to receive this brand-new recommendation when it publishes by [clicking here](. [Get a 30-day, 100% money-back trial to Empire Real Wealth by clicking here.]( --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. Charles Street, Baltimore, Maryland 21201 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](