This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The IPO Shell Game

Stocks in this article: WDAY TRLA

NEW YORK ( TheStreet -- The Jumpstart Our Business Startups Act (JOBS) envisioned helping emerging companies raise money without the cost and extensive reporting requirements typically expected of a company going public. The emerging growth designation has helped many up-and-coming businesses, but it has also spawned abuse of the system.

It isn't simple to find out which companies have chosen to call themselves an emerging growth company. The Securities and Exchange Commission is so overwhelmed with writing the rules around the JOBS Act that its website doesn't have a spot that lists these companies.

However, a search through S-1 filings for this wording in the text generates a list.

The list contains names of viable companies like Workday (WDAY - Get Report) and Trulia (TRLA - Get Report). Both successfully went public within the last few months and are the ideal candidates to benefit from such help. These are valid companies with real products and services. The staff is real and the CEOs are knowledgeable.

The list also contains some names of a different sort, New Life Bikes, Lake Play, Segway City , Book It Local, Easy Buy Plus and Tarheel Billboard. My favorite? American Critter College. This is an obedience training school for animals. New Life is stationary exercise bikes. Segway City claims to be getting into the segway tour business and Lake Play wants to rent house boats. What do they all have in common? None are currently operating and they are all shell companies.

All of these companies share the same counsel that prepared the boilerplate S-1 filings. They also share the same auditor. Nothing wrong with that. They even share the same bad do-it-yourself web page design.

Some of the information online raises questions. For instance, the website for Tarheel Billboards lists its contact address as 555 Somewhere St.

Then there's New Life Bikes, which lists Tom Schwinn as name of its contact. Creativity isn't in abundance with this group.

The filings also reveal the CEOs for these companies have no knowledge of their companies, no experience running these companies and all state they'll work less than 20 hours a week at their new company. That's comforting. A quick call was placed to one of the CEOs, Stephen Keller of New Life Bikes to ask why would you be a CEO if you know nothing about bikes?

Keller's response: " You'll have to talk to Garvin Capital, they set this up."

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs