By Kris Sayce, editor, Casey Daily Dispatch
What if there was a way to “force” your investments to rise in value?
In a way that’s virtually guaranteed.
It’s a big claim… perhaps an unbelievable claim.
But a certain famous billionaire has been doing just that.
So stick around… and we’ll explain exactly how this is happening… what this all means…
And how you can be a part of the profits, too…
If this is your first time reading the Dispatch, welcome. If you’ve been here before, welcome back.
At the Dispatch we have two goals:
To introduce you to the most important investing themes of the day, and
To show you how to profit from them.
We do this by showcasing ideas from our cast of in-house investing experts. Among them is venture capitalist, geologist, entrepreneur, and investor… Dave Forest.
Small Stakes, Big Gains – The Foundation of Casey Research
Before we explain the idea of “forcing” an investment higher, here’s some background.
The foundational idea behind Casey Research is to help investors make small bets in a broad range of investments to generate outsized gains.
It’s why Casey Research has been at the forefront of small-cap technology and mining investing for the past 40 years.
That’s because those sectors offer the best opportunities for big gains, while only putting a small amount of money at risk.
It helped Casey Research subscribers make gains of 853%, 783%, and 2,123% from bitcoin mining stocks…
It helped them make gains of 996%, 111%, and 1,020% from cannabis and psychedelic medicine stocks.
It’s helped them make gains of 352%, 606%, 435%, and 772% from small-cap mining stocks. (Note: Those last four gainers are still open positions.)
And it’s helped them make gains of 4,942%, 2,805%, and 1,415% from a little-known and even less understood type of investment called warrants.
That brings us back to the idea at the top of this essay – the idea that you can “force” your investments higher.
Follow This Simple Formula to Lock-In Gains
This is all to do with our favorite investment type: warrants. Casey Research has helped investors profit from warrants for years. So to us, this idea isn’t new.
And importantly, it isn’t new to a certain billionaire investor either. And we’re not talking about Warren Buffett – although Buffett is no stranger to warrants either.
You may remember that Buffett made millions from his warrants investment in Goldman Sachs when he helped bail out the investment bank in 2008.
But this time, the billionaire investor is Jeff Bezos.
And based on work from colleague Dave Forest and his team, we’ve figured out exactly how Bezos has used warrants to help build his fortune.
Here’s what Dave has discovered about Bezos and Amazon’s investing strategy… and it’s quite a simple formula.
Take a big stake in a company.
Sign a massive contract for its services.
Watch your investment shoot higher.
Simple… yet effective.
According to Amazon’s most recent quarterly filing with the SEC, the value of the investments it holds in companies is around $9.2 billion today.
That’s over 10 times the value from just three years ago.
And taking a closer look, we can see that Amazon and Bezos aren’t playing for small gains.
They want to make it worth their while every time they take a stake in a company. Here’s the key number… which shows you just how important this strategy is to their investment plan…
Out of the $9.2 billion in investments Amazon holds, more than a third – or $3.6 billion – is in warrants.
Here’s how Amazon has amassed these stakes… and how it is able to “force” its investments higher…
Amazon’s Genius Investing Strategy
Amazon used Canadian charter aircraft company Cargojet for years to move packages.
But in 2019, the company wanted to expand its partnership. So Amazon decided to invest in Cargojet.
But Amazon didn’t ask for stock… It asked for warrants.
Cargojet agreed to issue warrants to Amazon with a $91.78 per share strike price. That means Amazon will have the right to buy shares of Cargojet for $91.78 for seven years – no matter how high the stock price goes in that time.
But for Amazon to “unlock” all the warrants, it has to spend $400 million with Cargojet over that timeframe.
It’s a win-win. In 2019, Cargojet did $367 million in sales. Amazon promised to add hundreds of millions more.
Today, shares of Cargojet trade for $202. That means Amazon’s warrants are showing about a $250 million gain so far. It also means that Amazon was able to “force” the Cargojet share price higher.
But that’s not all…
Amazon did the same thing last October with grocery distributor SpartanNash (SPTN). If Amazon buys $8 billion worth of groceries from SpartanNash over seven years, Amazon gets up to 5.4 million warrants. (Keep in mind, $8 billion is almost the same amount of revenue SpartanNash did in 2019.)
Each warrant gives Amazon the chance to buy stock for $17.73. At today’s price, Amazon already has a built-in $25 million gain on its warrants. And how much higher can shares go if Amazon keeps pumping money SpartanNash’s way?
Do this over and over again and you can start to see how Amazon is playing for keeps. It’s gaining a strong relationship with suppliers… it’s getting priority access to supplies… and it’s legally “forcing” higher the share prices of the companies it deals with and invests in.
Now, to be clear, we’re not saying that we can deploy the same kind of capital into – or have the same kind of influence over – these companies.
But we can find the opportunities in which big investors like Bezos and Amazon are “forcing” the share price higher… and even better, we can use warrants in other ways to our advantage.
In fact, we’d say that Dave’s strategy is even better than Amazon’s. It’s a strategy that helped his readers to a gain of 4,942% in less than two years.
Warrants for the Win
Instead of using warrants to buy stock at a discount, Dave and his team recommend trading warrants to profit from the rise in a stock’s price.
For instance, in February 2019, Dave’s team recommended warrants of Purple Innovation (PRPL). At the time, the stock was trading for $5.75.
But the warrants were trading for just 19 cents.
By the time we exited the position last November, the stock traded for $29.95 per share, or a 421% return. That’s outstanding by any measure in 20 months.
But the warrants did a lot better. When Dave recommended selling the warrants, they traded for $9.58. That’s an astounding 4,942% gain – a 50x return. It’s also 11 times better than the stock’s return.
See for yourself:
That’s true leverage and it’s how Dave is helping thousands of regular Americans tap into this niche area of the market. And you have the opportunity to take part in that, too…
How to Ride the Next Big Warrant
Now… Jeff Bezos has another deal in the works.
And Dave says he’s never seen a deal with the potential to make his readers as much money as this… ever. He believes those who get in before mid-November will be able to make 49 years’ worth of profits… in one year.
It’s an opportunity so historic that he’s holding his first event ever on Wednesday, October 20 at 8 p.m. ET to get the word out.
It’s called the “Zero to Retirement Summit.” And if you join him… he’ll give you all the details when he reveals Amazon’s next target.
It’s an event you don’t want to miss.
Editor, Casey Daily Dispatch