By John Pangere, CFA, senior analyst, Strategic Investor
It was our top trade of 2020 at Strategic Trader. In fact, it’s one of the greatest calls of my career. And readers made those gains from a “boring” mattress company.
I’m talking about Purple Innovation (PRPL). Some of you may know Purple. It’s the company behind the Purple Mattress. You may have seen some of their humorous ads, like this one.
Purple happens to be one of the pioneers upending the decades-old mattress business by selling directly to consumers.
When we first recommended Purple in our Strategic Trader advisory, we told subscribers that the company was on the verge of breaking out. Sales were growing at double-digit rates, and it was only a matter of time before investors caught on.
But there was a catch. We didn’t invest in the stock. We didn’t buy options. And Purple didn’t release its own crypto coin.
That’s chump change.
Instead, we recommended a little-known way to speculate on all the upside… with less money at risk.
That’s because there’s a secret I’ve been using for years in my personal portfolio. It’s a way to supercharge your returns – without ever having to buy a stock.
I’m talking about warrants.
My guess is 99% of you have never heard of warrants. That’s by design.
Warrants have been around for decades. But they’re usually reserved for the wealthiest and most connected investors… like Warren Buffett… George Soros… and John Paulson.
I’ve invested in some of those private deals personally. In fact, I rarely look at a private investment unless warrants are involved.
But almost two years ago, we decided to blow the doors off this little-known market. That’s because warrants don’t just change hands in private deals. Some of them trade on public markets.
So we thought, “Why should only connected speculators have access to these life-changing returns?”
Turning Dimes Into Dollars
For those of you who aren’t familiar, warrants are one of our favorite trading tools. As I said before, they give us all of the upside of a stock… but at a fraction of the price.
Warrants give holders the right – but not the obligation – to buy shares of a company at a specified price or better.
That may sound a lot like stock options. But they’re not.
The difference is, warrants are issued directly from the underlying company. And you don’t need any special permission in your brokerage account. All you need to do is click and buy, just like with any other stock. It’s that simple.
Let’s go back and take a look at Purple Innovation. Below is a chart of the company’s stock.
When we first recommended the warrants, shares were trading at $5.75.
But the warrants were trading for just 19 cents.
A $1,000 investment would give you 174 shares. That same amount could buy 5,263 warrants.
After less than two years, shares moved 431%. That’s a great trade by any standard. That’s enough to turn your original $1,000 into over $5,000.
But the warrants obliterated the stock, rising 4,942%. The warrants outperformed the stock by over 10 times.
That’s enough to turn that $1,000 into over $50,000… on the same company!
That’s life-changing for most investors. But that’s just the beginning.
The trick is to try to do this over and over again. And so far, we have…
Wash. Rinse. Repeat.
Some of you may be skeptical and think Purple was a fluke. Maybe we got lucky, just this once.
However, just one month after we closed out the Purple Innovation trade, we did it again on Blink Charging (BLNK).
Regular Dispatch readers know we believe electric vehicles (EVs) are the future of transportation. The problem is, the infrastructure to support mass adoption just isn’t there yet. It’s a massive problem.
Blink is one of the companies solving it, leading the way in EV charging stations.
That’s why we recommended the company’s warrants. And in November, we cashed out with a 29x gain in under two years.
Then, just one week later, we alerted our readers to take profits on another. This time, it was a warrant to play the 5G boom. We booked a 7x return… in six months!
And this wasn’t even a sexy tech company.
Nesco Holdings (NSCO) is a specialty equipment rental company. It rents things like cranes and boom trucks to install telecom equipment. And yet, readers still made multiples of their money in a short period of time.
I’ve seen this play out time and time again. I’ve personally made 10x-plus gains multiple times over the years with warrants.
That’s why my co-editor Dave Forest and I felt the need to share this secret with our readers.
At writing, we’re sitting on gains of 706%, 250%, and 241% with some of our other recommendations.
But we’re just getting started.
There’s a Warrant for That
The real magic is that whatever major trend is happening in the market, you don’t need to buy stocks. It’s almost certain you can play it with warrants.
Electric vehicles? We’ve done that.
5G? Play it with warrants.
Autonomous driving? Esports and sports betting? The gold bull market? Warrants have you covered.
A recovery in oil? Take your pick, with over a dozen different warrants.
Remember, even something as boring as a mattress company turned $1,000 into over $50,000. That’s a life-changing return.
Now, imagine what happens when we see the perfect storm: a massive trend… with major investor excitement. The potential to see 100x returns is there.
Sure, you can get a 100-bagger with stocks. But that could take decades. Just look at Amazon. It took 20 years to go 100x.
Warrants give us the chance to do the same in just a few short years… or even months. They’re truly a path to financial freedom – without risking your life savings.
For most people, stocks are for your serious money. That’s what will help you live comfortably into retirement.
But a speculative portfolio of warrants like Dave and I recommend in Strategic Trader can change your life. They can help you buy that Ferrari you’ve always wanted… or put a down payment on a house.
That’s why we decided to bring warrants to our Strategic Investor advisory, too.
Dave put together the first of its kind, five-video Warrants Master Course to help you get into these picks with ease. (Current Strategic Investor subscribers can review the PDF version here.) It’ll walk you through everything you need to know before trading warrants… and reveal our top pick to get you started.
If you’re interested in accessing it… and learning more about the explosive potential of warrants… go right here.
And over the coming months, we’ll be talking more about warrants in the Dispatch – and how they can deliver outsized returns.
We ended 2020 on a high note. Now, we’re looking to do even better in 2021 and beyond.
I hope you’ll join us along the way.
John Pangere, CFA
Senior Analyst, Strategic Investor