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A few posts ago I talked about how to leverage crowdfunding to access exclusive and pre-IPO deals. Click here to read: How the rich ACTUALLY get rich

This is another way to invest on steroids - and almost anyone can do it.

Private placements are method of investing where shares are sold directly to a small number of private investors rather than on the public stock exchange.

Let’s talk about the advantages of private placements that wealthy people use to stack 💸 and how you can too.

Also - if you already know about private placements and want to join my list for upcoming opportunities to invest in - send me a reply that says “add me”.

The Multiplier Effect

Warrants are a well known tool in private placements, offering a free way to increase your investment returns.

But a lot of smaller investors don’t know about them.

When you invest in a small-cap private placement, you often get warrants along with your shares. The best private placements offer 1 warrant for every 1 share purchased, but some offer ½ warrants.

Warrants allow you to buy more shares later, at a fixed price, which could be lower than the future market price, sort of like an option.

Let’s say you buy shares in a mining company at $0.50, and each share comes with 1 warrant at $0.75.

If the stock price rises to $1.00, you have the OPTION to use your warrants and buy shares at $0.75 - making a profit on the difference.

The nice part here is if the share price doesn’t exceed the warrant price, you don’t have to exercise them. No risk.

Buy below market price??

Companies are allowed to price private placements for cheaper than the market price of their shares - why?

To entice investors like you to give them money.

Usually, investors have a hold period on private placement shares so that investors don’t dump them immediately, but it’s typically only 3 months.

If you love a stock at $0.50, you’ll love it even more at $0.40.

We all just want a bit of stability

In a market like mining, where volatility can scare even the most risk-tolerant, any sort of stabilization is welcomed.

With private placements, you buy shares at a set amount - no need to worry about timing.

Let’s be honest, not many people are timing the market correctly anyways - don’t event try.

So how do you get involved?

In the small-cap world, and really most business, it’s who you know.

Making connections will help you get access to private placements and sometimes pre-IPO companies - often where the money is really made.

Go to investment conferences, join online forums (my favorite for small-cap is CEO.ca) and get active on social media, particularly LinkedIn & Twitter/X.

Or like I said above, reply “add me” to this email.

The Accredited Investor Route

An accredited investor is someone with a higher income or significant wealth which qualifies them to invest in whatever they want.

Usually, you need to meet one of these conditions:

Income: Earn over a certain amount annually, often around $200,000 for individuals or $300,000 for married couples.

Net Worth: Having a net worth exceeding a specific amount, typically around $1 million, not including your primary home.

If the company is already public you can also simply be an existing shareholder and that will also qualify you for their private placement.

So, if you own shares in a company and they announce a private placement, reach out and ask for the subscription documents - it’s a great way to get involved, build more connections & make money doing it.

👋 Colton, Stock Monster.

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This newsletter is for informational purposes only and should not be considered financial advice. Always conduct your own research before making any investment decisions. We have not been compensated in any way for this pick or content; we genuinely just like it. Assume that contributors to articles own or have interest in stocks they talk about, therefore may be bias.