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How to Buy Twitter Stock Now, BEFORE the IPO

twitter stock logoTwitter stock is sure to be in high demand once it hits the market, judging by Twitter IPO buzz in the financial media right now.

But for impatient investors looking for a way into Twitter stock before the social media company hosts its initial public offering, have no fear. There’s a way to buy Twitter stock right now — and share in a host of other red-hot tech companies, too.

Charles Sizemore, editor of the Sizemore Investment Letter, says the closed-end fund GSV Capital (GSVC) is worth a look for investors looking to ride the Twitter stock IPO.

As a closed-end fund, GSV Capital invests in other companies similar to the way a mutual fund would … except that it has a fixed number of shares that do not grow to meet new investor demand. As a result, a closed-end fund like GSVC can trade at a premium or discount to its book value based on sentiment, instead of the underlying value of its investments.

For instance, as an early investor in Facebook (FB) stock, this closed-end fund was battered as FB’s public offering sparked a host of negative sentiment. GSVC traded as a deep discount as a result, but Sizemore saw the closed-end fund as a big buy as traders were undervaluing its investments in FB and others.

With the Twitter stock IPO, things are different in GSVC now that the valuation of this closed-end fund has normalized. But there is still potential for early investors to get in and make some money. Here’s what Charles told me recently:

At the beginning of this year, GSVC was just about the most hated pick on Wall Street.  The botched Facebook  IPO had soured investor sentiment toward social media companies, and GSVC became a punching bag for all the Street’s frustration toward the sector.  The stock was trading at a 35% discount to book value … a book value that was itself depressed by bad sentiment toward the underlying holdings.  Pre-Facebook IPO, GSVC had traded at a large premium to book value of 20%-30%.

Today, GSVC has no significant stake in Facebook.  But Facebook’s recent profit surprises have caused investors to rethink social media in general, and there is a general belief that Twitter’s IPO will succeed where Facebook’s failed.  As GSVC has rallied, it now trades at a slight premium to book value, though again, the book value is itself a moving target.

If you believe that the Twitter IPO will lead to several more successful “new tech” IPOs, then GSVC is an excellent way to get access.  The easy money has already been made, but I think another 30-50% upside over the next year is feasible if the animal spirits return to the IPO market.  It’s really all going to depend on how successful the Twitter IPO is.

In other words, tread carefully but consider a stake in GSVC if you’re a big believer in Twitter stock. It may be your best — and only — way to buy into Twitter stock before the IPO.

Related Reading on Twitter Stock and GSVC

Jeff Reeves is the editor of and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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