Should I invest in American Riviera Bank stock (ARBV)?

Here are three reasons to invest in American Riviera Bank stock (ARBV) and three reasons to avoid it.

What does American Riviera Bank (ARBV) do?

A small bank in Santa Barbara, Calif., American Riviera opened in July of 2006. It’s done well, too, recently recently merging with The Bank of Santa Barbara. That gives ARBV two community branches, both of which are focused on growing their deposit bases and expanding lending.

Three reasons NOT to invest in American Riviera Bank stock (ARBV)

1) Under-performance. Year-to-date, ARBV is underperforming the S&P 500. Shares are up 3 percent while the broader market is up north of 5 percent. Still, that’s better than some of the nation’s largest banks. Bank of America (BAC), for example, is down more than 7 percent this year, and JPMorgan Chase (JPM) is down half a percent.

2) Merger woes. ARBV recently merged with The Bank of Santa Barbara. Unexpected costs or difficulties with the merger could impact the bank’s ability to make a profit. Mergers that look great on paper can sometimes result in culture clashes that negatively impact a business.

3) Over-the-counter shares. ARBV trades over-the-counter – not on a national securities exchange like the NASDAQ. That means ARBV isn’t held to the same stringent reporting requirements as companies on the NASDAQ. We know less about ARBV than we do other banks that trade on the NYSE.

Three reasons to invest in American Riviera Bank stock (ARBV)

1) Strong growth. 2015 saw significant growth for the bank. According to ARBV’s 2015 annual report, the company grew its average total loans by 14 percent to $179 million. The bank also grew its average assets by 12 percent to $232,000. All told, the bank had net income of $1,303,000 in 2015 (unadjusted for non-recurring merger-related costs). That worked out to $0.48 per share. “Our bank finished the year with a record $249 million in assets and 18% higher pre-tax income over 2014 excluding merger related costs,” the company wrote.

At the end of 2015, ARBV had a book value of $10.56. Today, shares are trading at $11.65. Over the past five years, ARBV shares have appreciated more than 124 percent. That’s well above the S&P 500’s return of 84 percent. “Our goal is to reach a $1 per share earnings run rate by year end,” ARBV wrote early in 2016.

2) Great track record. American Riviera Bank celebrated its 10th anniversary on July 18, 2016. The finance industry is one of the most heavily regulated industries on the planet. Staying in business and growing over the course of a decade (particularly through the housing and financial collapse of 2007-2008) is impressive.

3) Merger time. American Riviera Bank merged with The Bank of Santa Barbara effective January 1, 2016. While this is adding significant merger-related costs to the company’s books, ARBV believes the “merger has positive financial synergies.” If you’re looking for growth, two branches are better than one.

Should I buy American Riviera Bank stock (ARBV)?

ARBV’s shares look appealing so long as interest rates begin to normalize. Artificially-low interest rates make it difficult for banks to generate big profits as the spread between their borrowing rate and the rate they lend to customers is small. If ARBV can continue to grow, it will do so by capturing more of the Santa Barbara County market – an area with a median household income of $63,409. Santa Barbara County is the 17th-wealthiest county in California. Right now, ARBV controls 2.77 percent of the market there (by deposits).

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here. Full disclosure: I do not own a position in ARBV, and I do not plan to initiate one in the next 72 hours.

Silver price manipulation case narrows in on JPMorgan; drops HSBC for now

The media tends to brush off reports of manipulation in the silver market. Hopefully, this lawsuit will change that.

A new wrinkle in the silver price manipulation lawsuit against JPMorgan Chase & Co. (NYSE:JPM) has dropped the spotlight off HSBC Holdings PLC (NYSE:HBC) for now. The fresh lawsuit amendment, which was filed last Tuesday, now names JPMorgan as the sole defendant in the case (per the Wall Street Journal).

Here’s what we know: a lawsuit filed by individual silver investors alleged that JPMorgan and HSBC amassed massive short positions in silver futures between 2008 and 2010, then reaped the rewards as silver prices declined in the face of the large short positions. The new move drops allegations against HSBC, as investors have entered into a tolling agreement with the London bank.

Tolling agreements give both sides in the case time to negotiate a settlement. Should those talks crumble, HSBC could be re-added to the lawsuit. A tolling agreement certainly isn’t an admission of guilt on HSBC’s part, but it’s a clear signal that they don’t want to go to trial (perhaps to avoid the massive legal fees, the bad press, or because they fear they’d be on the losing side of the case). What bothers me about the agreement is the fact that we may never know whether HSBC was truly involved in attempting to manipulate the price of silver – especially if JPMorgan enters into a similar agreement in the future.

New numbers in the amended lawsuit allege that JPMorgan’s shorts pushed silver prices down 12 percent in a single day – a move that, if true, made the bank $220 million.

All told, more than 43 separate silver price manipulation lawsuits were filed against JPMorgan and HSBC (per Reuters). Those lawsuits were eventually combined into a class action lawsuit.

“The complaint alleges that HSBC and J.P. Morgan made large, coordinated trades, among other things, to artificially lower the price of silver at key times when the precious metal should have been trading at higher levels,” the law firm Girard Gibbs LLP writes on its web site. “By depressing the price of silver, the class action alleges that the defendants made substantial illegal profits while harming investors and restraining competition in the COMEX silver futures market.”

Due to it’s small size and relative lack of liquidity, the silver market has often been the target of price manipulation (see my post Silver Thursday, the Hunt Brothers, and the collapse of a precious metal for more). But there’s also a tendency for the media to brush off reports of manipulation in any markets – particularly emotionally-charged markets like precious metals. This lawsuit could help bring visibility to a problem that’s lost a lot of money for a lot of people. Let’s just hope it makes it to trial.


The Baby Boomer stock shock and what you can do to avoid it

A prolonged sell-off in the stock market thanks to the retirement of waves of Baby Boomers could mean stock prices won’t recover to their 2010 levels until 2027.

Two researchers buried amid reams of data at the Federal Reserve Bank of San Francisco emerged recently with a disquieting prediction: the first great wave of Baby Boomer retirements is going to push down stock prices for the next 10 years. According to researchers Mark Spiegel and Zheng Liu, stocks in 2021 could be worth 13 percent less than were in 2010.

Worse than that, Spiegel and Liu don’t expect stock prices to fully recover to their 2010 levels until 2027. I’ve dubbed it the Baby Boomer stock shock, and its had me exploring ways to protect my capital over the next 16 years.

Born between 1946 and 1964, Baby Boomers are the single largest demographic in America, and they make up fully 25 percent of the population. The youngest Boomer is now 44 years old, and the oldest Boomers should start qualifying for retirement benefits this year. According to Speigel and Liu, those Boomers are going to start selling shares they’ve spent decades accumulating, and that’s going to drive down the overall stock market.

How to avoid the Baby Boomer stock shock

While the overall stock market might suffer from prolonged selling as Boomers cash in their equities, stocks that specifically cater to an older population could be poised to outperform. JPMorgan Chase & Co. (NYSE:JPM) has actually put together a list of just such stocks. Dubbed the Aging Population Index, this group of 21 stocks has outperformed the S&P 500 six out of the eight past years (per the Financial Post).

The index is heavily weighted toward healthcare (at 48 percent), consumer discretionary items (at 33 percent) and financial stocks (at 14 percent). Among the companies?

Royal Caribbean Cruises Ltd. (NYSE:RCL). Stress-free trips on clear blue Caribbean waters. Just what the doctor ordered. There are even a handful of retirees who have opted to live out the rest of their days on cruise ships (per Snopes). The industry’s been working hard at appealing to younger travelers, but their bread and butter for the next 20 years will be Boomers.

Chico’s FAS, Inc. (NYSE:CHS). With a clothing line that’s specifically targeted at high-income women over 35, the company’s stock is up more than 123 percent over the past 10 years (not counting three stock splits earlier in the decade). Chico’s designs its clothes with a toned-down color palette and fills its racks with sizes aimed at “plumper” figures.

Sun Healthcare Group Inc. (NASDAQ:SUNH). One of Sun Healthcare’s largest businesses is SunBridge, which operates more than 200 nursing homes and post-acute care centers. All told, SunBridge houses 22,000 beds in 25 states, and that number should start accelerating rapidly 10 years from now. The average age upon admission to a nursing home is 79 (per As Boomers start aging, long-term care will be inevitable for many.

The Scotts Miracle-Gro Company (NYSE:SMG). The National Gardening Association pegs the average age for gardeners at 55 (per Companies like Miracle-Gro that cater to that niche are in the fat part of the growth curve. The oldest Boomers are still gardening and the youngest Boomers could just be getting started.

In general, Boomers won’t be fully liquidating their portfolios, but they probably will be moving from high-risk sectors like tech into stable, dividend-paying stocks. Keep the macro-trend in mind, and you should fare better than the S&P in the years to come.



Eleven reasons to AVOID investing in Dow Jones Industrial Average stocks


Gold prices take biggest plunge in 30 years; CME hikes gold margin requirements


Top 10 new investing books for 2011


How to file a patent


How to invest in natural gas


Why invest in silver?

Why Bank of America stock (NYSE:BAC) got crushed

It’s clear investors feel like Bank of America’s the ugliest house in a pretty crummy-looking neighborhood. Here are five reasons why.

It’s not often that one of the 30 largest stocks in the country drops 20 percent in a day. That’s what happened to Bank of America Corporation (NYSE:BAC) yesterday, though. The Dow component stock crumpled from $8.17 a share to $6.51 and it shed another 1.5 percent in after-hours trading.

Year-to-date, Bank of America stock is down 51 percent. But the bad news just doesn’t seem to be going away for America’s largest bank holding company. Here are five reasons the stock got crushed yesterday:

1) The mother of all lawsuits. American International Group, Inc. (NYSE:AIG) filed suit against BAC yesterday seeking at least $10 billion in damages for alleged fraud at the bank and at Countrywide Financial, a mortgage origination company that Bank of America acquired in 2007.

2) Did we mention the other lawsuits? AIG is just the latest in a string of high-profile lawsuits against BAC. Freddie Mac, Fannie Mae, BlackRock, Inc. (NYSE:BLK), PIMCO and Goldman Sachs Group, Inc. (NYSE:GS) have also filed suits against the bank. And no one’s sure just how much it’s going to cost BAC to defend itself (not to mention how much it will cost if the bank does have to pay for damages one day).

3) Stock dilution, anyone? Bank of America maintains its stance that the company won’t have to issue more shares in order to cover costs associated with ongoing litigation. If the lawsuits keep coming, though, BAC might not have a choice. Win or lose, lawyers need paid.

4) Jumping ship. Regulatory filings released yesterday showed that hedge fund manager David Tepper of Appaloosa Management LP took a carving knife to his stake in BAC last quarter. Tepper pared off 42 percent of his holdings in the bank, narrowly escaping the guillotine that dropped yesterday. The news of Tepper’s move added fuel to an already fiery sell-off.

5) Downgrade central. In just two trading days, Bank of America shares were downgraded three times. On the heels of downgrades from Standard & Poor’s and Wells Fargo, the most recent thumbs-down comes from CLSA analyst Mike Mayo (per TheStreet). Mayo cut the stock from “buy” to “outperform” (which almost seems meaningless considering the stock’s loses year-to-date). Still, it’s yet another vote of no-confidence for BAC.

All told, yesterday’s 20 percent plunge in Bank of America’s share price wiped out $16 billion. Other banks didn’t fare much better, but it’s clear investors feel like Bank of America’s the ugliest house in a pretty crummy-looking neighborhood. For the year, BAC is down 51 percent. Citigroup Inc. (NYSE:C) is down 41 percent YTD, Wells Fargo & Company (NYSE:WFC) is down 26 percent, and JPMorgan Chase & Co. (NYSE:JPM) seems heroic having lost just 20 percent since the start of the year.



Top four reasons to invest in Teavana Holdings, Inc. (NYSE:TEA)


Why invest in gold?


The latest gold price forecast for 2011? $2,500 an ounce, says JPMorgan


How to sell your silver jewelry and silver coins


How to invest in natural gas


Why do companies go public?

Three reasons to invest in the Square IPO (when it finally arrives)

Here are three reasons to invest in the Square IPO, even before we’ve gotten a chance to look at any financial documents.

One of the more exciting start-ups in the tech space comes in the form of a pocket-sized, half-inch plastic square. Said plastic square can be plugged into the audio jack on your iPhone, Andoid, iPod or iPad and transformed into a mobile credit card processor. That’s the premise behind Square – an inspiring start-up with 100 employees based in San Francisco. The IPO rumors haven’t started up yet, but there are lots of reasons to be excited about this small company (even before we’ve gotten a chance to look at any financial documents). Here are three reasons to invest in the Square IPO (when it finally arrives):

1) Leadership. Investing icon Warren Buffett argues that you shouldn’t invest in companies but rather people. “You can have the greatest goals in the world, but if you have the wrong people running it, it isn’t going to work,” he said recently. “On the other hand, if you’ve got the right person running it, almost anything is possible.”

Without question, Square’s got an excellent pedigree. One of the company’s co-founders, Jack Dorsey also co-founded Twitter, rising at one point to serve as CEO (he’s now a chairman working on product development and growth). That takes up a mere 8 to 10 hours of his day. After that, he ambles down the road to clock another 8 to 10 hours of work at Square.

“Most people have major positions at companies and they’re also raising families,” Dorsey told Fortune last week. “They have two-year-olds. I have it easy.”

Best of all, Dorsey seems to possess a sense of a wonder that he uses to inspire the developers working below him. He does that in part with his weekly “town square” meetings where he takes 15 minutes or so to talk values and aspirations with his employees.

In a recent town-square meeting, he compared what Square’s doing to building the Golden Gate Bridge: “Every single aspect of this is gorgeous,” he said (per TechCrunch). “So your homework this weekend is to cross this bridge, think about that, and also think about how we take those (design) lessons into doing what we do, which is carry every single transaction in the world.”

2) The volume game. Numbers aren’t readily available, but we do know that Square is “processing millions of dollars in mobile transactions every week,” according to NPR. Let’s conservatively say the site’s processing $2 million in transactions weekly. That’s good for more than $225,000 in revenue. Not bad for a company that just opened its doors to clients nine months ago. The key here is scale. By poaching a huge number of transactions and reaping 2.75 percent of every sale, the company needs to consistently grow it’s user base to move toward profitability. The numbers look good so far.

3) The writing on the wall. Your head is planted firmly in the sand if you’re not convinced that credit cards are going the way of the dodo bird. In fact, I’d argue that it’s not just your head that’s buried in sand; it’s your torso, midsection, legs and feet, too. The smartphone is transforming into a mobile wallet. Every major credit card company in the world has started forays into the mobile payment processing realm and few have made it as simple as Square.

Merchants get their card readers for free. They pay no monthly fees, and they can use it as little or as often as they like. In fact, we might even use it to give our friends a few bucks for the cab we’re sharing one day. If Square can keep gobbling up marketshare while PayPal, Visa, Mastercard and others are still scribbling on whiteboards, they’re either going to IPO or get bought out. And either scenario will likely be a boon for shareholders.



The unofficial tech IPO calendar for 2011


5 reasons LinkedIn’s stock is set to plunge (LNKD)


PopCap IPO: 4 reasons to invest in the social gaming giant


3 reasons NOT to invest in Groupon’s IPO


How to sell your silver jewelry and silver coins


Tudou IPO: Is Tudou stock a buy?

HomeStreet IPO: 5 things you didn’t know about Homestreet’s stock

HomeStreet Bank filed for an IPO late last week as the company looks to raise some capital after heavy losses during the financial crisis of 2008. Here are five things you probably didn’t know about the Seattle-based bank culled from the company’s S-1 filing.

HomeStreet Bank filed for an IPO late last week as the company looks to raise some capital after heavy losses during the financial crisis of 2008. Here are five things you probably didn’t know about the Seattle-based bank culled from the company’s S-1 filing:

1) An IPO by decree? HomeStreet’s under orders from the Office of Thrift Supervision and the Federal Deposit Insurance Corp. to raise regulatory capital and reduce problem assets. After failing to raise enough regulatory capital last year, the company chose to turn to the markets to shore up its books. That makes HomeStreet “subject to certain restrictions on our operations” until it satisfies the government’s capital requirements. An IPO should generate enough cash to lift the increased regulations on the company.

2) Storied history. Founded 90 years ago, HomeStreet has the oldest continuous relationship with Fannie Mae in the country. They were the second company approved by Fannie Mae at its founding in 1938.

3) Scope. As of December 31, 2010, HomeStreet had total assets of $2.49 billion, net loans held for investment of $1.54 billion, deposits of $2.13 billion and shareholders’ equity of $58.8 million. All told, the company operates 20 bank branches and nine stand-alone lending centers from the Puget Sound to Hawaii. The bank’s branches averaged $106.5 million in deposits last year.

4) New Management. In August of 2009, HomeStreet overhauled its executive management team as part of its turnaround strategy. Mark Mason, former CEO of Los Angeles-based Fidelity Federal Bank, was named CEO at HomeStreet. “A substantial portion of Mr. Mason’s career has been spent resolving or recapitalizing troubled institutions, restructuring operations and upgrading troubled loan portfolios,” the company writes in its S1 filing.

Mason’s strategy at HomeStreet thus far has emphasized offloading the bank’s other real estate owned property, restructuring troubled loans and implementing stricter underwriting policies.

5) Turning the corner? HomeStreet’s revenue was up $8 million last year to $39 million (though well off revenue of $90 million in 2007), and the company’s net loss fell from $110 million in 2009 to $34 million in 2010. Once HomeStreet’s regulatory status is lifted, the company plans to expand the number of branches it operates and look at potential acquisitions in the Pacific Northwest.

Homestreet stock ticker: NASDAQ:HMST
Homestreet IPO date: July 2011



3 reasons to buy Zipcar IPO (Ticker:ZIP)


Amazon stock analysis: 5 reasons to buy and hold in 2011 (AMZN)


Is Ally IPO a buy?


Top 10 best gold and silver ETF funds


The unofficial tech IPO calendar for 2011


What would happen in the event of a U.S. debt default in 2011?

What would happen in the event of a U.S. debt default in 2011?

Even toying with the idea that the U.S. could default on its debt obligations probably has foreign lenders looking for new places to park their surplus capital.

With the drama surrounding Friday’s near-shutdown of the federal government, it’s easy to forget there’s a bigger problem looming: the need to raise the federal government’s debt ceiling. As it stands, government debt is currently capped at $14.3 trillion, and we’ve rung up some $14.287 trillion in debt (and climbing), Reuters reports.

The Treasury estimates we could bump up against the debt ceiling as early as mid-May, although we may be able to extend D-Day as late as July 8. Hitting the debt ceiling sounds innocuous, but the implications are downright scary: if Congress doesn’t raise the ceiling, the U.S. would, in effect, default on some of its loans as there would be little other way to meet the government’s spending obligations.

The only alternative would be balancing the Federal budget overnight, and – according to NPR – that would require slashing spending by 40 percent, raising Federal tax receipts by 40 percent or some combination of the two (translation: it would be all but impossible without crumpling our economy).

If a debt default did happen, it would make the 2008 financial crisis look like child’s play. Treasury Secretary Timothy Geithner was on Capitol Hill last week trying to drive home that fact with Congress. Here are just a few of the problems he sees if the government fails to raise the debt ceiling:

  • Dramatic rises in borrowing costs for all Americans
  • Decreased payments to the military
  • Cuts in social security
  • A surge in unemployment
  • “Thousands, if not hundreds of thousands” of business failures

Defaulting on our government debt, Geithner added, would “call into question the willingness of the United States to meet its obligations” and this would “shake the … foundations of the entire global financial system.”

On top of Geithner’s concerns, we’d probably see more problems:

  • The death of the U.S. dollar’s status as the world’s reserve currency
  • A downgrade of U.S. sovereign debt
  • Hyperinflation
  • A stock market collapse
  • Decreased or complete cessation of payments for Medicaid, Medicare, Social Security, military pensions and other government programs
  • An IMF bailout of the U.S. government
  • Draconian spending cuts imposed by foreign lenders
  • Mass layoffs for state and federal employees
  • School closings and consolidations
  • Protests, demonstrations and widespread civil unrest

In the words of President Obama’s White House spokesman Jay Carney, “failing to raise the debt ceiling would be Armageddon-like.” No matter what your politics, it’s hard to argue with Carney.

Even toying with the idea that the U.S. could default on its debt obligations probably has foreign lenders looking for new places to park their surplus capital. Let’s just hope our Congressmen realizes that there are some issues that take precedence over political maneuvering. We elected them to protect our interests, and raising the debt ceiling is in the interest of everyone.



Sprott silver predictions calling for uncharted gold-silver ratio


Facebook + Baidu vs. Renren: Let the war begin (BIDU)


Silver price record could fall in 2011


What will happen when QE2 ends in June?


5 reasons to buy solar stocks in 2011


Top 10 best gold and silver ETF funds

Is Ally IPO a buy?

Will the Ally IPO be a buy? Here are three (not necessarily convincing reasons) to be bullish on the stock.

Welcome to the new incarnation of GMAC: Ally Financial, Inc. The storied company was originally founded by General Motors in 1919 as a lending house for car buyers. Nearly a century later, GMAC had expanded into insurance, online banking, and subprime lending.

It was subprime lending, of course, that would eventually knock GMAC Bank to its knees in May of 2008. The Federal government swept in, buying ever-larger chunks of the company until – in December of 2010 – it would become the majority stakeholder. Out of the ashes would rise Ally Financial, a bank holding company that’s announced plans to go public with an IPO in the next several months. Will the Ally IPO be a buy, though? Here are three (not necessarily convincing reasons) to be bullish on the stock:

1) Dollars and cents. Ally’s got a long row to hoe, but at least it’s profitable. As it stands, the company owes the U.S. Government $12.3 billion in funds received from the TARP program. That’s even after Ally’s already repaid $4.9 billion. There are glimmers of hope, though. Early figures estimate the company could raise $5 billion (per Reuters) from an IPO. That figure could grow as Ally’s IPO date nears, too.

While Ally owes the government $12.3 billion, the Treasury holds $5.9 billion in preferred stock. That means Ally actually needs to come up with just $6.4 billion to pay off the government (before any interest Uncle Sam decides to take). Total net revenue at Ally grew 22 percent last year to $7.9 billion. That was good enough $1.1 billion in profits.

2) New car anyone? I like to think of Ally as an extension of the auto industry. The bank, after all, funds 80 percent of all GM dealers and half of GM’s customers, according to the Capitalistpig Hedge Fund‘s managing member Jonathan Hoenig. Indeed, Ally financed 10 percent of all new cars sold in the U.S. last year. As the prospects for the auto industry improve, so too do Ally’s.

3) Diversification. To be successful moving forward, Ally will have to find creative new ways to make money. Mortgage lending rules will be tighter, and fees the bank can impose on its customers will be smaller. It’s clear the company must find new ways to make profits. That might not be as difficult as it sounds. When you’ve got $172 billion in assets, there are a lot of potential directions you can go in. Given Ally’s leadership in online banking and its early foray into subprime lending, the company has shown it’s not afraid of taking risks. If it makes better choices moving forward, this IPO could unlock a new and exciting chapter in the company’s future.

Bears will be bears: The bearish case against Ally is just as powerful as the bullish case, though. Since the company’s prospects are so pervasively intertwined with the fortunes of General Motors Company (NYSE:GM) and Chrysler, headwinds for American automakers mean headwinds for Ally. And gauging by the performance of GM’s stock since its IPO (down 10 percent), it looks like it’ll be a while before investors start jumping on the bandwagon again.

Then, there’s the pesky matter of dealing with regulators. Ally’s mishandling of foreclosures last year could ultimately lead to a multi-billion dollar fine from the government.

While the publicity surrounding Ally’s IPO will make it a tempting daytrade, it doesn’t take much looking to find companies with more intriguing growth profiles. Smaller companies might not have the name recognition of Ally, but they’ve probably got better financials – and that’s what matters in the long run. Until we see more innovation at Ally, there just isn’t a whole lot to get excited about.



3 reasons to buy Zipcar IPO (Ticker:ZIP)


Amazon stock analysis: 5 reasons to buy and hold in 2011 (AMZN)


Three triggers that could push silver over $50 ounce


Five reasons to invest in the IPO


The unofficial tech IPO calendar for 2011


Death to Exxon? A sythentic fuel maker hopes so

How does the BATS exchange work?

Instead of buying shares on the NYSE or NASDAQ, retail-level investors may soon be placing orders on BATS as well, provided their brokers offer access to the exchange.

A tiny tech and trading start-up, BATS Global Markets, piqued the curiosity of investors after announcing that it will soon file as a primary U.S. market. The move, which BATS hopes will allow it to start listing stocks in the fourth quarter, would pit the Kansas City-based stock exchange against the two largest stocks exchanges in the world in the NYSE and NASDAQ.

What does the move mean for investors? Instead of buying shares on the NYSE or NASDAQ, retail-level investors may soon be placing orders on BATS as well – provided their brokers offer access to the exchange.

“The key for this to be successful will be to be able to attract a key company to list,” Josef Schuster, founder of Chicago-based IPO investment firm IPOX Schuster LLC, tells Reuters. Schuster speculates that doing an IPO and listing BATS shares on the BATS exchange itself could be a way of doing that.

Alternatively, attracting a sought-after tech company like a Zynga or a Groupon to list with BATS might do the trick. As it stands, BATS is already the third-largest exchange in the world by volume. That’s largely thanks to the exchanges’ emphasis on speed.

When BATS went live in January of 2006, most trading platforms executed trades in one to 30 milliseconds. BATS executed trades in one to three milliseconds. Today, BATS executes 80 percent of all its trades in 250 microseconds (.25 millliseconds). Contrast that with the NYSE, which executes trades in 650-950 microseconds.

BATS’ emphasis on speed has attracted business from “hedge funds and other trading operations” that engage in high-frequency trading, Newsweek reports. Should the company land a few big fish to list, it could very well grow from there and challenge the supremacy of the NYSE and NASDAQ.



15 gold price predictions for 2011


How to buy stock in private companies


3 reasons to invest in FriendFinder IPO (FFR)


The unofficial tech IPO calendar for 2011


Is China’s Qihoo IPO a buy? (Ticker:QIHU)


Five reasons to invest in the IPO

JPMorgan tries to get in before Twitter IPO (JPM)

Wealthy investors will pay just about anything to invest in Facebook and Twitter. JPMorgan (JPM) and Goldman Sachs (GS) are finding ways to make it happen.

Shortly after Goldman Sachs Group, Inc. (NYSE:GS) announced it was selling $1 billion in Facebook shares to its foreign clients, news leaked that JPMorgan Chase & Co. (NYSE:JPM) was raising cash, too, for its so-called J.P. Morgan Digital Growth Fund LP. A few weeks later, the Digital Growth Fund is sitting on a treasure chest filled with $1.2 billion. And it’s looking to deploy that cash for stakes in late-stage, pre-IPO social media companies.

Twitter sits in the crosshairs. Negotiations are ongoing, but it sounds like JPM’s pushing for a minority stake in Twitter, which could value the site at $4.5 billion, according to the Financial Times.

Talk about a steep valuation. Debra Williamson of eMarketer estimates Twitter could generate just $150 million in revenue in 2011, according to the Wall Street Journal. Compare that to Facebook, which could generate as much as $4 billion.

With a valuation around 100 times the company’s revenues, JPM will probably lobby for Twitter to put itself up for sale. A partnership with a site like Google Inc. (NASDAQ:GOOG) could give Twitter the cash and time it needs to roll out a viable, long-term business model. And no one suggests such a thing will be easy.

While Twitter’s got 175 million “registered accounts,” eMarketer believes that only 16 million or so of those accounts are actually active. Still, it’s difficult to put a price-tag on a site that’s among the Top 10 most-visited Web sites in the world (per Alexa). It shares that honor with Web superpowers like, and

Twitter’s reach makes it difficult to slap a pricetag on, even if the site’s “only” generating $150 million a year. The fact of the matter is, investors probably won’t care. The hottest companies in the tech sphere are all privately-owned. And we all want a piece of something the rest of the public can’t touch. Wealthy investors will pay just about anything for that honor, and JPMorgan and Goldman Sachs are finding ways to make it happen.



JP Morgan’s new media fund forces out the little guy, again


The unofficial tech IPO calendar for 2011


Five reasons to invest in the IPO


How to buy stock in private companies


Groupon CEO is a weird guy with good advice


Time to short Demand Media, Inc. (NYSE:DMD)?