Wow — Buffett's NEVER Done This Before!

By Wayne Mulligan, on Thursday, October 11, 2018

Warren Buffett just shocked the financial world with his latest investment.

No one saw this coming…

That’s because in Buffett’s seventy-year career, he’s never made an investment like this before.

Today, I’ll reveal all the details…

Including why he made this investment, and how you can get in on the action, too.

$4.8 Trillion Profit Opportunity

Last Thursday, I wrote to you about a rare profit opportunity…

It involves a $4.8 trillion mega-trend we’ve been following for the past few months.

You see, once every decade or so, a massive wave of consolidation takes place where bigger companies buy out tens of thousands of smaller ones.

This process is known as Mergers & Acquisitions, or M&A for short.

And as it turns out, that once-in-a-decade wave is taking place right now

The Wall Street Journal predicts that, by December, we’ll hit $4.8 trillion in takeover activity. That will make 2018 the biggest year for M&A ever.

In total, Harvard Business Review expects there to be more than 50,000 transactions this year. And here’s the thing:

If you can identify the companies that will get taken over, you can make a fortune.

And this might explain why Buffett made his most recent investment…

This Is a “First” for The Oracle of Omaha

With a net worth of $88.9 billion, Buffett is currently the third wealthiest person in the world.

He accumulated this fortune by investing in “sure things.”

For the past seventy years or so, these “sure things” were publicly traded blue-chip companies.

These companies always shared similar attributes: for example, they’d been in business for decades, were profitable, and generated significant cash flow… but in recent years they’d stumbled, which caused their stock price to drop.

This enabled Buffett to buy these stocks “cheap” — which put him in position to cash out for big gains when they finally turned around.

But times have changed, and now Buffett seems to have a new definition for a “sure thing.” You see, for his most recent investment, Buffett did something he’s never done before:

Instead of investing in a big publicly-traded company, he went in the exact opposite direction:

He invested in a private startup!

A Method to Buffett’s Madness

Although this is new territory for Buffett, it makes a lot of sense:

Buffett is certainly aware that we’re in the midst of the biggest takeover boom in history…

And he also knows that most takeovers don’t involve public stocks — instead, they involve private startups.

In fact, according to market intelligence firm Capital IQ, 95% of all takeover deals are for private companies.

In the past few months alone, we’ve seen dozens of M&A deals for private companies. For example:

  • Adobe Systems bought private e-commerce startup Magento for $1.68 billion…

  • acquired MuleSoft for $6.5 billion

  • And Microsoft took over software startup GitHub for $7.5 billion.

Early investors in these deals made a fortune — and that’s exactly what Buffett is expecting to do with his most recent investment.

If you’d like to put yourself in the same position, please read on…

The Sweet Spot for “Takeover Profits”

You see, there’s one small detail about Buffett’s investment that I haven’t told you about yet…

It ties back to a concept I mentioned in my article last Thursday:

Investing in startups is a great way to increase your odds of profiting from today’s M&A boom…

But if you really want to stack the odds in your favor, there’s also something else you should do…

You should look for a certain attribute in the private companies you invest in. In fact, this attribute is probably one of the main things Buffett was seeking with his recent startup investment.

Simply put, the private company Buffett backed wasn’t a typical startup. In other words, it wasn’t a tiny early-stage company with a few founders working out of a garage.

Instead, it was a larger company that had been around for years — a company with hundreds of employees, and millions of dollars in sales.

In the startup world, such companies are known as late-stage startups.

A Rare Window of Profit Opportunities

Typically, most private M&A deals are for early-stage companies.

For example, according to data from PricewaterhouseCoopers and Thomson Reuters, in normal market conditions, most M&A takes place at a deal value of less than $100 million…

And the majority of those deals take place for less than $50 million.

But as I’ve explained, we’re not in a “normal” market right now. You see, according to data from Crunchbase, the majority of M&A this year has been for later-stage startups.

Therefore, if you want to put yourself in the best position to cash in on this M&A boom, you should follow the data — and follow Buffett! — into later-stage private companies.

This strategy will give you the best possible chance of getting your piece of these M&A profits.

How to Find Late-Stage Deals

At Crowdability, we tend to focus on early-stage deals.

As you learned today, other than rare markets like the one we’re in today, that’s where the lion’s share of the profits can be earned.

But occasionally, we look at later-stage deals. For example, here are a few later-stage startups currently raising capital from investors like you:

Winsantor — This is a biotech company seeking a cure for a health condition called Peripheral Neuropathy (PN), which affects 1 out of 15 people in the U.S. The company has already completed Phase 1 safety studies, and its founder sold his last two startups to Qualcomm and Apple.

Moonlighting — This is an online marketplace for freelance workers, a demographic that’s expected to make up as much as 80% of the global workforce by 2030. Moonlighting has already raised millions of dollars, has more than 650,000 registered users, and has been a Top 10 app for more than two years.

GeoOrbital — This self-powered wheel can make any vehicle fully electric. The company brought in $2 million in revenues last year, and has earned powerful press mentions from outlets including Huffington Post and CNN. With e-bike sales expected to grow to $25 billion by 2025, this later-stage startup is targeting an enormous market.

Before you proceed, however, a word of caution:

Even though we’re in a bull market for M&A deals, and even though later-stage opportunities have relatively lower risk than early-stage opportunities, these are still private companies — so they’re relatively more risky than stocks.

So if you decide to invest in any late-stage deals, be sure to build a diversified portfolio…

“Betting” it all on just one or two of them is a surefire way to lose your money.

Happy investing!

Please note: Crowdability has no relationship with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.

Best Regards,
Wayne Mulligan
Wayne Mulligan


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