Story Stock

Categories: Stocks

See: Story Bond.

The stock went from $20 to $80 three years after the IPO. It went back to $20. Then it went to $400. And back down to $20. It was almost a grail myth journey. But...it wasn't. It was a stock. And now you're the banker, trying to do a secondary offering or placement of 3 million shares from the now-divorced founder, and you don't know how to run the process. That is, you're used to talking about a steady, growing, 20%-a-year compounder with semi-predictable futures.

But you can't with this one. It's a whole story...or series of stories. It trundles like an epic Greek tragedy, so in order to pitch would-be investors as to why they should pay $58 for a stock trading this moment at $59, you have a whole story you have to lay out for them. It ain't a 30-second pitch, the way it is whenever Amazon drops $100 and there's a quick chance for portfolio managers to balance those shares into their not-weighted-enough AMZN stock.

Related or Semi-related Video

Finance: What is a story bond?8 Views

00:00

Finance allah shmoop What is a story bond Well once

00:07

upon a time there was a castle alone in the

00:10

kingdom of yield The princess wanted to pay on ly

00:14

five percent a year to rent that money She had

00:17

found just the right castle she wanted to buy She'd

00:21

been cutting her hair for decades and selling it on

00:24

c baii you know for the down payment But then

00:27

one day a socialist ogre came by and took all

00:30

of her money her belongings and her pink unicorn and

00:33

gave it all to the union elves So then the

00:36

troll family who had loaned her the castle loans grew

00:39

very nervous about her collecting the debts she owed them

00:43

Especially now that the socialist ogre had taken over her

00:46

castle and was kind of ruining it with the elves

00:49

partying down way too hard Well the troll family bonds

00:53

were backed by the value of the castle And the

00:55

family knew that even if the castle were completely ruined

00:59

by the trolls and the ogre and it turned to

01:02

rubble while the lands around it were worth five times

01:05

the bonds principle so is the bonds trading value had

01:09

come down from its thousand dollars a unit par value

01:13

to being offered it now only six hundred bucks investors

01:16

who realised the great value of the pink unicorn breeding

01:20

grounds around the castle wanted toe by that bond aggressively

01:24

at these prices Well the brokers who wanted to sell

01:27

the bond and make their nice commissions were only too

01:29

happy to tell and retail this complex story And in

01:33

fact this is the chances of a story bond that

01:36

is There is some explanation as to why the bond

01:40

is trading at some weird meaningful discount or premium toe

01:44

where it was originally offered or trading that is not

01:47

explainable by normal market conditions like fed fund rates changing

01:51

or inflation moving around or other broad based global debt

01:55

phenomena that would raise or lower the tides bringing up

01:58

or down all votes This is a story bond It

02:01

has its own unique story that has to be told

02:03

and retold like the bible again and again it's a

02:06

bond that has such a complicated random bizarre history behind

02:10

it that investors need tohave an endlessly long painful story

02:14

like this one told to them before they feel comfortable

02:17

Enough to risk their money on that bond And still

02:20

you know be able to sleep at night because well 00:02:22.805 --> [endTime] you know who doesn't love a good bedtime story

Find other enlightening terms in Shmoop Finance Genius Bar(f)