Hello and welcome.
In this article, we’ll be taking a look at Dave Forest’s Warrants Master Course.
I first learned about this through a presentation on the Casey Research website, where Dave was talking about a “private investment” that has shown rare gains of 2,487% to 7,991% within a short period of time. And that Warren Buffet has used it to make billions of dollars.
According to Dave, there’s “no better opportunity for the smart speculator to make big, fast gains.” So I was very curious to see what all of this was about.
Here’s a quick summary of what I found:
- The “Warrants” Dave Forest is talking about in the presentation are called stock warrants, which are issued directly by the company to the investor, and allow you to purchase the company’s stock at a specific price, before a specific date.
- As an investor, the benefit of a stock warrant is that it allows you to potentially purchase shares in the company at a lower price in the future, upon exercising the warrant.
- The benefit to the company issuing the warrant is that, when the warrant is exercised, it provides them with a fresh source of capital, since they issue new shares for the transaction.
- In the presentation, David says that even though it’s relatively easy for anyone to invest in warrants with a regular brokerage account, good opportunities can be hard to find. And that his Warrants Master Course teaches you how to find them.
- In order to access Dave’s Warrants Master Course, you need to join his service, Strategic Investor, through the Casey Research website for $49.
- David Forest (Dave) is a geologist, entrepreneur and investment analyst who joined Casey Research, a popular financial publishing company, in 2004. He’s best know for his work with the Strategic Investor and International Speculator services he runs.
Read on to learn more.
Overview of Dave Forest’s Presentation
The presentation used to pitch the Warrants Master Course is an interview between Rachel Bodden and Dave Forest. In it, Dave talks about “the sexiest, fastest moving” opportunity in the world, and how it can produce large gains in record time.
According to the presentation, this is Warren Buffett’s #1 private investment and has historically shown rare gains of 2,487%, 2,233%, 2,117%, and 7,991%:
The website also states that this opportunity was previously reserved for the 1% of wealthy investors, but “thanks to SEC Rule 30.52, Main Street Americans are now getting more and more access to these kinds of investments.”
At this point, I have to admit, I was wondering what on earth he was talking about!?
The presentation got even more mysterious though, when Dave pointed out that all you need to do to find these “private investments” is “spot the W” which is hidden among regular stocks.
He says there are “just 5% as many of these special investments as there are stocks on the major US exchanges” or 304 in total. So you need to know how to find them.
He goes on to cite numerous examples of how these “special investments” could have made you a lot of money, within a relatively short period of time.
One of these examples Dave used had to do with Warren Buffet:
After the 2008 financial crisis, Bank of America got hit hard. They had to deal with $83 billion in losses from bad loans plus mounting legal payouts from the subprime mortgage crisis.
So Uncle Warren came along and infused them with sorely needed cash… and in return he got a slew of these private investments.
And then a big profit catalyst hit for Bank of America…
The bank got a $45 billion bailout courtesy of the U.S. taxpayer. This let the company get back on its feet, and it soon made a complete turnaround.
And thanks to that catalyst, Buffett got MUCH richer. The value of his private investments shot up by $12 billion.
I was curious to know what Dave was referring to, so I did some digging.
And it turns out, Dave was referring to the time when Warren Buffet’s Berkshire Hathaway made roughly $12 billion in one day, just by exercising stock warrants.
According to an article on CNBC, Berkshire Hathaway obtained these warrants through an investment it made in Bank of America in 2011, that allowed it to purchase roughly $5 billion in BoA shares for $7.14 each at any time prior to 2021.
Then, in 2017, when Bank of America’s share price rose to around $24 per share, Berkshire Hathaway exercised the warrants. Which allowed it to purchase roughly $17 billion worth of shares for a “mere” $5 billion, making Warren a cool $12B in one day as a result.
Dave goes on to provide other examples of how much money could have been made through warrant investments in other companies using a similar strategy. And says that this type of investment allows individual investors a way to profit like Warren Buffet.
Warrants give individual investors a direct way to profit like Warren Buffett, right from their existing brokerage account, with securities that can cost a dime or less.
It all sounds very exciting…
But what are warrants? How do they work? And are they really a good way to make lots of money in a relatively short period of time?
What Are Warrants and How Do They Work?
The “Warrants” Dave Forest is talking about in the presentation are called stock warrants.
Stock warrants are certificates that are issued directly by the company to the investor, that allow you to purchase the company’s stock at a specific price, before a specific date.
So it’s basically a way to “lock in” the right to buy shares at a certain price in future.
And if that price is lower than the current stock price when you exercise the warrant at some point down the road, you can buy the shares at a discount.
Then, once you own the shares, you can sell them and make an immediate profit based on the difference between what you paid for the shares and what you sold them for.
It may sound a bit complicated, but it’s really not.
Warrants just give you the right to buy shares at a specific price, before a specific date.
It’s kind of like stock options, but there are differences.
The main difference between options and warrants is that warrants are issued directly by the company, and when you “exercise” a warrant, the company issues you new shares.
On the other hand, with stock options, investors are trading between one another as a way to speculate on price movements. So no new shares are created.
The other major difference is that options contracts typically expire within a few days, weeks or months. Whereas warrants tend to have much longer, multi-year expiry dates.
How do you buy and sell warrants?
There are a few main ways you can obtain warrants.
One way wealthy investors, like Warren Buffet, have obtained warrants, is by purchasing “preferred shares” of a company, because warrants often come attached to preferred shares.
Another way some people receive stock warrants is from their employer. For example, if their employer is issuing stock warrants as a bonus to their employees.
And lastly, you can buy, sell and exercise warrants in most regular brokerage accounts. You just need to find the companies that are offering warrants, and Dave Forest says there are 304 of them in the U.S.
In any case, from there you can buy, exercise, or sell the warrants in a similar manner to stocks, all within your own brokerage account, provided they give you the option to do so.
As mentioned earlier, exercising a warrant means exercising your right to buy shares at the price the warrant stipulates. Which is (ideally) going to be lower than the current share price. But you can also sell them to other investors within your brokerage account.
What are the potential downsides?
The main potential drawback of investing in warrants has to do with volatility.
Warrant prices are typically much lower than the underlying share price of the stock they’re connected to. For example, if the share price is $2, the warrant price might be $0.70.
Which is great if the stock price goes up, but not so good if it tanks.
For example, if the share price went from $2 to $2.50, you could still buy shares for $0.70 using the warrants you have. Awesome. But if the share price went from $2 to $1.50 at the time you exercised them, you’d lose money. Bummer.
That part is pretty straightforward.
What’s a bit more tricky to understand, however, is the volatility aspect.
Basically, as this article on Investopedia explains, warrant prices typically move in tandem to the underlying share price in absolute terms, which exaggerates the percentage gain or loss of the warrant, given that the warrant’s price is much lower.
Using the same figures we did earlier, if the share price went from $2 to $2.50, that would represent a 25% gain. And, assuming the warrant price moved in tandem, the warrant would have gone from $0.70 to $1.20, which would represent a 71.42% gain.
On the flip side, if that same share price dropped from $2 to $1.50, representing a 25% loss for a regular shareholder, the warrant holder would have seen the price of their warrant(s) drop from $0.70 to $0.20, which represents a 71.42% loss.
As you can see from the first example, warrants can give you a form of leverage, and make your gains much larger than holding regular shares. But as I outlined in the second example, they can also exacerbate your losses. So it’s a tradeoff.
Summing it up
Warrants can offer investors a way to make outsized gains with a relatively small stake, but there are risks involved. And those risks are amplified compared to investing in regular shares.
Like anything, there are pros and cons to consider. And while I don’t consider myself to be a financial expert like Dave, I did think it was worth explaining this, because it’s easy to get swept up in the hype, and overlook the potential risks involved.
What Is The Warrants Master Course?
Dave Forest’s Warrants Master Course is a five part video training that walks you through what stock warrants are, how they work, and how to make money investing in them.
The first video (Warrants 101) gives you some background on what warrants are and gets you up to speed on how they work and why Dave thinks they’re such a great opportunity.
The subsequent videos walk you through the step-by-step process of how to find warrants in a regular brokerage account, how to buy them, and how to track their performance.
How do you access the course?
The only way to get access to the Warrants Master Course, to the best of my knowledge, is to subscribe to Dave’s service, Strategic Investor, for $49 on the Casey Research website.
You basically get the course as a bonus for joining Strategic Investor.
On top of that, subscribers receive a report titled “The Warrant Play Set to Triple Or More” which outlines, as the name suggests, a warrant Dave says could triple in price.
In order to get the course and bonus report, however, you do need to join Strategic Investor through the presentation about warrants. Because these are exclusive to that promotion.
What Is Strategic Investor?
Strategic Investor is a monthly advisory service headed up by David Forest, that provides subscribers with monthly stock recommendations and research.
As I explain in my full review of Strategic Investor, the aim of the service is to help individual investors make money through the stock market.
The service does tend to favor the commodities and mining sector given Dave’s background in geology. But the types of opportunities Dave recommends aren’t limited to warrants and commodities.
Dave leverages his decades of experience as an investment analyst to identify a range of stocks using his unique four step process (Assess, Consolidate, Position and Speculate).
And he shares these with subscribers each month via the newsletter, along with detailed analysis and insight into why he recommends each stock.
As a subscriber, you also get access to the model portfolio, archives of all past newsletters, and a number of bonus reports which detail different opportunities Dave is looking at.
Here are the bonuses on offer as part of the “warrant” presentation:
- The Warrant Play Set to Triple or More (report)
- The 2021 Gold Spike Action Plan (report)
- Dave Forest’s Warrants Master Course (video training series)
- The “Strategic Profits Library” (three report bundle that provides four tech-related stock recommendations and the details on each)
How much does it cost to join?
The cost of joining Strategic Investor is $49 for 12 months, and there’s a 60 day money back guarantee in place.
Who Is David Forest?
David Forest, otherwise known as Dave, is a geologist who worked in the mining and petroleum industry for over two decades. As part of this, he founded his own mineral exploration and development companies, and raised $80 million in equity financing.
According to the Casey Research website, he joined the Casey Research team in 2004 to share his insights and recommendations with those interested in the natural resources sector.
These days, he is probably best known for his work with Strategic Investor, and the various presentations he runs as part of promoting this service.
For example, at one point, Dave ran a presentation called “5G Master Key” where he talked about one of his tech related stock picks related to 5G, as a way to promote Strategic Investor.
Is he the real deal?
Dave is a real investing expert, and from what I can see, he does have a solid track record.
He also works with one of the most respected financial publishing companies in the world, Casey Research, and shares a lot of useful insight as part of his services.
According to the website, readers across Dave’s research services have seen how to make as much as 3,194% with warrants. And while I wouldn’t expect that all of his recommendations (warrants or otherwise) would pay off that well, it does show that he knows his stuff.
Dave’s presentation about “Warren Buffet’s #1 private investment” has to do with stock warrants, which give you the right to buy shares at a specific price before a specific date.
Dave says warrants are “the sexiest, fastest moving plays in the world” and provides multiple examples of seeing huge gains (of between 2,487% to 7,991%) in a relatively short period of time.
The gist of his pitch was that warrants can be a cheap, fast way to make big gains.
Is it legit?
It is possible to make money with stock warrants, and Dave’s course (called Warrants Master Course) does walk you through the process of investing in stock warrants.
So it is legitimate, and the service you need to join to access the video training, Strategic Investor, is a legitimate service that he runs with the help of the team at Casey Research.
That said, I wouldn’t join expecting to get rich quick.
Because first of all, investing is risky. No matter who’s recommendations you’re following, or what strategy they’re using, there are no guarantees you’ll make any money at all.
Second, as I explained earlier, warrants can be highly volatile. So just as you could potentially make money quickly, you could also lose money quickly.
I’m not saying this to put you off, but I do think it’s important to do your own research and consider the risks, so that you can better decide if Dave’s strategy is right for you.
And hopefully what I’ve shared with you here, helps you do that.