Dave Forest just released a presentation about Jeff Bezos’ supposed “next billion-dollar deal” that he says could “potentially hand investors up to 49X over the next 12 months.”
There’s more than one version of this presentation floating around, with different headlines and introductions. But they are mostly the same.
In short, Dave Forest claims that Bezos has netted up to $2.5 billion in profit from six prior deals. And with one “obscure $3 play,” he says that every American can get in on Bezos’ next (7th) deal, and potentially see “up to 49 years’ worth of gains” in the process.
What’s he talking about? And is it legit?
After looking into this presentation, I realized that it’s actually a rehash of a Dave Forest pitch I wrote about late last year dubbed the Zero to Retirement Summit.
Long story short, Dave Forest is recommending buying stock warrants in an EV company that has a business deal in place with Amazon regarding its electric trucks.
In this post, I’ll walk you through what “Bezos deal” Dave Forest is talking about, what warrants play he’s teasing, and dig into a second pick he mentioned towards the end of the presentation (his “#1 EV Stock of the Decade”).
I’ll also shed some light on what warrants are and give you an overview of the service he’s promoting (Strategic Investor) to help you decide if it’s worth joining.
So with all that said, let’s get started!
What Is “Bezos’ 7th Deal?”
According to Dave Forest, Jeff Bezos has found a way to use Amazon to “force” his investments to go up. And he says it’s possible to invest alongside Bezos, potentially seeing “up to 49 years’ worth of gains” in the process.
What’s more, Forest says that all you need is a “5-letter code,” a regular brokerage account, and “as little as $3” to get started.
“I’m here today to give everyone watching the chance to get into a deal that could be bigger than all of those examples you just mentioned.
We’re talking about a chance to invest alongside Jeff Bezos…
One of the most powerful men in the world…
And potentially see up to 49 years’ worth of gains as Bezos makes moves to use the entire power of Amazon to FORCE his investment to go up.
All you need is a 5-letter code…
A regular brokerage account…
And as little as $3 to get started.”
What the heck is Dave Forest talking about?
In short, Dave Forest said that Bezos uses an “airtight playbook” to “force” his investments to go up, which involves the following three steps:
- First, Forest says Bezos takes a “huge stake in the company.”
- Next, he supposedly sends lots of business to that company through Amazon.
- And finally, he says Bezos “sits back and waits for his investment to soar higher.”
I’m sure it’s not THAT simple in reality, but generally speaking, this does appear to be a strategy Bezos has used to make money on different investments in the past.
Dave Forest listed six “Bezos deals” in the presentation:
- Spartan Nash
- Clean Energy Fuels
- Air Transport Services Group
- Plug Power
I haven’t looked into every deal Dave Forest mentioned, but these do appear to be deals Bezos has made in the past. And the way Forest describes the deals (overall) seems to fit.
For instance, in 2019, a subsidiary of Amazon did a shipping deal with Cargojet, a Canadian cargo airline. And according to financialpost.com, the terms were that Cargojet would issue warrants allowing Amazon to purchase Cargojet shares for $91.78 a share IF the company generates $400 million worth of business over six and a half years.
I’ll explain how warrants work in a moment, but the short version is that this deal all but guaranteed Amazon could buy shares at the above price because it can easily send Cargojet $400 million in business over that timeframe. Why? Because it’s Amazon.
And when news broke out that Amazon had inked a deal with Cargojet, a relatively small public company, its shares soared well above $91.78. Meaning… cha-ching.
Anyway, this is what Dave Forest is getting at when he says that Bezos is using Amazon to “force” his investments to go up.
It’s not literal. Instead, he’s more or less saying that Amazon can profit from its ability to fulfill these types of business deals and from its strong reputation.
And the brilliant part about this strategy is that, aside from an initial “hype rally” because the company has partnered with Amazon, it can see continued earnings growth as a result of the business deal, which in turn can lead to long-term share price appreciation.
In any case, while that might be great for Jeff Bezos, none of this means (in any way) that you’ll make money following Dave Forest’s recommendation.
Why? Because, as with any investment, there are ALWAYS risks involved, and warrants are no different. In fact, warrants can be a LOT riskier than shares.
How so? Well, to understand that, you first need to understand how warrants work. And the link I just shared leads to an Investopedia article that breaks it all down. So I highly recommend checking that article out before doing anything else.
But in case you don’t want to read that… the short version is that warrants are derivatives that give you the right to buy the underlying asset (i.e., shares) at a set price on or before the expiry date. In other words, they allow you to pay to lock in a future share price.
And while there are differences, warrants are very similar to options.
Like options, one of the main advantages of stock warrants is that they act as a form of leverage because you can “control” a larger number of shares with less money.
In other words, it’s typically cheaper to buy a warrant than a share. And since warrant prices tend to move in tandem with the underlying stock price, the percentage moves on a warrant can be massively exaggerated to the upside or downside.
What does that mean?
The best way to explain this, I think, is with an example…
Let’s say that Company X’s shares are trading for $50, and the associated warrant is $5. If the share price moves up to $52.50, that’s a 5% increase. Big deal. However, the warrant may also go up by $2.50, bringing it to $7.50. And if so, that’d represent a 50% increase.
The same is true if the stock goes down in price, too. As in, a relatively small move in the underlying share price could take a sledgehammer to the value of the warrant. Using the example above, a 5% move in the share price could wipe out half of the warrant’s price.
So to sum it up… warrants can be great, but like anything, it pays to do your research because there are significant potential risks involved.
What “Warrants Play” Is Dave Forest Recommending?
I believe Dave Forest’s pick is The Lion Electric Company (LEV).
Well, as I mentioned at the outset, this presentation is essentially an update of a Dave Forest presentation I’ve already looked into. And after checking the clues in the “Bezos’ 7th Deal” pitch, it appears as though he’s still pitching the same company.
For instance, one of the first clues he shared was about how Amazon is dedicated to reducing its carbon emissions by “electrifying” its fleet.
“By 2040 he wants to cut Amazon’s carbon emissions down to zero.
And that means – Amazon’s entire fleet has to go electric.
It’s an incredibly ambitious goal.
And Bezos is dead-serious about it.
He has already ordered over 100,000 electric vehicles – the largest order for EVs ever.
And my research indicates this massive transformation could be a massive profit opportunity for a tiny EV firm.
I’m not speaking about Tesla or Rivian or all these companies everybody is looking at.
We’re really talking tiny here… this firm is 600 times smaller than Tesla… and in their last earnings report, they only claimed $22 million in sales.”
This tells us that Forest is spruiking an EV company, and he dropped some clues about its market cap and latest earnings report (all of which match Lion Electric).
How so? Well, Amazon has a deal in place with Lion Electric to procure 2,500 of their electric trucks, the market cap clue matches, and its fourth quarter 2021 revenue was around $22 million (rounded down).
What other clues did he share?
“And get this…
The way this deal is structured if Bezos wants to “unlock” his stake in this company…
He will need to send them $1.1 BILLION in business.”
“This firm… it’s currently building a 900,000 square feet EV manufacturing plant that will be the biggest of its kind in America…”
As for the first clue above… this is related to the deal I mentioned earlier between Amazon and Lion Electric. According to Markets Insider, part of the deal involved Amazon getting warrants that allow it to purchase shares of Lion Electric at $23.36. The deal also requires that Amazon spend at least $1.1 billion annually on the company’s products.
And last but not least, the company has said it’s planning on building a 900,000-square-foot manufacturing plant near Chicago, according to auto123.com.
So, I have no doubt that Lion Electric Dave Forest’s pick.
But what “warrant play” is he talking about?
Assuming my guess is right, Dave Forest is most likely referring to Lion Electric’s warrant, which is listed on the Nasdaq under the ticker LEV.WS.
How does it work? Each warrant allows the holder to purchase one Common Share of Lion Electric at $11.50 per share on or before expiry.
What else matches? As of writing, it’s trading for less than $2, which matches Dave Forest’s clues, “LEV.WS” is likely the “5-letter code” Dave Forest talked about in the presentation, and it can be traded on a regular broker account.
So all the stars have aligned on this one.
As for whether or not you should invest… I’ll leave that part up to you. But I’m confident that, based on the clues, this is the “warrant play” Dave Forest is teasing.
If you want to find out for sure and access Forest’s research on the company, the best thing to do would be to read his report, “Bezos’ 7th Deal: How to Bag Up to 49X as Amazon FORCES these Warrants Up,” which comes with a Strategic Investor subscription.
I’ll give you the heads up about that in a moment, but for now, let’s dig into the second EV company Dave Forest teased in the presentation.
Recommended: Go here to see my #1 rated stock advisory of 2022
What’s Dave Forest’s #1 EV Stock of the Decade?
Toward the end of the presentation, Dave Forest dropped some clues about a second company he’s interested in within the EV space.
To start with, he talked about his overall EV market prediction for the next decade:
“I don’t care about the Federal Reserve… geopolitics… none of that.
Until 2030 the entire EV sector will only know one direction…
As for the company he’s bullish on, Forest discussed a “behind-the-scenes firm” he’s tracking that’s been around “since the days of horse-drawn carriages.”
“This firm has been around since the days of horse-drawn carriages.
And it has always managed to stay on the cutting edge of automobile technology.
In 1909 it developed its first manual transmission…
Which helped engineer Louis Schwitzer win the first ever race at the Indianapolis Motor Speedway.
And recently this firm spent over $3.3 billion building out their line of EV parts.”
What could it be?
Well, the clue about developing its first manual transmission in 1909 led me to an article on Automotive News Europe that matches BorgWarner Inc.
I also looked into the “spent over $3.3 billion” clue about EV parts, and it appears that Dave Forest could be talking about BorgWarner’s $3.3 billion takeover of Delphi Technologies.
Not only do the numbers match, but the article I just linked to states that this “positions BorgWarner to grow as a leader in electrified propulsion systems for cars and heavy-duty trucks.” And that, to me, sounds like a pretty close match with what Forest said.
What else does Dave Forest say?
“You’ll see this firm can supply pretty much anything that’s needed for EVs.
From battery packs… to inverters… to charging stations…
Mark my words…
This is not just another EV parts supplier.
It’s on the verge of becoming the EV parts supplier.
And according to my research, sales could explode as much as 15X as this company transforms into an EV-parts powerhouse.
I consider this the #1 EV stock to own over this decade.”
I have no idea if its sales will “explode as much as 15X,” but BorgWarner is a U.S.-based multinational automotive supplier that’s focused on electric vehicles and sustainability.
And as a quick side note, while the company was formed in 1928, it was formed as part of a merger with a handful of companies, some of which were founded as early as 1901 (Warner Gear). So the clue about developing its first manual transmission in 1909 matches.
Bottom line… BorgWarner Inc. (ticker: BWA) appears to be “The #1 EV Stock of the Decade” that Dave Forest teases in the presentation.
And like his last pick, the only way to access the research on his pick is to subscribe to his stock advisory service, Strategic Investor. So let’s take a look at that now.
Should You Join Strategic Investor?
Strategic Investor is Casey Research’s flagship stock advisory service, where Dave Forest shares his latest research and investment ideas with subscribers each month.
According to Forest, his mission with Strategic Investor is to “bring knowledge about warrants to the masses” and share “hedge-fund level research.”
The service isn’t just focused exclusively focused on warrant investing, but this is one of the things that makes the service unique. Aside from warrants, Dave’s focus with this service is on uncovering the “next big trends” before the mainstream media catches on.
How much does it cost?
Strategic Investor retails for $199 per year, but if you sign up through the “Bezos’ 7th Deal” presentation, this is reduced to $49 for the first 12 months (as of writing). However, the Casey Research order page says that the service auto-renews at $129.
Still, that’s a reasonable price for an entry-level stock advisory service.
What do you get if you join?
The main component of the Strategic Investor service is the monthly newsletter, which is where Dave Forest shares his latest research and stock picks.
Subscribers also receive research reports (including the two reports mentioned earlier), access to the model portfolio, and updates on Dave Forest’s picks.
Lastly, Dave Forest has put together a five-part video course (Dave Forest’s Warrants Master Course) that explains what warrants are so you know how to follow his recommendations.
Is Dave Forest the Real Deal?
David (Dave) Forest is a geologist-turned-stockpicker who, from what I can tell, runs all (or at least most) of Casey Research’s services.
This includes the free daily newsletter called Casey Daily Dispatch, Strategic Investor, a higher-tier service called Strategic Trader, and International Speculator; a service focused on junior mining companies.
Before joining Casey Research, Dave Forest worked in the mining and petroleum industry for over two decades. During that time, he founded a mineral exploration company and traveled to resource projects around the world.
So his background is mostly in natural resources, but he seems to have recommended a number of great stocks across different sectors over the years.
I’ve also covered some of his recent presentations on this blog, aside from what I’ve already mentioned. For instance, most recently, I wrote about his “crack-up boom” prediction. So if you want to get a better idea of what he’s forecasting, you might find that helpful.
Dave Forest’s presentation centers around what he’s calling Jeff Bezos’ “7th deal” and suggests that everyday investors can “get in on” this deal too.
On the one hand, investing in warrants could be a potentially worthwhile strategy if you take the time to learn how it works and educate yourself on the potential risks.
And since Strategic Investor is focused on helping subscribers learn about this strategy, the service could be well worth a look for $49.
That said, there are two things I want to mention before we wrap this up.
First, neither Jeff Bezos nor Amazon is “forcing” any investment to go up. The company has struck mutually beneficial business deals that make it likely the warrants it’s received will pay off in the years ahead. But there’s still a lot that could go wrong from an investment point of view, so there is no guarantee you’ll make money with Dave Forest’s recommendation.
Second, there are significant potential risks involved with warrant investing, and many factors contribute to a warrant’s price. For instance, there are factors relating to the company itself, macro factors, and things specifically related to warrants like the leverage aspect, expiration dates, and the warrant’s terms as set by the company.
So I highly recommend doing your own research on this before making any decisions because that way, you’ll have a better idea of what to expect before diving in.
Anyway, that’s my take. I hope you found this post helpful. And if you have any comments, feel free to chime in below. Thanks for reading.