5 Tips For Tracking Unlisted Investments

Keeping track of your listed investments is difficult enough even for the most experienced investment planners. For one, there are a lot of things to watch out for when tracking listed investments, such as the movement of share prices and company disclosure statements. Unlisted investments are even more difficult to track because they’re usually not publicly available information. 

Among the things you have to track for in unlisted investments are your employer’s 401(k) plan, individual retirement accounts (IRAs), health savings accounts (HSAs), and taxable investment accounts. 

There are many ways to track your listed investments, such as thru an online platform and trade applications. Fortunately, you can also track your unlisted investments thru the same online platforms. Additionally, here are some tips for tracking unlisted investments:

1. Nurture Good Business Relationships

The first thing you have to keep in mind if you’re mulling over the idea of playing the unlisted investments game is that they’re a long game. If you’re the kind of person who’s willing to wait, then this game might be for you. Investors make money from unlisted investments by coming in at the first floor and waiting until the par value of their investments take to the skies.

You’ll have to choose companies that have a board coming from diverse and independent interests and have a professional team taking care of management. One of the things you should watch out for is the attitude and policy of the management towards long-term wealth creation and future earnings growth, as well as how they treat minority shareholders.

To be able to track your unlisted investments, you should nurture good business relationships with the management team, especially the finance and accounting teams, of the companies where you sunk your money. If you bought the shares through an intermediary or underwriter, you should establish good communications with the management and finance team from the get-go. 

2. Get A Hold Of Strategic And Annual Plans

Buying shares and equities in unlisted companies is basically saying you’re betting that the company will become a winner in the long run, even though it doesn’t have much to show yet. To understand what you’re getting or gotten into, get a hold of copies of the strategic and annual plans of the company. Some even offer investments in platforms. Of course, these are just mostly paper concepts and presentations, but at least it gives you an idea of what this unlisted company plans to do. You may then later measure real figures against what they’re planning to do. 

The strategic and annual plans usually contain the things that the company intends to do and accomplish in the long term. You can also gauge whether the company is heading where it says it wants to go by tracking its monthly and annual activities and accomplishments. You should ask for copies of relevant corporate and management documents from time to time so you can get updates about what management is doing to make the company earn future income growth.

3. Read Financial Statements And Reports

The only way you can make sense of strategic and annual reports is by verifying whether they’re indeed being done. The only way you can verify whether they’re being done without having to do site inspections and onsite interviews is by reading financial statements and reports. You’ll also have to do this to look for opportunities and ways to diversify your portfolio.

Financial statements and reports usually contain how the company spent its money and how much it’s earning. As they say, numbers don’t lie. So, you’ll see in these statements exactly what the management did to the company’s money and how much the company is actually making.

Since these are unlisted companies, they don’t have disclosure obligations. Hence, you won’t be able to find copies of their financial statements and reports lying around somewhere on the internet. To get those copies, you often have to ask for them from the finance or accounting departments of these companies.

4. Watch Out For Business And Financial News

Even though you’ve invested in unlisted companies, their business operations and financial value will still be affected by fundamental factors such as political stability, business, and financial news, as well as market developments. For instance, a promising startup electronics company that sources its chips and processors from a country suddenly placed under a trade embargo by the United States will definitely be affected. In this scenario, it’s possible to lose money due to disruptions.

In relation to this, at the level of the enterprise, you should also request for reports and sales forecasts from the marketing and sales departments. Doing so will also help you track your unlisted investments. Both marketing and sales departments usually submit their reports to the executive management. You’ll get an idea of the long-term financial viability and forecasted earnings based on what the sales department says they’ve sold over a specific period.

5. Attend Meetings You’re Allowed  

Aside from the written financial reports and statements, another way of tracking your investments in unlisted companies is by listening to or attending company meetings that you’re allowed to join. Of course, there are meetings you won’t be allowed to join, like regular board meetings. But if they hold executive committee and management team meetings, and they post link or session IDs and passwords, then you should join and listen in every now and then so you can stay updated.

Takeaway: From Startup To IPO

The dream of every promising startup today, it seems, is to earn enough money to convince its investors the company is headed for-profit and work towards holding an Initial Public Offering (IPO). 

You can get early initial information about possible IPOs from the finance and accounting department. They’re usually in charge of doing all the prep work when a company is about to go public. In between, though, you’ll have to stick close to them to track unlisted investments