Livestrong.com, Demand IPO exposed

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Jan 15, 2011
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Windfall to LAF

Greg Lee, the chief financial officer of the LAF told Statesman in a piece headed Demand Media IPO delivers windfall to the Lance Armstrong Foundation:

"This was a very valuable way for a nonprofit organization to have their brand and name and image and likeness promoted in a very innovative way" that raised awareness among millions of people about topics the foundation works to promote.

On Tuesday night, the foundation sold 115,000 of its own shares, and 68,000 shares that Armstrong had donated, at the $17 price, and will receive the money "in a matter of days," Lee said.

"Bottom line, the foundation will receive $3.1 million to fund programs for people fighting cancer." In addition, the foundation still has 68,000 shares that it will be able to sell in six months.

There's no way to tell what the stock price will be when the foundation sells those shares, Lee said. At $17 a share, the stock is worth $1.1 million.

Lee said the Demand Media partnership has proven to be "one of the more innovative relationships" the foundation has entered into. It also has licensing deals with Nike, Bayer Aspirin, Trek bicycles, Oakley sunglasses and RadioShack.

Those agreements provide a healthy revenue stream for the foundation, he said. They represent about 25 percent — roughly $10 million to $12 million a year — of its annual revenue, which was $48 million last year.

Armstrong also received warrants to buy Demand Media stock when he negotiated a separate endorsement deal in 2008. He was not listed among the shareholders selling their stock in the IPO.

Capital Sports & Entertainment, which represents Armstrong, received a smaller number of warrants in 2008 and offered some shares in the IPO.

http://www.statesman.com/business/demand-media-ipo-delivers-windfall-to-the-lance-1212492.html
 
Jul 25, 2009
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Shortleg said:
On Tuesday night, the foundation sold 115,000 of its own shares, and 68,000 shares that Armstrong had donated, at the $17 price, and will receive the money "in a matter of days," Lee said.
That seems very generous. When and where will it be possible to check whether this is what actually happened?

As an aside, is the $50,000 flood donation listed yet?
 
Jan 15, 2011
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I Watch Cycling In July said:
As an aside, is the $50,000 flood donation listed yet?
There is nothing against either LA or LAF for that amount on the Qld Premier's Appeal page. On the home page it refers to "organisations" that have contributed $10k or more, on the page itself I cannot see any large donations from individuals.

Though it does have the following: "If you would like your major donation of over $10,000 recognised on this page, please provide your details on the major donations form."

Maybe someone could point that out to LA or the LAF?
 
Nov 24, 2010
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From the info in this thread, I think Botany is right on the money. ie less than $15 a share in July. Any mum and dad investors could be seriously burnt here!
Further discoveries from Velocentric will be interesting. Problem being the horse has already bolted!

cheers to all, except Demand
 
I Watch Cycling In July said:
That seems very generous. When and where will it be possible to check whether this is what actually happened?

As an aside, is the $50,000 flood donation listed yet?
You miss the point. Dot-Org was propping the price. By selling it's shares at it's set level it kept the price strong. Nothing wrong with this normally but the chairman of dot-org is also an owner of Demand. Severe conflict. In addtion the 3 million dot-org made from the selling pays the fees of Demand owner for image rights. It's very messy.
 
Jul 7, 2009
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Is everyone really that jealous of Lance?

Seriously, just because he makes money off his name whether you like him or not is his business ( let me guess......... you can't).......... and it appears to be a damn good one

flame on............
 
Nov 24, 2010
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oldschoolnik said:
Hit public market @ $23 now at $20.44 in only 3 trading days. Given everything I've learned in thread there could be many downward catalysts on the price - this could be a great short. I wonder how DMD would be affected by LA being charged or another big news story?

Down $2.56 in only three days of trading. Botany predicted less than $15 by july
Well maybe $15 by march!

Oldschoolnik, please keep us up to date on further drastic price drops.

cheers to all
 

Dr. Maserati

BANNED
Jun 19, 2009
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whocares said:
Why is this in the clinic?
Because it relates to Lance Armstrong who is a doper.

Wheels Go Round and Round said:
Is everyone really that jealous of Lance?

Seriously, just because he makes money off his name whether you like him or not is his business ( let me guess......... you can't).......... and it appears to be a damn good one

flame on............
The reason it is being discussed is not because he is "making money off his name" - it is because he is making money off his 'charity'.
 
Mar 19, 2009
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Page Mill Masochist said:
Stock is trading at $8.42, down two-thirds since IPO.
Most people knew that was going to happen because their business model is constantly at risk by Google tweaking it's search algorithms to weed out spam.

What's really strange is doing a search for "Armstrong" at Livestrong.com and getting no results.
 
Sep 5, 2009
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thehog said:
I have to admit the stock has done better than I originally thought.

Armstrong did clean up at IPO though. Took the money and ran. Thank-god for Livestrong.com
After Armstrong was exposed as obtaining the same benefit as LAF for the sub licensing of LAF's intangible assets and transfer of the .com website Armstrong agreed to donate his profits to LAF.

About Armstrong's benefit the Demand Media IPO prospectusreasoned as follows it was paying Armstrong for the use of his name for endorsement and "services":

During the term of the Endorsement Agreement ending on December 31, 2011, Lance Armstrong ("Armstrong") will provide certain services and endorsement rights to the Company. In consideration of Mr. Armstrong's services, the Company issued a one-time upfront consideration in the form of a ten-year warrant to purchase 1,250 shares of the Company's common stock at an exercise price of $6.00 per share (the "Livestrong Warrant"). No royalties or other consideration are payable to Armstrong under this agreement.
 
Aug 10, 2010
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BotanyBay said:
Options will be called options (unless he's already purchased the options, at which point, he already owns the stock). If they're un-exercised, then they are referred to as options. I believe warrants pertain to options.

"Beneficially owned" means he owns it. They gave or sold it to him.

As you dig through the various filings, and think you're seeing them handing him more and more stock, make sure you've been keeping-up with internal pre-IPO stock splits. It is not uncommon for a hot IPO to split ts stock a LOT in the month before it hits the market (with its underwriter's permission, of course).

BTW, who is underwriting this POS?
To articulate further, "beneficial" means that Lance is the "real" owner, even though the property might be held in name or title by somebody else.
 
Sep 5, 2009
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Page Mill Masochist said:
What percentage of Demand does Lance own now?
A substantial potential stock holding to Armstrong and LAF was in the form of stock warrants. Armstrong also held shares purchased before the IPO.

The initial IPO had these with an exercise price of $6 which would have provided both LA and LAF with humongous capital gains.

SEC stepped in and said "no way". The exercise price was increased in the amended IPO, from memory, to $12 and the number of warrants halved.

Google spoiled the party by changing its search algorithms that had the effect of scuttling Demand Media's search advantages. The stock value plummeted from a high I recall of $24.

The stock was trading at below the exercise price so the warrants were worthless. Why exercise @ $12 when you could purchase on the market in the last 12 months at $5.85?
 
May 25, 2009
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Page Mill Masochist said:
Stock is trading at $8.42, down two-thirds since IPO.
Should have put my money where my mouth was. It really would have been like Trading Places--making money while the bad guys finally get theirs :)

Interesting learning experience though.
 
oldschoolnik said:
Should have put my money where my mouth was. It really would have been like Trading Places--making money while the bad guys finally get theirs :)

Interesting learning experience though.
I alerted one of the market's big short sellers. Don't know if he paid attention, but if he did, he is happy.

Dave.
 
May 25, 2009
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D-Queued said:
I alerted one of the market's big short sellers. Don't know if he paid attention, but if he did, he is happy.

Dave.
That's hilarious! If he really made a killing can he put me on retainer? Maybe throw me a "Thank you" bone :) $23---->$8.45 not bad.

Given all the fraud in pro sports-- I'm sure there will be other similar opportunities at some point.
 
oldschoolnik said:
That's hilarious! If he really made a killing can he put me on retainer? Maybe throw me a "Thank you" bone :) $23---->$8.45 not bad.

Given all the fraud in pro sports-- I'm sure there will be other similar opportunities at some point.
I'll put in a good word for you... but my check is still in the mail and I alerted him ahead of the IPO.

Dave.
 

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