Thursday, April 01, 2010

Primerica Getting An IPO, But Are Investors As Easily Duped As Their Recruits?

Clearly we're seeing the light at the end of the economic tunnel when the banks start offering ludicrous Initial Public Offerings again.

Primerica, Citigroup's red-headed MLM stepchild is being spun off and taken public.

Clusterstock: Meet Primerica, The New Wall Street IPO That's Really A Multi-Level Marketing Scheme
Citigroup (C) has officially priced the IPO of its spinoff of Primerica.
At $15 per share, the pricing went strong.
Warburg Pincus will pick up 22% to 33% of shares and Citigroup will retain 32% to 46% of equity, which it will divest after Primerica begins trading.
But will investors buy Primerica's stock?
That depends if they can figure out what Primerica actually does first.

For pretty much as long as Primerica has existed, it's been a flash-point for controversy over it's shady recruiting practices. All you have to do is Google them, and you'll see for yourself. Expert Fraud Investigator Tracey Coenen has pilloried them on several occasions, and she's not alone.

When I worked in retail sales, I averaged one or two contacts a week with Primerica "reps" who would waste my valuable on-commission time, only to offer me their so-called opportunity. When I was still young, I would be civil, thinking I still might be able to get a sale out of them. Eventually, I realized that, if they had any money to buy the luxury goods I sold, they wouldn't have become Primerica reps in the first place.

Fact: Real financial advisers are too busy either advising their clients on financial matters, or looking for more clients to advise. What they aren't doing is cruising shopping malls looking to recruit new sales reps: real financial planning companies have HR departments for that.

Whatever Primerica is good for, it isn't making their sales reps rich, since the average Primerica rep makes $5,156 a year. Bike messengers make more than that, and hardly anyone spits on them in public.

About the only value Primerica generates aside from the half a billion dollars it funnels up to the top of the pyramid is the click-through ad revenue that it generates for blogs and websites that criticize them. Apparently their 100,000 rep workforce has so much time on their hands that they constantly surf for sites critical of Primerica and leave thousands of flaming spam comments defending the company.

Wouldn't their time be better spent trying to make money? One would think so.

Back on track, the big question this IPO raises is: is there enough dumb money to buy this stock? Certainly, the average Primerica rep is priced out of becoming a shareholder.

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Stacie Reeves District Rep said...

Many assumptions (we know what that does) are made on things that people know little about. This is a prime example. Its obvious you know very little about Primerica or you would not have these comments posted. A little more research would show this is an amazing opportunity for those who are looking for a part time income and possible career change in educating middle income families on a personal level, at the kitchen table, on how to properly protect their families and to invest in areas that will allow them to have thier money work for them. You apparently are not meant for this type of help of families, we will continue to search out those who it is for. Please do more research on your topics

Lee_D said...

Instead of just saying I'm wrong, feel free to offer statements that counter any of the points I made, Ms. Reeves.

In addition, tell us more about the "amazing" opportunity, and what makes it amazing.

Anonymous said...

I have attended an overview, the folks there are totally involved in what they are doing. I cannot help but think it has a chance. I puchased three shares at the cost of a trip to disney world (Fee included).