Are You IPO Experienced

[Danny]

http://intelligentspeculation.blogsp...7/03/ipos.html

[brewer12345]

I've participated in an IPO of a tiny local bank, which turned out OK, but no quick pop.

Mostly, I have successfully bought stocks that IPO'd and then traded down. RVWD (acquired), EGLE, DSX, STON, and others were stocks I bought not long after IPO after they just slid or went flat.

[FinanceDude]

With rare exceptions, I have yet to see anybody make big money in them........

Most IPOs are WAY oversubscribed, because the firm that underwrites the issue pushes its brokers to sell it to everyone. It becomes sort of a self-fulfilling philosophy.

I think for the mosr part, you can buy the issue in the secondary market, after the inevitable pullback as some sell their shares for a quick flip.

One exception to the rule is when a local bank goes public. In Wisconsin, I know several folks who made a killing when a small profitable bank goes public. They give depositors first crack at buying shares. One millionaire guy I know opens up a savings account at every private small bank in Wisconsin, and puts $1000 in it. He has participated in 11 IPOs as a bank depositor, and has made clost to a million dollars over 17 years doing that...........

[brewer12345]

Yeah, I never lucked out on the mutual bank conversion thing. I just invested in a start-up bank because some family friends were on the board. When they came around later to do a secondary offfering, I joined in then too.

[FinanceDude]

Quote:

Originally Posted by brewer12345 Yeah, I never lucked out on the mutual bank conversion thing. I just invested in a start-up bank because some family friends were on the board. When they came around later to do a secondary offfering, I joined in then too.

Those kind oof small deals usually work out well over time, but probbaly not going to be the next Microsoft..........

[brewer12345]

Quote:

Originally Posted by FinanceDude Those kind oof small deals usually work out well over time, but probbaly not going to be the next Microsoft..........

Nah, its more like:

Step 1. Buy stock at book value
Step 2. Grow Book value per share by 100%
Step 3. Sell out to a larger bank at 3X newly-enlarged book value.

The only real question is how long it will take.

[FinanceDude]

Quote:

Originally Posted by brewer12345 Nah, its more like: Step 1. Buy stock at book value Step 2. Grow Book value per share by 100% Step 3. Sell out to a larger bank at 3X newly-enlarged book value. The only real question is how long it will take.

Sounds like the playbook for a number of banks 25 years ago...........

Some of those pensions out there for those folks that ran those small banks..........WOW!!!

[brewer12345]

Quote:

Originally Posted by FinanceDude Sounds like the playbook for a number of banks 25 years ago........... Some of those pensions out there for those folks that ran those small banks..........WOW!!!

Start-up/de novo bans are hot these days, with many, many banks starting up. Check out: www.bankipo.com

[kcowan]

I have been in 2 IPOs:
MDA at $14 now trading at $41 (Got out at $27)
THI at $27 now trading at $34 still holding.

The good thing about them is that you pay no brokerage fees (the company picks up all the costs) on purchase (but you do on sale). I passed on Vonage fortunately because I thought they were way overpriced for the risks.

I always stick with established companies with proven cashflows and growth records.

[FinanceDude]

Quote:

Originally Posted by kcowan I have been in 2 IPOs: MDA at $14 now trading at $41 (Got out at $27) THI at $27 now trading at $34 still holding. The good thing about them is that you pay no brokerage fees (the company picks up all the costs) on purchase (but you do on sale). I passed on Vonage fortunately because I thought they were way overpriced for the risks. I always stick with established companies with proven cashflows and growth records.

Yeah, I passed on Vonage too. To me, they have a lot of challenges to overcome........

[Nords]

I don't think Jimi ever got an IPO!

Quote:

Originally Posted by DanTien I've never gotten in on an Initial Public Offering. Have any of you been so lucky?

Fidelity offers IPOs to hyperactive frequent traders but expects you to hang on instead of flipping. I think they work with Lehman to join in on their IPOs. My experience was running behind the market averages.

Then (buried deep in Fidelity's website) I found a record of 10 years of their IPOs. In 2005 I spreadsheeted the 20 most recent (about five years' worth), which you think would have been uncontaminated by the hysterical excesses of the tech wreck. The cumulative result was a 6% total return over the five-year period.

Until you took out Google. The remainder racked up a -25% return.

I've made much more money by watching IPOs peak and then shorting them at about the five-month point-- just before the VC's & insider's lockups expire.

[kumquat]

I got in on one once. I liked the ticker, POT, IPO'd at C$18, promptly fell to 11. Forgot about it. 18 years and a 2 for 1 split later it closed today at around C$157. I think I've even collected about $20 in dividends over the years.

Normally, I wouldn't touch an IPO as I like a track record. This was a local company the government had owned. I knew a bit about it and thought it could go to $50.