How do you feel about IPOs

[katwillny]

With the recent success of IPOs such as Tableau Software (DATA) and Marketo (MKTO), does anyone venture into a short purchase of new stocks? Marketo has certainly gone down since its second day of trading, but Tableau has enjoyed a nice run. What is everyone's thoughts on buying on the first day of trading for a company and selling soon thereafter? Thanks.

 

[obgyn65]

No, sorry.

With the recent success of IPOs such as Tableau Software (DATA) and Marketo (MKTO), does anyone venture into a short purchase of new stocks? .

 

[Zathras]

I don't participate in IPOs with the goal of making money off the initial surge, too close to gambling.
I have invested in two IPOs over the years. In both cases I made the investments because I believed in the product, company, and wanted to support the company.

 

[Meadbh]

IPOs are more risky than existing public offerings and the insiders get the best deals. So the answer is no. Think of Facebook!

 

[ERhoosier]

IPOs are more risky than existing public offerings and the insiders get the best deals. So the answer is no. Think of Facebook!

+1

I feel more comfortable playing blackjack or video poker at a casino

 

[katwillny]

Thanks for the responses. I figure Id get these type of response. agreed, FB has been a bust thus far. I have a about 2k to invest and I am torn between GE and INTC. Any thoughts?

 

[gauss]

Beware when the "Green Shoe" Option expires.

-gauss

 

[Animorph]

I have access to IPO's through Fidelity, but part of their deal is that you can't sell for 30 days. Kind of takes the first day jump out of play. GE and INTC are kind of distant from their IPO's. Why not something small with big growth potential? I had more fun with small tech companies than IPO's.

 

[gauss]

And the 30 days is typically when the Green Shoe option expires.

After this period, the underwriting firm no longer tries to support the market price (via purchasing shares) to maintain it about the offer price.

-gauss

 

[katwillny]

I have access to IPO's through Fidelity, but part of their deal is that you can't sell for 30 days. Kind of takes the first day jump out of play. GE and INTC are kind of distant from their IPO's. Why not something small with big growth potential? I had more fun with small tech companies than IPO's.

Thanks Animorph, What I meant was other than an IPO i was considering going into those two companies.

 

[clifp]

I wonder if the good old days of 1999 will ever return, when if you were part of the lucky few and got access to IPO you pretty much always made money. I had access to 3 IPOs via Schwab and one from friends and family. I at least double my money in each one. Now you can't get too rich since I was only allowed to buy between 100-300 shares. Still I probably made 15K and it was the easiest money I made in my life.

But those days aren't here, and if broker allows you access to an IPO, there is no reason to expect to go up much. Now days those damn bankers try price the IPO to maximize the capital raised for the company, instead of lining the pockets of Wall St traders. (Not mind you that doesn't still happen they just get in before the IPO).

If you have some insights into the company and product than as part of your Mad Money investing go for it.

GE Morningstar has a fair price on the stock on $27 and it has a yield of 3%
Intel M* says it is worth $26 and has a yield of 3.66%

I own both and have for a long time and have been happy spending the dividend checks. But don't expect them to hit 100 in your lifetime.

Actually if you are in you are under 60 they probably will hit $100 in your lifetime, just ran the math 5% increase in share price does it.

 

[katwillny]

clifp, thanks for your insight. The M* analysis is one of the reasons why I like those two stocks. My wife and I are maxing out our 401k and our ROTH and are now trying to find other avenues and over the past 6 months have been investing in Fidelity mutual funds which have done very well. I recently got a nice raise and in the spirit of continuing to live much below our means, I would like to invest some of it in individual stocks. I have made very decent investments in F, KKD, EAC, WAGE, LOW and BAC. One of the reasons I like INTC and GE is because of their dividend. Both my wife and I are 38 so perhaps we will see GE north of $60.

 

[clifp]

clifp, thanks for your insight. The M* analysis is one of the reasons why I like those two stocks. My wife and I are maxing out our 401k and our ROTH and are now trying to find other avenues and over the past 6 months have been investing in Fidelity mutual funds which have done very well. I recently got a nice raise and in the spirit of continuing to live much below our means, I would like to invest some of it in individual stocks. I have made very decent investments in F, KKD, EAC, WAGE, LOW and BAC. One of the reasons I like INTC and GE is because of their dividend. Both my wife and I are 38 so perhaps we will see GE north of $60.

Actually I'd be surprised if you didn't see both GE and INTC hit a 100 in your lifetime. Although, bad management or major technological disruptions can change everything.

You've made some good choices,and despite the boards wisdom, backed up by some good data, I like picking individual stocks.

A funny story about EAC (Erickson Air Crane). This company provides huge helicopters for the logging industry. They happened to have been started in the small town my 87 year old mom lives in. Now mom's memory is suffering, she doesn't have dementia, but she does have trouble remembering a lot of day to day things.

She has been interest in investing for decades although never really grasped some of the concepts. I have take over managing most of her money for years. Anyway she has been bugging me for years about EAC, the company wasn't public when she first talked about it.
While she can't remember where she left her purse to save her life, she does bring up the EAC all the time when the subject turns to the market.
I've never felt comfortable buying the stock for an 87-year old. But this Jan I relented and damn if the stock didn't double in a few months. When it hit $20 "ok mom we've doubled our money. Sell now?," nope keep it and now it has tripled. I guess the morale of the story is listen to mom .

 

[Ed_The_Gypsy]

You gotta be nuts (my not so humble opinion). Example: Facebook.

It has to have a track record for me, with years of dividend history. I would rather buy lottery tickets.

 

[ERD50]

IPOs are more risky than existing public offerings and the insiders get the best deals. So the answer is no. Think of Facebook!

+1

I also know someone who was interested in the Vonage IPO (VG) @ $17. It dropped on day one (2006) and never recovered. Still @ $2-$3 range. I explained it was nothing but a gamble, and why would they offer it at $17 if it was worth more - I don't know if they bought or not.

Thanks for the responses. I figure Id get these type of response. agreed, FB has been a bust thus far. I have a about 2k to invest and I am torn between GE and INTC. Any thoughts?

Whether FB did good or not is irrelevant. What is relevant is what are the chances you will do good with any specific IPO.

One of the things that is generally accepted around here is diversification. With $2K, I wouldn't invest in just GM or INTC or any individual issue. Just buy into a low-cost, wide-market index ETF or mutual fund and spread it around.

-ERD50

 

[katwillny]

great story Clifp. I went into EAC with some cash my grandma gave me and Im glad i did. I got it late last summer after reading about their business model and looking at their earnings potential. Recently the CEO was on with Cramer and there has been a lot of movement ever since. I think its just the overall market not just EAC.
@ERD50, we are pretty diversified with our ROTH and other investments that I have, the 2k I spoke about is part of some extra cash that I have saved from a few consulting jobs I have done over the last few weeks. I like the idea of dividend investing and I am dabbling into that avenue. I appreciate and value everyone's input.