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Title: Underpricing IPO Question Post by: EdLeafs on March 19, 2010, 05:52:33 PM Are there any strategy to tell if a company's share are underpriced at IPO or is this nearly a guessing game?
Title: Re: Underpricing IPO Question Post by: garilou on March 19, 2010, 06:27:13 PM When you subscribe to buy an IPO, you receive the whole prospectus, and you can make your own idea.
When Google came out at $80.00 if I remember well, lots of people said it was over priced! Very often, it comes out, makes a jump upward, and then goes down (the reverse is true too). If you are just starting, I guess you should not start with IPO's Louise Title: Re: Underpricing IPO Question Post by: EdLeafs on March 19, 2010, 06:45:43 PM Yes I agree, very risky investments but the payout is big if you pick the right one. But if I had a diversifying portfolio made up of those do you think it is possible to nail out a big? 1:4 perhaps.
Title: Re: Underpricing IPO Question Post by: garilou on March 19, 2010, 07:43:06 PM Gees EdLeafs!
IPO or not, one has to make the right choice. Before you dream of that once in a lifetime 1:4 (you meant 400% gain?), start with "nailing" a trading year with a 30% return, and find yourself pretty good! A diversified portfolio all made up with IPOs? Are YOU playing games with us today? Are we part of you master degree research? Louise PS: Right beside the reply area where I write, I see that add that promotes 1000% Penny stocks, and there is a beautiful young man on the add. I can't help thinking this is your picture! Title: Re: Underpricing IPO Question Post by: bryanmcn on March 20, 2010, 08:18:06 AM Check the SSP historical trade performances for the Weekly Momentum Portfolio. How many four baggers (over 400%) have they had?
Now look at the yearly perfomance of the portfolio. You'll get rich faster by hitting a lot of small singles than hoping for a giant home run. Bryan Title: Re: Underpricing IPO Question Post by: DCA on March 20, 2010, 09:56:40 AM And always read the fine print of the prospectus.
The IPO is underwritten. What this means is that there is someone who is getting paid to promote and ensure that the IPO comes in at a good price. This is not just a cash deal for them. Quite often they will recieve a block of shares and possibly options for more at a lower price. The restrictions on selling these shares can sometimes be quite low. What this means is there is a large block of shares owned by someone who has the means and the incentive to hype and promote followed by sell when the hype has reached its peak. You have to be able to buy and sell before them or you are in for the long haul. Title: Re: Underpricing IPO Question Post by: garilou on March 20, 2010, 04:45:43 PM Bryan, You said it better then I did! Nice to see that we sometimes do agree! And DCA, I thank you (also in the name of EdLeafs) for those extra info and warnings, because I ask my-self questions about his "naive" questions on this board, considering the studies that he says he is doing. Louise Title: Re: Underpricing IPO Question Post by: EdLeafs on March 20, 2010, 10:30:06 PM Just interested in the explanation behind it. This was not meant to be a real investment ideal. Nobody wants to fall victim to "the winner's curse" if you know what I mean.
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