IPOs

U.N.D.E.R.S.T.A.N.D.I.N.G IPOs.

ONE OF THE MOST SEEMINGLY ATTRACTIVE AREAS OF INVESTMENT IS THAT OF IPOs.

IPO’s REPRESENT THE FIRM’S FIRST PRESENTATION OF SECURITIES TO THE CAPITAL MARKETS. ALTHOUGH IPOs INCLUDE ALL NEW OFFERINGS, COMMON-STOCK IPOs RECEIVE THE MOST ATTENTION FROM THE INVESTMENT COMMUNITY.

THE TYPE OF COMPANIES THAT UTILIZE IPOs INCLUDE PRIVATELY OWNED GROWTH COMPANIES SEEKING TO PROVIDE FUNDING FOR THEIR GROWTH AND LIQUIDITY FOR THEIR OWNERS, LEVERAGED BUYOUTS SEEKING FUNDS TO DELEVERAGE THEMSELVES, AND NON STRATEGIC SUBSIDIARIES THAT ARE CARVED OUT, SPUN-OFF, OR DIVESTED FROM THEIR PARENT COMPANIES.

INVESTMENT BANKERS PLAY A CRUCIAL ROLE IN THE IPO PROCESS AND MAY BRING AN IPO TO MARKET BY EMPLOYING EITHER A FIRM COMMITMENT OR BEST-EFFORT UNDERWRITING ARRANGEMENT.

A SIMPLE TRADING RULE IS THAT IF IPOs START SELLING BELOW THE OFFER PRICE ON THE FIRST DAY OF SETTLEMENT, YOU SHOULD STOP BUYING THEM. AND IF YOU ARE UNABLE TO ACQUIRE THEM AT THE OFFER PRICE, THE DECK IS STACKED AGAINST YOU.

OUR COMMENT : POLISH DOES NOT CHANGE QUARTZ INTO A DIAMOND…

PHLDUCX