Category Archives: IPO

IPO Strategies: Example US IPO Market January to November 2013

This data was compiled from 193 US IPOs in 2013.

This graph shows how the risk of losses rises for a strategy of buying IPOs on the close of the first day of trading and holding them (green, let’s call it ‘Strategy B’). It also shows how being allocated shares in new issues prior to trading and selling on market close of the first trading day is a much lower risk strategy (blue, let’s call it ‘Strategy A’) for several reasons: a) your capital is only tied up for 1 day – 10 days (depending on if your bank needs cash on an account for the whole potentially allocatable USD amount) b) you profit from bookrunners generally underpricing new issues. Strategy B let’s you invest at what the market thinks is fair value, which of course offers less upside.

Note how the regression line of Strategy A is constantly and clearly in the 15-25% return range. That’s in stark contrast to Strategy B which has a downward sloping regression line that is close to 0% in the last 2 months (left=November, right=January). As this year has been a bull market the IPOs from January through April have risen in line with the market.

US_IPO_Market_1st_Day_Close_vs_Current_1

Also see yesterday’s post for more graphs.

Should you be interested in benefiting from the possibilities in the worldwide IPO market, feel free to contact me via the website contact form or facsimile. Should you need assistance opening a swiss bank account, I will also gladly help you.

 

US IPO Market 2013 – Performance & Deals (Size) YTD

The following two charts show the performance of the newly issued/listed US shares in 2013 YTD aswell as the size of issues being placed. Note the performance is calculated on the assumption you were allocated shares at issue price and sold on close of the first day of trading. A total of 193 issuers placed shares. Left to right = November to January (2013). So the latest action is on the left hand side of the graphs…

US_IPO-Market_2013_Issue_Price_vs_Closing_1st_Day US_IPO-Market_2013

Had an investor been able to invest USD 10k in every issue, he would have returned over 16% YTD on every of the 193 (!) trades on average. The tricky part is of course not being given chicken size allocations in hot deals and full allocation in the lame ducks. That’s where a person comes in handy who’s following the markets daily and has a network of contacts. For example: If you had subscribed for USD 100k worth of Twitter and received just USD 5k of paper, but had subscribed 100k to Mavenir Systems and been allocated USD 100k worth,  your performance would be close to zero after fees even though Twitters’ performance was over 72% and Mavenir Systems just down 3.5% (both on their respective day of issue).

Should you be interested in benefiting from the possibilities in the worldwide IPO market, feel free to contact me via the website contact form or facsimile. Should you need assistance opening a swiss bank account, I will also gladly help you.