Just a thought.... I guess new companies floating on the stock market make an interesting investment. High risk and possibly great gain??. Does anyone have any opinions on this? How can you find out about new floatation? Does ayone know how many occur in a typical year?
2007-01-26 08:50:22 · 6 answers · asked by Anonymous in Business & Finance ➔ Investing
Companies issuing stock during 1970-1990, whether an initial public offering (IPO) or a seasoned equity offering (SEO), have been poor long run investments for investors. During the five years after the issue, investors have received average returns of only 5% per year for companies going public and only 7% per year for companies conducting an SEO. Book to market effects account for only a modest portion of the low returns. An investor would have had to invest 44% more money in the issuers than in non-issuers of the same size to have the same wealth five years after the offering date.
2007-01-26 11:25:57 · answer #1 · answered by NC 7 · 0⤊ 0⤋
The problem with this idea is that IPOs are most often oversubscribed upon offering. The underwriting company usually offers the IPO to its largest institutional and individual investors (the ones playing with millions of dollars). After that, it offers anything left over to other brokerages to offer their largest clients. By the time the average individual investor has a chance to buy, the shares have shot up and these investors are buying near the top. IPOs tend not to have long-term abnormal returns and once the initial increase has finished, returns to IPOs tend to be below or at market. Thus, only the initial investors in IPOs get those big returns.
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2016-04-16 10:32:39 · answer #2 · answered by ? 4 · 0⤊ 0⤋
Yes, IPOs are high risk/high reward investments. These investments are generally recommended for experienced stock investors. You could get info about new flotations from a full service broker or from the stock market websites. The sites will usually have advertisements for new, upcoming IPOs. IPOs usually occur any time of the year; just be on the look out if you are interested.
2007-01-26 09:08:57 · answer #3 · answered by Muga Wa Kabbz 5 · 0⤊ 0⤋
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2014-10-07 13:24:14 · answer #4 · answered by Anonymous · 0⤊ 0⤋
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2017-03-01 04:15:47 · answer #5 · answered by Shayne 3 · 0⤊ 0⤋
IPO shares are normaly given to large insurance companies so the only way you can buy them is on the 2ndry market. Even when you can get them directly its very hard to value the company so you don't realy know what your buying.
2007-01-26 10:00:43 · answer #6 · answered by Anonymous · 0⤊ 0⤋