Thursday, March 20, 2014

Shrouded Facts about the U.S. Initial Public Offering (IPO) Market

An Investor should not let the large 1st day % returns of an IPO fool him/her to Buy and Hold without considering some hard facts. 

The average 3-year performance of an IPO bought on the 1st day over the past 30-years has lagged the S/P by about 20%Yet this under-performance only applies to cos that had < $50M in Sales in the year prior of going public

Investors aware of these facts have a better chance of making a more profitable decision when the time comes to Buy and Hold an IPO.  

Industry breakdown of U.S. IPOs over last 12-months

Perhaps good reason Biotechs are in a corrective phase as the Wall Street Syndicates have created a lot of new froth

The law of Supply and Demand always wins in the end over the IPO Road Show and often painted rosy business Story.  

Guard Up,

No comments: