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Technology Stocks : Safeguard Scientifics SFE

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To: wellab1 who wrote (2666)	4/21/1999 9:29:00 AM
From: Katherine Derbyshire	of 4467

>> "Take company X .You will receive rights to buy it on the first pricing of eg. $10.You got it.Now the Investment Banker will start to spinn it.Week before first trade he will rise the price to $ 15 ,two days before to $19 and on the eve of trading to $ 24.First day pop on the board is to $50.You got yourself a 500% gain "<< Not strictly true in my experience. Even people who are able to buy at the IPO price pay the final price--the one the underwriters pay the company--not the initial estimated price. So that would be $24 paid and a "mere" 2x first-day gain in this case. I'm not an investment banker myself, but I suspect that the above approach to pricing is one of the key differences between a rights offering and a standard IPO. I believe SFE has said they plan to do more standard IPOs. Katherine

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