Small investors very rarely get to participate in real IPOs until after they come out and start trading. By then it is often too late, as the IPO soars. The big brokerage firms and special high net worth clients get to buy into IPOs BEFORE the stock comes out. Little guys are shut out. If small investors get to participate it is only in small amounts like 100 shares.
However, there is a "poor man's" way to invest in a "quasi" IPO. It is called a shell deal. Many new companies begin trading not through IPOs, but through merging with a public shell. A public shell is a publicly traded entity with a stock ticker symbol and no business activities. It is used as a vehicle for a private company to go public quickly, bypassing the traditional IPO and all of the bureaucracy that usually accompanies it.
By merging with a public shell, a private company can go public in a matter of days rather than months. Though this kind of deal is technically not an IPO, the results can be the same: a soaring stock price once word gets out about the new company. The bad news is these deals are very hard to find. It seems that everything is kept quiet. What happens is that investors close to the private company find out about the deal first. So they and their friends and families start buying the stock, driving the stock price to high levels.
By the time the rest of the investment community DISCOVERS the stock, it is already priced much higher than what it was as a public shell. If the new company is successful and profitable the stock price can soar higher yet, as the ticker symbol no longer represents a shell but a new profitable company!
"I couldn't have said it better myself".........:-)
Greg
PS The above article is my investment strategy. High risk better rewards. I spend days upon hours looking for companies like PRMC. |
