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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED
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To: stockman_scott who wrote (39121)7/17/2001 2:08:02 PM
From: Jim Willie CB  Read Replies (1) of 65232
 
read about backfire in stock underwriting in PersonalFinance

it goes like this
in order to get a secondary issuance underwritten, brokerages have to pony up to buy some of the company's existing debt, and then provide gaurantee for surplus shares not taken
the companies want the House to act like a partner

so brokerages have been on the hook exposed
the Agere spinoff issuance for Lucent was the example
cannot remember the brokerage house, BUT THEY TOOK A BATH
on the debt and the stock, esp the overage

now, issuing firms are calling the shots, since brokerage houses are still competing
the Houses gain instant revenue income, but are at risk for the debt and shortfall in participation (the overage)
the Houses think big, talk big, put forth rosey outlooks, take their initial profits, but are getting hammered with the followup

my heart bleeds for them
most Houses live with whores leading the cheers to the misguided gullible public

let them bleed
/ Romeo
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