<<Which is gibberish. Can investors estimate a fair price at IPO? >>
that is meaningless, unless you're an academic.
85% of those ipo's that are brought public by name-brand underwriters, and which have some consistent pattern of growing revenues and earnings, or declining losses, follow one of 3 patterns that by the late 1990s i recognized and began to capitalize on.
For example, CME came public and did a high-demand tradeable pattern that i made money on repeatedly from day one.
IPMT on the other hand is far too high for it's fundementals and has been since day one. But when the underwriting brokers do not issue a strong buy on it, and they won't be able to, the stock will tumble a nice bit. And that is when i will buy.
These two patterns are actually the least common IPO patterns, and the least profitable for me.
IPO patterns like ELAB, SYNA, and PRAA are the the real money-makers for me. Home runs. The good ones that are initially ignored.
I once put serious $$ in a IPO that made rivets and riveting tools for aircraft manufacturers. Can you think of a sexier business?
It was a preferred vendor to Boeing. That stock, Kaynar Technologies, went up 90% in about 8 mos from it's ipo. Then i sold it. Then it went up another 15%. Then it was acquired by a much larger co.
But the fact that people are far too lazy to do the research is what really helps me. I do the homework, and it's fun. And i avoid many of the junk co's.
But when there's a good one, i get in, and then when the hordes read the first co press release, and start to see the value and the growth, I start to sell.
So the question isn't what is a fair price. That's irrelavent. What is important is which of the patterns it will follow. That is what is key. |
