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Technology Stocks : CBS MarketWatch (NASDAQ:MKTW)
MKTW 17.20+3.6%3:52 PM EST
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To: Bob Duncan who wrote (415)1/17/1999 9:03:00 PM
From: Ice Cube  Read Replies (2) of 571
 
Flipping IPO's is not allowed just because of market stability. It's also just as important if not more so a tool for the investment bankers. When a company is interviewing bankers and firms one of the biggest issues that comes up is the distribution of the stock, i.e., longer term investors. This is shown by "retention rate" and is graphically shown on charts by days weeks and months. The pitch is that "look at our deals..... Our poeple hold your stock and create long term holders. Look at the first week of trading and you can see that 80% of the deal is still with origonal hands (by the way, about 3 years ago the NASDQ put a system in place to track this data) Then over time selling does take place but by then the selling pressure will subside." Many brokers will get stock only if they keep holding syndicate over a 6 month period and if they do this on all their deals they build up a "syndicate index" that is used for future IPO's, the higher your index, the more stock you get in the next deal. Envision yourself as a CEO.... Wouldn't you rather have an underwriter that REALLY places stock into safe hands as opposed to whoring your company???? EVERY, and I mean EVERY banker uses these numbers to sell themselves..... If your broker lets you flip now, they won't for long because they will get pressure from the lead underwriter real soon because this hurts their numbers. Also, The few lead underwriters that are out there stop using firms that flip the stock... don't forget, many times they are on the bid trying to make the deal a success. Also, there is a "friends and family" allocation in every deal. Too bad that many times this is the first stock out......
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