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Technology Stocks : 25-Day "Buy" Recommendation Pops -- Ignore unavailable to you. Want to Upgrade?

To: Mr_Mojo_Risin who wrote (48)	7/15/1999 11:13:00 PM
From: Shadowed	Read Replies (1) \| Respond to of 155

Relevant article: Flipped out Vanishing Point 07/14/99 4:00 PM By Andy Wang To the flippers go the spoils. That was the message Wall Street seemed to be giving investors about Internet initial public offerings just a few months ago. Buying into IPOs was an insider's game. The way it worked was simple. The rich got richer as they bought shares of high-flying Internet IPOs at the offering price and sold them for a hefty profit. Holding on to the stocks for more than a couple of hours was considered long-term investing. It was as if the Street was saying: Get out while you still can! Don't be the last one to jump! There aren't that many Greater Fools out there. Are there? The flipping strategy turned out to be very sound for insiders. Meanwhile, individual investors who bought IPOs on the first day were often left wondering where their money went. It was a rather ugly picture. On May 11, TheStreet.com (TSCM) priced its IPO at $19 a share and closed its first day of trading at 60. It was a flipper's paradise. It was also a nightmare for anybody who bought in after trading started. Shares of TheStreet.com closed Monday at 32 15/16. Two weeks after TheStreet.com's IPO, barnesandnoble.com (BNBN) went public at $18 a share and closed the first day at 22 15/16. Shares of barnesnoble.com have since fallen as well, with the stock closing at 18 1/4 on Monday. These were two very different examples that made the same point: Flipping was where the money was. A new trend Look at how things have changed since then. Online investment bank Wit Capital (WITC) went public at $9 a share on June 4 and closed its first day of trading at 14 7/8. Not a bad day for flippers, but in this case the flippers left money on the table. Shares of Wit Capital closed Monday at 34 7/8. In this case and many other recent ones, patient individual investors who bought in on the first day have realized some tremendous gains. GoTo.com (GOTO) went public June 18 at $15 a share and closed at 23 3/8 that day. The stock closed Monday at 54 3/4. Internet consultant Viant (VIAN) went public at $16 a share on the same day as GoTo.com's offering and closed at 24 3/8 that day. Viant stock closed at 38 on Monday. Examples like this abound. If you want proof, take a look at the charts for drkoop.com (KOOP), Stamps.com (STMP) and Internet consultant IXL Enterprises (IIXL). Even some of the highest of high fliers like Juniper Networks (JNPR) and Ariba (ARBA) have climbed since their stellar first-day pops. What might be most remarkable is the way Internet IPOs that disappointed on their first day of trading have also joined the frenzy. US Search.com (SRCH) went public at $9 a share June 25, at the low end of its range. It closed its first day of trading at 6 15/16. While flippers lost money on the deal, investors who bought in at that level have now seen the stock price soar to a close of 12 13/16 on Monday. Another example is Digital Island (ISLD), a Web networker that went public at $10 a share June 30, at the low end of its range. The stock actually traded below its offering price before closing at 11 7/8. A big pop came one day later as the stock climbed 6 1/16 on news that PaymentNet was a customer. Digital Island stock has continued to climb, closing Monday at 30 9/16. Of course, there are still some recent Internet IPOs where the biggest early winners have been flippers; Ask Jeeves (ASKJ) being the most prominent example. For the most part, however, individuals who have bought into Internet IPOs on their first day of trading in the last month have done well. Ben Holmes, president of ipoPros.com, believes this trend can continue in a positive market because individual investors are getting smarter. “It's important to note that what has made this market cycle different than any other in the past is the presence of the online individual investor buying the deals,” Holmes said. “Early on, they didn't have an appreciation of how volatile the deals could be.” That meant many individuals were making market orders and getting hammered. “A lot of those people have gotten burned when their orders got filled at the highest levels of the day, and within minutes the stock was trading 10 or 20 points lower,” Holmes said. “Now, individuals are waiting for a stock to open and settle into a trading range before they jump in.” A turning point David Menlow, president of the IPO Financial Network and publisher of the IPO Frontline newsletter, believes that the recent performance of Internet IPOs can be traced to the recovery of the entire Internet sector. “Prior to June 23, which was the recent emergence of the Internet IPO buyer, we had a market that was falling under the weight of self-recognized levels of overvaluations, and the leader of the pack was Amazon.com (AMZN), having come down from such high levels.” Menlow said. “Even though we had a couple of bounces, there was nobody out on the Street who was willing to step up and say these stocks are worth buying at these levels.” On June 23, TD Waterhouse (TWE) pulled off the largest Internet IPO of all time, raising more than $1 billion. Investor interest was extremely high before the stock started trading. The offering priced at $24 a share after being raised from 31 million shares to 42 million shares. Shares of TD Waterhouse closed their first day of trading of 25 5/8. That same day, Ariba went public at $23 a share, up from its original range of $16 to $18, and closed the first day at 90. The message seemed clear: The Internet IPO was back. The stage was set for stocks like Juniper Networks and Ask Jeeves. As investors began to warm to the Internet sector again, the stocks of many other recent IPOs began to climb, a positive trend that is continuing…..for now. It's rare indeed when individual investors can do as well as, if not better than, insiders. Menlow isn't sure this trend can last. “Overall, it's been a wonderful period for the small investor,” Menlow said. “I don't know if it's going to sustain itself because the market has gotten very violently vicious, as far as creating a dichotomy. There are really good deals, and the rest of the deals are taken out and shot.” However, with individual investors becoming savvier and online investment banks like Wit Capital helping individuals get into IPOs at the offering price, the rules have changed a bit. There are many more reasons for small investors to cheer and invest in IPOs. That in itself is a victory. “The individual investors are the ones driving the IPO market,” Holmes said. “They are the herders.” You've got to like the sound of that.