Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : LBRT - Liberate -- Ignore unavailable to you. Want to Upgrade?

To: pat mudge who wrote (78)	1/17/2000 4:15:00 PM
From: Snowshoe	Read Replies (1) \| Respond to of 409

According to this site, the LBRT lockup expires January 23... ipolockup.com Here's some background about lockups from the same site... ipolockup.com Here is a recent article from TheStreet.com about the positive and negative effects of lockup expiration... New Why You Should Care About Lockup Periods thestreet.com excerpt from the above... For some of you this will be the first time you've heard the term lockup, for others it'll be old hat. Let me give a quick explanation so that we're all up to speed, then we can move on to examine how such an event is viewed by investors. Lockup period: For a preset number of days following an IPO, certain classes of shareholders are restricted from selling their shares. This "lockup period" is designed to protect a newly issued stock from undue selling pressure from insiders. At the end of the lockup period, these restricted shareholders may sell some or all of their shares. Now, most people I talk to, or whose stuff I read, take the position that an expiring lockup is a guaranteed net-negative for a stock. They jump to the quick and almost universal conclusion that the resulting increase in the float will damage the stock price and makes for an obvious short. I disagree: An increase in a newly issued stock's float can actually be a good thing. How? Consider the following. Most institutional investors -- mutual funds, pensions, etc. -- have clearly established investment criteria that define the characteristics of securities that they may buy. A common qualifying feature for allowing investment in a particular stock is its liquidity. One of the measures of a stock's liquidity is, you guessed it, the size of the float. One fund manager I talk with complains that she is held back from participating in many of the super-hot IPOs because of her fund's investment criteria, specifically the restriction prohibiting her from owning stocks with floats of less than 5 million shares. Obviously not all institutions are prevented from buying small-float IPOs. Some of these simply wait for the lockups to expire and for shareholders to sell enough stock to qualify that issue for investment. The most important thing to consider when using expiring lockups as the basis for putting on a trade, whether long or short, is that every stock is different. Some will weaken or even collapse as a result of the event, while others will flourish. Quite frequently, a stock will dip a few days in advance of the lockup expiration, but then quickly recover and rise even higher than it was before. In effect, this reflects a combination of these twin influences on the stock.