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Strategies & Market Trends : LastShadow's Position Trading -- Ignore unavailable to you. Want to Upgrade?

To: LastShadow who wrote (11452)	3/25/1999 11:30:00 PM
From: SteveDavis	Read Replies (2) \| Respond to of 43080

LS, I did not make myself clear regarding institutional buying. With an IPO the size of ONEM (8.5M) there has to be quite a bit of big boys buying on the primary market. What we trade in is known as the "secondary market", between buyer and seller. As opposed between issuing company (ONEM) and buyer. The selling syndicate led by Alex Brown, in this case, places those shares with various clients usually aided by the infamous "road show" that is conducted with management. Once all of the shares are placed or committed the company is paid the final price ($22) times the number of shares sold (8.5M). The underwriters then sell them to those who have committed making a fee in the process. The shares are then free to be traded in the open market, as we know it, at what ever price the traffic will bear. This is why the pricing is done at night and placed in the customers account the next morning. This reduces any risk to underwriters that something might happen to change deal while they own shares. Ever notice IPO's do not open on Mondays. The underwriters are litterally buying 8.5M shares at $22/share from ONEM and they make damn sure they have them placed before they release the check to the company. ONEM does not participate in the increase in price after $22/share. IMO, for AlexBrown to place 8.5M shares there had to be a fair amount of institutional buying in order to place all of the shares. Steve Davis