An IPO Investment Tip
June 3, 2012 5 Comments
I’m not really that much of an IPO investor-I have only applied twice,once for Coal India and the second time for MCX.I find IPOs too much of a gamble.I’m never certain that I have all the relevant facts before me to take a decision.Blind trust and money just don’t go together for me.That said, I have heard the stories of how people have made good money fast from IPOs.So I continue to look for ways to even the odds in the game.This is an article I came across in the ET:http://articles.economictimes.indiatimes.com/2012-06-01/news/31959423_1_nonvegetarian-food-investors-listing-day
The relevant excerpt is as follows:
The market buzz is that the lack of interest in the stock among certain investors and traders, who are strict vegetarians, has helped it sustain gains.
These influential investors usually do not invest in companies that manufacture or sell alcohol, non-vegetarian food, leather, among other things……….. Many of these deep-pocketed investors are known to subscribe to IPOs with an intention to sell on the listing day.
So what is the moral of the story?We can give a second look to IPOs of companies that manufacture or sell alcohol, non-vegetarian food and leather.
About Keerthika Singaravel
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The sad truth is, in on the start out on the top…( those on the inside win and some get lucky)
You’re right.There is a great asymmetry in the information between both sides in IPOs.And IPOs do allow insiders the opportunity to exit poor to middling businesses at very favourable valuations.So that is one thing to check–if the insiders will still continue to hold reasonable stakes in the company after the IPO.Enough to make a big dent in their personal well being if the shares tank big time after the IPO.
But not all IPOs involve the insiders exiting at the expense of the fools who subscribe to their shares.Occassionally there is the sort of promoter who plans on staying on and looks set to do a good job of expanding their business.Acquiring the shares of these companies at or below fair value is not such a bad idea.
However,the real IPO must apply cases are when there is a lot left on the table for subscribers,such as in the case of CIL.The only problem in these IPOs is in ensuring a reasonable allotment given the massive oversubscriptions that can be expected.
Sometimes it is good to sit in the boat and eat your lunch, enjoy the day and forget about fishing….check out Corning. I am parked there for another year…I am not saying to buy, we are having a conversation…www.corning.com
Corning looks interesting.But this will be one of the times I sit in my boat and eat lunch…..I buy only Indian stocks……fluctuations in the exchange rate are likely to kill as fast as any IPO.