What a cool infographic!
Just as long we know IPO is for insiders to cash out (sell), we are good to go!
Ever wondered if you build up your own company from the ground up with blood and sweat, why on Earth would you dilute and share the future earnings flow of your "baby" to outside freeloaders you don't even know?
And during AGM, these freeloaders got the cheek to tell you how to run your own company?
There must be an overriding reason for business owners to go the IPO route, when there are alternative vehicles for raising funds for expansion.
Do you know what it is?
Tip: Its the reverse of why some majority shareholders decide to take their listed "babies" private again.
Hi SMOL,
ReplyDeleteI did know a fair bit about ipo since I was involved before and also are familiar with how some listed entity worked during my working career.
Successful IPO is art of selling way above valuation wo tom dick n harry on the streets actually realizing.
Rolf,
DeleteGlad to have someone who can verify from personal experiences. Having "land owners" as mentors can be a big leg up in perspective ;)
I myself have benefitted a lot from the business lunches and dinners from the founding owners of factories I've visited as a purchaser.
Competent retail investors who stag or "invest" in IPOs are those who are skilled in the game of buy high and sell higher - more akin to Growth Investing than Value Investing ;)
Who is that silly to share their founded wealth with the public and just retain part for themselves?
ReplyDeleteCW,
Delete17% of a BIG company is way better than 100% of nothing ;)
Something for those Buy and Hold retail investors to think about...
If the founding business owners don't believe in holding forever and is willing to SELL at the right price, what say you?
LOL!
Hi SMOL,
ReplyDeleteI remembered a time when IPO is like lottery, always massively over subscribe and will jump in the first day of IPO
Most IPO are over valued but that doesn't mean it cannot grow to be a value play.
However the odds are stacked against one
Sillyinvestor,
DeleteIPOs are not value plays ;)
The only way for IPOs to become value plays is for them to crash way BELOW the IPO price - that's when Value Investors start coming out of the woodwork ;)
Of course can make money in IPOs - be the early angel or venture investors cashing out ;)
3 examples of below SGX IPO pricing:
ReplyDeleteGLP
ISEC
Starburst
Rolf,
DeleteI have eggs all over my face.
When Facebook IPOed, it was priced perfectly from the insiders' perspective.
But when Facebook price dived after it's IPO, it was an excellent buy for us retail investors.
I have no clue how Facebook made their money so I passed as an investment for my core holdings. But as a trade, kicking myself for missing it :(
I'm an idiot!
yes. that's why I find it hilarious when retail investors liken buying shares to being business owners. youthful naivety is sometimes independent of age.
ReplyDeletebut the overriding reason to be in a recently IPO business is: growth.
SMK,
Delete1) OK, I think you and I won't be invited for any retail investors gatherings... LOL!
2) Remember this joke on the secret of equity investing?
Only buy shares that go up in price. Shares that don't go up, don't buy. (I think some won't get this joke)
Applies perfectly for IPOs!
High five on the growth part ;)