IPO s FOR THE PUBLIC (suckers)

[brother coy]

During the boom, PLENTY of companies jumped into every sector possible, raising money on the basis of a piece of paper halve the time. Dreams were easy, implementation turned out to be impossible. More damaging, many of the issuers were dishonest, and used the euphoria to dupe the public.
cooked-up figures, bloated projections, siphoning off cash, manipulation of shares and other such tools were effectively exploited.

The tragedy is that many such creatures are now appearing on the landscape - many of them the same villains who raised money last time.
HAAAAHHHa

[brother coy]

Fund managers and rich investors catch IPO fever

25.05.2004


IPO fever has spread from Australia to New Zealand, where fund managers and individual investors flush with cash are hunting for new investment opportunities.

After two years of thin share offerings on the New Zealand Exchange, 13 companies have come to market so far this year and five more are set to sell $636 million of shares in the next month. More are in the pipeline.

Feltex Carpets announced details of its $254 million share offer yesterday, along with retail investor StoreFund, which already has the BBQ Factory chain lined up for acquisition.

Canada's CanWest Global Communications Corp joined the flood of floats last week, saying it plans to raise $119 million through an issue of part of its New Zealand radio and television operations in June.

Fund managers and investment bankers said there was a deep pool of money for companies planning to issue shares because they had few other options to make money.

The property market is cooling. Interest rates are the highest in the industrial world, but listed companies have been paying strong dividends and are returning at least $1.5 billion in capital to shareholders.

Many investors are also flush with cash after taking profits on some of the bigger local companies that have performed well over the last two years. They are now looking for new opportunities.

Investment bankers said they were working on more IPOs to debut in the second half of the year.

[Major von Tempsky]

Warren Buffett doesn't go in for share floats as a matter of policy - he points out that the profits have already been taken by the company promoters during the float process.
Why buy hyped up Mike Pero at $1.00 when you can buy later at 95 cents? (or is it lower than that now?)....come to think of it why buy Mike Pero at all....its a hollow marketing campaign where Mike Pero himself has pulled the golden parachute cord (he's cut himself to just 5% of the coy) that isn't a fully fledged mortgage broker to start with i.e. it doesn't offer a choice of mortgage sources and its in a "commodity" area with heaps of competition.

Why buy the second best carpet maker Feltex at $1.70 when you will be able to buy it at $1.70 minus x....

Why go into IPO's at all, why not just pick off the bargains after they have listed and stabilised.

What successful IPO's have there been in recent years? Two? Telstra first tranche but not the second (predictable), Promina (not predictable) anything else? Briscoes is no longer a successful IPO....

In fact enthusiasm for IPO's is the real way of distinguishing simple minded and generally unsuccessful investors...

Does your mate enthuse about IPO's? Distance yourself a bit...never commit any money to him/her....seek a circle of more sophisticated people....

[MeNoBatty]

THere are IPOs and then there are IPOs. The assesment here has been a little simplistic IHMO. You have to look at the seller. In the most recent IPOs they have either been Private Equity chaps exiting with all the profits or fund managers looking to use other peoples money in less than transparant ways.

The most successfull IPOs in the last decade have been from Government spin offs - eg Telstra no1, Commonwealth bank, demutualisations - eg Colonial mutual (bought out by CBA for about 3 times the float price) and National Mutual (now AXA trading at about twice the float price, but hurt by -ve sentament since 9/11), distressed sellers - ie Promina, and spin outs - eg one steel and BHP Steel (now BlueSteel(?) ).

I would argue that Promina was a no brainer. Royal sun alliance were desparate to sell into a depressed market = low price. The insurance market was on the mend post 9/11 also.

I can't put my finger on the exact source, but research has shown the best IPOs are spinouts from large conglomerates. Managers in these companies are often highly incentivised and with the co being released from the conglomerate and a new injection of cash, often outperform the market.

The rubbish being floated at the moment is not worth touching, IMHO. Only exception is possibly Pumkin Patch but questions remain over this one also.

[Gryffyn]

NZ seems to be full of retail IPOs at the moment. I'm expecting my local dairy to list soon.

Not sure if all these IPOs are a sign that the market has peaked or just some bandwagon jumping but they are all of the type where you wait till after the listing and have a good look then.

[Nimble]

There actually have been a number of very successful floats on the NZ market, many of which I have participated in. How successful depends on how long you wait before comparing current price to list price, for example CEN initially didn't do too well but more recently has.

More recently we have seen Turners Auctions (Listed $1.50 now $4.80) & New Zealand Stock Exchange (Listed $3.60 now $9.00). Teamtalk also listed earlier this month at a 28% premium to list price.

Prior to that Auckland Airport, Contact Energy, Westpac Trust & Sky City. These have been fantastic performers for investors.

Market conditions have a big affect on the quality of IPO's offered & their success. Now is not the best time to be participating in IPO's.

[willy_wonker]

There is alot of dishonest brokers out their advicing in the best interest of the corporates and not their private clients. The brokers have as much to blame as the promoters of the IPOs.

[devito]

Teamtalk also listed earlier this month at a 28% premium to list price.

Yeah right. Only staff and a few mates of FOSBAR got a chance to buy at $1.75. Not really an IPO as no member of the public got a look in.....

[brother coy]

hhaahhaaha previous feltex owners laughing 193mil in der pocket and suckers left short changed [:0]
hahha donts worry suckers da next ipo will be da winner hahhhaaa one

[zyreon]

well just too bad i didn't have the cash to get some FTX !! [8D]:D
time to go out and un-fog my windows :(
[}:)]

[Awryly]

Oh, c'mon Cantab. How will the market function without the weird and wonderful whimsies of the wishful thinking?

[warthog]

quote:Originally posted by devito

Teamtalk also listed earlier this month at a 28% premium to list price.

Yeah right. Only staff and a few mates of FOSBAR got a chance to buy at $1.75. Not really an IPO as no member of the public got a look in.....


I don't know if Access Brokerage counts as maters of Forsyth Barr, but maybe ...

[Halebop]

quote:Originally posted by Major von Tempsky


What successful IPO's have there been in recent years? Two? Telstra first tranche but not the second (predictable), Promina (not predictable) anything else? Briscoes is no longer a successful IPO....

Promina was quite predictable. There was just plenty of uninformed noise about it pre float - particularly on this channel.

[brother coy]

ya suckers pumpkin listed with a premium only because da promoters dropped da application price cause of da hoo har over recent ipos so they didnt want a nother flop to kill them right off hahahaa
and da colville gone hhahaha peoples voting with der head now which companies they should put there money in and not just gambling hahahhaa:D

[willy_wonker]

Willy made good money from Pumpkins.

Thanks Aussie investors for loving our company so much.
Thanks for coming. :)

Willy thinks this will be the last good IPO float for sometime.

[marinesalvor]

probably correct WW (and you Bro)
cant see anything worthwhile out on the horizon - am off to visit ASX to pick up Neptune Marine

[warthog]

quote:Originally posted by brother coy

ya suckers pumpkin listed with a premium only because da promoters dropped da application price cause of da hoo har over recent ipos so they didnt want a nother flop to kill them right off hahahaa
and da colville gone hhahaha peoples voting with der head now which companies they should put there money in and not just gambling hahahhaa:D


Correct.

And it seems Willy took a gamble.

Or was it a calculated investment?

If so, what criteria did you use for PPatch that steered you away from the mortgage bloke and the carpet-makers??

[willy_wonker]

Willy dont gamble, only been to Casino twice in my life.

[warthog]

quote:Originally posted by willy_wonker

Willy dont gamble, only been to Casino twice in my life.


Uh huh.

Willy you're long chit-chat and short detail.

Gambling is (generally) risk-taking when you don't have control over the risk (this isn't a black-and-white statement). Investment is where there is at least some ability to manage the risk.

If you don't have any risk management (whatever it might be - inside knowledge, TA, FA, etc) then you're gambling.

[MeNoBatty]

You don't have to be a rocket scientist to work out that Pumpkins was a better quality offering than the mortgage bloke or the carpet makers.:D

[warthog]

quote:Originally posted by MeNoBatty

You don't have to be a rocket scientist to work out that Pumpkins was a better quality offering than the mortgage bloke or the carpet makers.:D


You are trading similar positions to Willy (short detail).

On what basis did you work out that PPL was a better quality offering?

What does "quality" mean in this context?

[MeNoBatty]

See my earlier posts in both this topic and the Pumkins topic.

Brand, Growth story, who the sellers are, brokers track record... Do i need to go on??[|)]

[warthog]

quote:Originally posted by MeNoBatty

See my earlier posts in both this topic and the Pumkins topic.

Brand, Growth story, who the sellers are, brokers track record... Do i need to go on??[|)]


So take TTK. Solid brand. Good track record. Sellers are people who started the business.

Same deal for Feltex. Same deal for the morgage bloke. Bla bla bla.

Of course the factors you mention are relevant, but without some reasonable research detail, they are just hunches.

[MeNoBatty]

Ahhh, wrong, my friend.

"I cannot teach him. The boy has no patience." --Yoda

Feltex is a low growth story with a private equity seller, the founders are long dead. Also the majority of their sales are to the building sector, which we all know, is at a peak. This yeild play was never going to take off.

"I find your lack of faith disturbing." - Darth Vader

The founder had pretty much exited from Pero and was being sold at a high price by an oportunistic new investor. There was also bad vibes about the industry and similarly, with the housing market at a peak and rumblings from the banks about reducing commisions, was also dubious. Small float off institutional radars = no support.

"I am altering the deal. Pray I don't alter it any further." -Darth Vader

All investing is a hunch but you try and do as much research as possible to reduce the guess work. If you want certainty, leave your money in the bank or put it into government bonds.

"In my experience there's no such thing as luck." - Obi-Wan Kenobi

"I think my eyes are getting better. Instead of a big dark blur, I see a big light blur." - Han Solo

[willy_wonker]

Willy dont even read the propectus unless it has nice pitures. I suppose when I walk my dog in our area, people know eachother and the information network flows like dog poo on the lawn. :D

[Placebo]

MNB, you're forgetting the most important quote from Star Wars (which is also relevant here...)

"I have a bad feeling about this" http://www.kgx.net.nz/smilies/fight2.gif

[Futurz]

"Its a trap"

[MeNoBatty]

http://www.stuff.co.nz/stuff/0,2106,2938613a13,00.html

Some good quotes from this article.

"It's all about pricing - you've got to leave something on the table for the next guy." - Tony Gibbs. Good to see big Tone talking some sense. Lets hope he means what he says.

"Good, attractively priced IPOs will go out the door. There is huge demand for them. Pent-up demand." - ASB Securities managing director Tim Preston. Well said, old boy.

[Capitalist]

Nothing like talking your book eh ;):D

The whole bookbuilding method is corrupt IMO.

Loved the "pent-up desire" bit. Smells a bit desperate to me [:p]

[mikescott]

Lots and lots of pent-up be demand for StoreFund from ASB apparently. Or how to turn $1.00 to 92.3 cents in a second. :D

In at the deep end for spa pool investors

04.06.2004
COMMENT
The BBQ Factory chain of stores doesn't look like too bad as a business, although profitability is a bit of an up and down affair.

Continuation of its growth is heavily dependent on sales of spa pools continuing to grow as fast as they have in the past few years.

Even with these qualifiers investors could be forgiven for wishing they could invest directly in BBQ Factory, rather than in the management company acquiring it, StoreFund.

This fund is offering investors extremely high issue costs and high continuing management fees coupled with the prospect of continuing demand for fresh capital or of being heavily diluted while at the same time the company pays out all its earnings in dividends.

StoreFund is aiming to raise $25 million plus another $5 million in over-subscriptions. If it manages to raise the full amount, the issue is estimated to cost $2.31 million, or 7.7 cents out of every $1 investors put in.

You only have to look at the issue costs of other recent floats to think this is excessive.

Take Just Water International, which estimated its $8.25 million capital raising would cost up to $500,000. Or Colville Equities whose up to $75 million issue is expected to cost $1.5 million. Or Pumpkin Patch which is aiming to raise between $97.2 million and $133.4 million at a cost to the company of $1.335 million (other float beneficiaries will pay the balance of costs expected to total $2.7 million).

The StoreFund prospectus breaks the costs down into $775,000 to its lead manager, ASB Securities, and brokerage costs, a further $325,000 to ASB in exchange for underwriting the issue to $20 million and $290,000 in accounting, auditing and legal fees.

On top of these costs, the future manager, North Head Management, is claiming $150,000 as a "consultancy fee", and a further $770,000 is to go on "NZX fees, prospectus printing and sundry costs".

StoreFund is paying $21.188 million for the BBQ Factory, $16.188 million from the float proceeds and $5 million in borrowings. $13.65 million of the purchase price will be goodwill and other intangibles.

That will mean that on June 30, when the BBQ purchase is completed, StoreFund's net tangible assets per share will be only 47 cents.

Assuming the float is successful, investors will then be up for fees of 1.75 per cent of the funds market value less any cash and, if the fund earns more than 12 per cent a year before tax, North Head will take 20 per cent of the excess.

In the year ending June 2005, this adds up to the fact that while the BBQ Factory is projected to post $3.685 million in earnings before interest, tax and amortisation (Ebita), StoreFund's Ebita over the same period will be just $2.755. In other words, $930,000 before interest, amortisation and tax disappears into the North Head structure.

While the management company has one large concrete investment prospect, as with any managed fund proposition, it is very much a case of asking investors to trust the manager.

The trio behind North Head are Wayne Walden, former managing director of the Farmers Deka retail business and present chairman of Maori Television among other directorships; Garry Bluett, who was Farmers' chief financial officer; and Leigh Davis of Jump Capital, previously with Fay Richwhite.

The BBQ Factory is owned by Roger Richwhite, brother of Fay Richwhite principal David Richwhite.

Walden says the family connection didn't play any part in StoreFund deciding to buy the BBQ Factory. Some of StoreFund's investment criteria are eyebrow-raising. While it is buying 100 per cent of BBQ Factory, it will be able to buy as little as 20 per cent of other retail businesses. It is hard to see how North Head will be able to add any value when it owns so little of a company and certainly lacks control.

Walden gives as an example the prospect of a retailer that wants t

[k1w1]

" NZ IPO's are for suckers".

I like that message. Thats Mr Market whispering in my ear.

I hope I can profit from it.

Here are 2 good NZ IPO's. TEL and AIA. So there must be some that are not for suckers.

Willy Wonker (why does he use an i for an a, and an o for an a, when spelling his name ?)made 10 % on listing with Pumpkin Patch. It is mainly a good brand - really that is its most attractive feature.

But so are Slazenger and Jockey. Yet Pacific Brands has not taken off. Why not?

I couldnt answer that question so I wasn't sure enough to take a swing at Pumpkin Patch. There is also a bit of blue sky thats being sold out there in my view.

Then again AIA and CEN didnt take off at the outset so who knows. Buy and hold seems to be the only way to deal with timing of markets.

Colville. I think Bryan Gaynor showed integrity in pulling out Colville . If the untaken brokers firm allocations were sold onto the market that would depress the price and harm the Mum and Dads. It wouldnt have harmed Bryan though. He still would get his 1% commission. There are no performance incentives in his deal. Classy guy. File that for future reference.

Anyway... the only scientific way to test the
" NZ IPO's are currently for mugs" theory is to disprove it.

For science can only disprove things. Scientific Truth is a function of time. It varies as more and more tests are performed.

If you don't believe that scientific truth is a function of time go to the 2nd hand bookstall run by the University Students at the start of the academic year. Twenty year old English texts and publications are still valuable but one year old science texts are heavily discounted and two and three year ones are out of date as new scientific truths have replaced their contents in later editions.

Scientific test:

Hypothesis : " Current NZ IPO's are for suckers"

Prediction: This hypothesis is a truth which is a function of time. It may not always be correct. At times when Mr Market holds it to be an infallible statement there may be profit to be had.

Experiment: $8000.00 invested in Just Water IPO which lists tomorrow.

Investment style: Buy and Hold

Result : I have no more idea than you do at the moment what will happen. But thats never stopped anyone posting on this site. Lets watch for a reasonable period.


Bacon and eggs- this is like a meal of bacon and eggs.Your involved -like the chicken . But me - I'm the pig. I've committed to make this happen

[winner69]

Wayne tells all

http://www.sharechat.co.nz/news/scnews/article.php/3e0a970a

[brother coy]

a sucker k1w1 heres some da science facts for ya based on da us though buts probably still relevant hahaha any any country

IPO's

Initial public offerings can offer substantial opportunities to investors since they can supposedly get in on the ground floor. But a recent study by two acamedicians studying new offerings over the last 20 years suggest that brokerage firms are wrong in making such statements. Most IPO's are overpriced and that the problem is worst when the market is hot. The study showed that buying at the closing price of the first day provided only about a 2% annual return- about 1/7 of the average profit from similar public companies. The study further suggested that the companies were timing their offerings to coincide when the industries were at peak prices. And they often go public just before the company's growth pattern begins to slow- disappointing investors who expected continued growth.

Initial Public Offerings are the most profitable underwritings and generate substantial fees. On a typical IPO, the underwriting fee is 7%. The two or three managing underwriters usually split 80% of this fee with the rest going to the dozen or so brokerage firms that help sell the stock. The underwriters net profit- after paying attorneys and internal staff- is around 33% to 40%. Commission trading on the other hand produces only about $.06 per share. But it is very profitable in a bull market- very poor in a bear market.


Here are some definitions you should never need. Why? Because buying IPO's are sucker bets even for some institutions.

AFTERMARKET: The period after the stock has been sold to the public when selling by insiders and institutions has picked up and more shares are available for small buyers

BAKEOFF: When investment banking firms compete in meetings for corporate business.

BOOSTER SHOT: When a underwriter, in the wake of a public offering, issues its first formal report recommending purchase of a client's stock

FLIP: When investors sell a stock soon after offering- brokers and companies don't like this and try to get you to stay in.

FRIENDLY HANDS: When IPO stock is owned by people likely to hold onto it.

FULLY SUBSCRIBED: When underwriters have takers for all the IPO stock on offer.

LOCKUP: The period, generally for four months after the public offering, during which the corporate officers, directors and other insiders cannot sell stock issued before the offering

UNDERWRITER: Investment banker who, alone or as a member of a group, agrees to purchase a new issue of stock and distribute it to investors

OVERSUBSCRIBED: When a deal is so hot that the underwriter will, in all likelihood, sell extra stock

FUNNING THE BOOK: A term used to described the lead managers duties as boss of the underwritings syndicate.


IPO'S: A 1992 study by David L. Babson & Co. showed that IPO's are bad investments. They looked at 452 IPO's that year and

1. 69% were afflicted by declining sales and earnings trends while only 14% showed improvement

2. Almost 80% achieved peak profit margins within four quarters before or after their offerings. SIXTY percent then slipped in profitability within two years of their IPO.

3. A quarterly earnings drop in the first four quarters after the IPO occurred in 58% of the companies. More than 75% had a decline within two years.

4. 1/3 of the companies had a sales decline within four quarters and 45% had a sales drop within two years.

5. !9% actually lost money in one of the first four quarters after the IPO.

6. 25% lost money throughout the two year period of the study.

In fairness, the winners enjoyed an average price increase of 134% from their IPO dates and 71% from the close of their first trading date. 76% outperformed the overall market from their IPO date and 72% outperformed from the first day's close. Admittedly, the last part shows significant promise- that is till you realize that most of the better IPO's are already pre sold to institutional investors. You'll probably only get the dregs. Bet

[k1w1]

'sup bro !,

so lemme get this clear - youre saying:"all IPO's are for suckers"?

[wsheridan]

quote:Originally posted by k1w1

'sup bro !,

so lemme get this clear - youre saying:"all IPO's are for suckers"?




No ... he's saying all brokers are deceitful:D

[willy_wonker]

quote:Originally posted by k1w1



Willy Wonker (why does he use an i for an a, and an o for an a, when spelling his name ?)made 10 % on listing with Pumpkin Patch. It is mainly a good brand - really that is its most attractive feature.




Is because Willy spends too much time in cafes and walking his dog instead of engish classes. :D Also, Willy laugh so much walking to his bank account he forgets to use the letters "a"...lol :D

[k1w1]

Always a good sign when someone can take a joke ...No offense meant- it was just too good a line to let go.

[mikescott]

Just Water - 66 cents & Profit of 36%.

This sucker is ready for lots more!

[Placebo]

quote:Market newcomer Just Water International proved to be a darling with investors, its shares trading at a 36 per cent premium within minutes of listing today

The Stags are roaring!

Now the question will be, with back-to-back positive IPOs, will the public queue up for the next, be it a goodie or a dog?

[marinesalvor]

and what is the next one????

[Halebop]

quote:Originally posted by minder


Just Water - 66 cents & Profit of 36%...


Congrats Minder. Nice short term gain. :D

If you're going to yell though, at least get it right. A 16 cent gain on 50 cents is 32%. Probably that heady and sweaty feeling of euphoria clouding up your spectacles! [:o)]

[mikescott]

Halebop, indeed! Thanks.

[mikescott]

And Pumpkin Patch above $1.40.

More IPOs for Suckers, please! More! More!

[mikescott]

No ...Salvus, Storefunds & Mike Pero are for the losers and real suckers be likes of you.

Please continue to talking down IPOs 'cos you are scaring all the losers off and peoples be like me we get More. More! More IPOs!

[mikescott]

quote:Originally posted by brother coy

ya minder ya made 16c so whats daT A 160 doolars on 1000 shares hahahahaaa ya as funny as me hahaha


That be telling everyone more about you than anything be else. [^][^][^][^]

That brand new BMW 530I booked for delivery next Monday, it be feeling very good. :D:D:D:D

Please be talking down IPOs more and more, loser. You will be getting more and more thanks. [:p][:p][:p][:p]:D:D:D

[mikescott]

See how that loser, Bro Coy, is busy deleting his postings to try and hide his tracks? A loser is a loser and deleting posts make no difference, Bro Coy. :D

Please continue posting negative threads all over the internet and here on IPOs. [^]

[k1w1]

hey brudder coy, plez explain me why for you do dis erasing da posts wif what ya sed 'bout NZ IPO's r 4 sukka's?

...da brudders wanna know

[mikescott]

Just Water 72 cents & Pumpkin Patch It Be $1.41.

More IPOs For The Suckers! More! More!

And the loser Coy has disappeared. :D:D:D

[brother coy]

a k1w1 sue me hahahahahaa as for da minder hes noo idea what da bro was getting at or da message keep ranting ya making yourself look an idiot sucker because ya just not in da know hahahahah:D

[mikescott]

Don't have to be in the know to make monies from IPOs. Just have to laugh at you. :D:D:D

But please keep writing negative things on IPOs - good boy. [^]

Don't delete any more of your postings too - they be good to steer cheap IPO stock towards Minder. [:p][:p][:p]

[brother coy]

another ipo failure storesfund hahhaaa whats a surprise justs shows da rats are trying to get back in da game bys any means hahhaha beware :D

[k1w1]

If the public are such suckers why didn't they fall for Storefund ?

[brother coy]

maybes da public is wising up at last or dare we says theys maturing as investors hahaa what a laugh suckers :D]
im da winner sucker minder hahahaa

[mikescott]

Extra good point made, k1w1. That loser Coy continues to make a right old a r s e of himself.

Now ...Bring on CanWest & Solution Dynamics!!!!!!!!!!!

[mikescott]

quote:Originally posted by brother coy

another ipo failure storesfund hahhaaa whats a surprise justs shows da rats are trying to get back in da game bys any means hahhaha beware :D


And just so that your posting is permanently in place (no more deleting to hide your tracks, you loser Coy), here's to record what a donkey loser Coy is.

This is a major victory for IPOs - but not for the promotors and ASB. ASB will be seeing stars and BBQs for a long time to come. :D:D:D:D:D:D

[mikescott]

Knew you were going to hide your tracks, loser Coy - notice how he changed his posting?

The title for this thread should be IPOs for suckers like loser Coy who cannot tell a good float from a bad one.

Pacific Brands (from $2.40 up to $2.76), Just Water (from 50 cents up to 78 cents), Pumpkin Patch (from $1.25 up to $1.42) etc .... bring them on!

More negative postings from you please , loser Coy, more! More! More!