Initial Public Offerings of shares; love them or hate them, they are an essential part of a functioning share market. On one side of the fence, we have the naysayers, with warnings that private equity sellers and business owners will always know more than investors. On the other side, we have stock brokers and investment bankers, spruiking the incredible returns they claim their investors have received. Simon Shields reminds investors; “sometimes there are good reasons is coming to market.” Rhett Kessler, however, warns investors; “remember that there’s a whole industry built around bringing these to market - the broking & investment banking industry - that makes money out of it, and they’re very good at what they do.” In this thematic discussion, Simon Shields, Principal at Monash Investors, and Rhett Kessler, Portfolio Manager at Pengana Capital, share their thoughts on some upcoming IPOs, and the general IPO market.
If you're a small investor it's simple. Avoid. You'll find it very difficult to get stock in the good ones. You'll get access to the passable ones, but the odds are that at some point in the future they will be cheaper on market anyway. The exception, of course, are privatisations with political input such as CBA and Telstra.
I use a full service broker and as a retail investor have had access to some reasonable IPOs. Also Medibank was widely available..
I received very little in the way of anything from my 'full service' broker. Perhaps the 2.5% that (I think) that they charged on my transactions back then wasn't large enough. In view of the discount service I was getting, I thought I may as well go with one who charged discount fees. From then on any floats I was interested in I had to chase up myself. The responses were interesting. My favorite one, probably computer generated is, "Your application has been scaled down ........ to NIL"! I would have thought that Medibank was the classic political privatisation, so had to be widely available. As an aside, they were known as 'floats' for a long time. Anyone know when they started calling them IPOs?