How do I research IPOs?

No sooner had I introduced myself on ASF that I got a call from someone who wanted to know if I was interested in an IPO. My name had been selected from one of those marketing lists – I guess I had ticked a box that said I was interested in the stock market. So… to the IPO. The sales guy used a lot of key words to catch my attention – water remediation…third largest commodity in the world…China… hydro solutions. The advertising (received via email) describes the company as “Intermediaries in private equity negotiations” and offers “membership to a network”, but is very scant on details. This does not sound like your average managed fund to me. My question is – when the sales guy rings me back what questions should I ask about the IPO? And then, how do I research this company?

Re: IPO's

My experience is that good ipos tend to sell themselves. Good issues (atleast in the sub $50m range) seldom have much left after company staff (and their friends and family) and the sponsoring broker (and their friends, family and the top echelon of clients) get their fill. I would be highly suspicious of any unsolicited calls from anyone other than my broker trying to place stock.

Bigger issues are a different matter, but my comments about unsolicited calls from people other than my broker still apply.

Re: IPO's

lolaba said:

when the sales guy rings me back what questions should I ask about the IPO? And then, how do I research this company?

Click to expand...

To research it you need to read the prospectus that the IPO must have. Tell him to send one out to you and when you have read it back to back then you can make a decision.

I have never received a solicitation regarding an IPO. I am on the mailing list with Commsec and they send me out info about IPO's but no one has ever called me. I would be on my guard if I was you, good luck.

Re: How do I research IPO's?

Thanks for your comments. I'll ask for a prospectus when the "guy" rings back in a couple of weeks and let you know about the product he is trying to sell.

Re: How do I research IPO's?

lolaba said:

Thanks for your comments. I'll ask for a prospectus when the "guy" rings back in a couple of weeks and let you know about the product he is trying to sell.

Click to expand...

If you see the prospectus it will list the directors and their previous experience / other directorships. See how those other companies have performed for starters. Some guys are proven winners over time and others just take the fees and slowly destroy shareholder value. And as others said, if you are getting an unsolicited offer it is probably an ordinary float because the good ones are usually snapped up by brokers and insiders/associates of the promoters.

Re: How do I research IPO's?

After a barrage of phone calls from this company, the phone went quiet for a month. Then yesterday, another phone call. The suggestion was made that I should release some of my super to invest. Did my own research and found the name of the company on ASIC/FIDO’s list of unlicensed overseas callers – not to be dealt with!