Flipping

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Flipping

Buying shares in an initial public offering (IPO), and then selling the shares immediately after the start of public trading to turn an immediate profit.

Flipping

1. The act or practice of buying IPOs only to resell them at a substantial profit very quickly. Flipping is a short-term investment strategy that operates on the assumption or existence of liquid markets. Institutional investors engage in flipping at a greater rate than individual investors as they have the most shares available to them at the offer price. Flipping, when done over and over by a large number of investors, can lead to a speculative bubble. See also: Stock jobbing.

2. The act or practice of buying real estate at a low or moderate price with the intent to resell it for a profit in a short amount of time. Flipping takes two main forms. One may buy several properties, intending to sell them in only a few months hoping that that price goes up. This is most common in areas expected to become big developments. On the other hand, one may buy a single property often with improvements already on it and renovate it with the intention to sell it for a much higher price.

flipping

The immediate selling of shares purchased in an initial public offering. Flipping is especially popular in a hot IPO market when newly issued shares can soar in price when they hit the secondary market. Investment banking firms underwriting new issues generally discourage flipping, in large part because it can depress a stock's price in the secondary market.
Case Study In late 2001 UBS PaineWebber issued a memo to its branch offices that the firm intended to fine its brokers whose customers engaged in flipping shares purchased in initial public offerings underwritten by the firm. According to the policy, brokers would be required to pay a fine equal to 200% of their original commission. Following complaints from the firm's brokers, PaineWebber withdrew the proposal but indicated it would monitor the investment activity of clients who participated in new issues and adjust future allocations of shares in subsequent IPOs. Investment banking firms dislike flipping because it tends to destabilize trading and depress the stock's price, both of which are likely to anger management of the issuing company.
References in periodicals archive ?
Most property flipping occurs within a matter of days after acquisition and usually with only minor cosmetic improvements, if any.
However, the letter requested two clarifications regarding appraisals for property flipping.
At the same time, property flipping cases have also been accelerating, primarily as a result of depreciating property values.
Huber agrees, saying that flopping is "a form of property flipping for profit that involves a real estate agent engaged in the listing process who (directly or indirectly) purchases the property for less than market value in order to make a quick sale to someone for a profit.
Property flipping is a long-time scam, according to the report, but it is becoming more sophisticated, with criminals incorporating identity theft, straw borrowers, and shell companies into their schemes.
Property flipping generally refers to the process of purchasing existing properties with the intention of immediately reselling the properties for a profit .
He is the author of several Wiley books, including the seven previous editions of the bestselling Getting Started in Options, as well as Getting Started in Property Flipping and three editions of Getting Started in Real Estate Investing.
In the current scenario, the Indian property market is definitely not geared up for property flipping within short investment periods, mid-to-long term investment options with 4-5 years window would be ideal, such an investment horizon is a safe hedge against risk related to market variations, and ensures that the property gains healthy appreciation regardless of market dynamics," added Sunil.
To protect against predatory practices of property flipping where homes are resold at inflated properties to unsuspecting buyers, certain protections remain in place.
Department of Housing and Urban Development) declared it so when it released its FR (Final Rule)-4615 Prohibition of Property Flipping.
In another federal lawsuit, in Eastern District Court, six Brooklyn homebuyers claim they are victims of a property flipping scheme orchestrated by Yaron Hershco, who owns United Homes and allegedly owns or manages about five or six other related companies, which all use 139-27 Queens Boulevard as an office address.
In mortgage fraud, the trends include equity skimming and more sophisticated property flipping Property flipping involves purchasing property, fraudulently appraising it at a higher value, then quickly selling it to an associate, who may sell it to another associate, and so on.

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