"Real investors," as Bloomberg's Matt Levine put it in an (https://www.bloomberg.com/view/articles/2017-03-01/snapchat-indexes-and-free-research) op-ed Wednesday, "will be much less jazzed about buying non-voting shares in a money-losing company" than "IPO investors," who "buy
hot IPOs just for the first-day pop."
further, in the case of "
hot IPOs" (those where demand exceeds
Excluding AIG and settlements over laddering in initial public offerings -- where underwriters inflate prices by handing out shares of
hot IPOs to buyers who promise to buy more later -- the average settlement was $41 million, and the median was $7.9 million, NERA said.
Extra-cold IPOs are defined as offers with initial return equal or less than zero; Cold IPOs are offers with initial return more than zero but equal or less than 10%;
Hot IPOs are offers with initial return great than 10% but less or equal 60%; and Extra-hot IPOs are offers with initial return more than 60%.
Read the February issue of Business Review Canada for a list of the
hot IPOs on the horizon.
As discussed earlier, retail investors should be more influential in setting prices for
hot IPOs when they are subject to sentiment.
The Market for "
Hot IPOs." In an IPO, a company issues shares to the public for the first time.
The idea behind Google using a Dutch Auction IPO was to help prevent underpricing that traditionally occurs in
hot IPOs and also allow small investors the ability to buy shares.
Further, they argue that in the later periods there was less focus on maximizing IPO proceeds due to both an increased emphasis on research coverage and allocations of
hot IPOs to the personal brokerage accounts of issuing firm executives.
Of course, as already noted, with
hot IPOs, few investors have access to the bargain stocks anyway.
Those probes focused on whether the CFSB had received kickbacks in the form of excessive commissions from hedge funds in exchange for
hot IPOs.
"With Citigroup, the concern is with the perception of them giving allocations in
hot IPOs in exchange for banking business," he said.
