How best to buy IPO’s — from TruewineThere are some exciting IPO’s coming down the pike, and I would like to be ready to take advantage of some of them. In particular, Alibaba. Is there anything one can do to try to get in as near the offering price as possible, other than the usual thing of entering one’s order with one’s broker the night before the offering is listed, and praying?
The next question, of course, is — Is there an alternative IPO to Alibaba, or even an alternative existing stock?
Surely our astute Irregulars know a trick or two about how to handle this? Many thanks.
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Nope. This is a biggie, so unless you have a big money account at one of the listing brokerages that’s underwriting (have they chosen a broker team yet? I didn’t notice) you’re unlikely to get in at the front of the line. If you are absolutely convinced that Alibaba will be massive, just buy Softbank or Yahoo — together they own almost half the company. Otherwise, this is a mega-billion-dollar company, it shouldn’t trade too crazy at the listing … and if it does, it should see some weakness at some point as the early flippers sell (a la facebook). I don’t think we’ve even seen real numbers on Alibaba yet, so it’s hard to guess at what the company might actually be worth.
I have never gotten an initial allocation on an IPO, ever. I’ve traded a few within the first few weeks and months, on occasion, but the most successful investments I’ve done in newly public companies have been several months after the IPO, as when lockups weaken the price (as with Google, for example, which I bought, and facebook, which I stupidly did not).