Tuesday, October 12, 2010

Up and coming IPOs

As market marches upwards, we'll see IPO in fashion again. What's scary is that my parents asked me about it too, as they mentioned that their money in the bank is idling, so they might as well make some use of it. If my non-investing parents are saying this, there must be others who are eager to do it too. Ignoring my tingling spidey sense for now, let's see if it's worth a shot at it. I'm not interested in the fundamentals of it, but as the IPO suggests, It's Probably Overpriced. It's definitely not for keeps too. Trading? That's not enough data to do anything from it, so let's analyse it from statistical point of view.

No companies worth its salt would want to do an IPO when times are bearish, because their shares would be sold at a lower valuation than in a more bullish environment. The fact that we're seeing the gahmen selling off their stake in the upcoming IPOs must be indicative of bullish times. Whether that party would end soon, I don't know, but since I'm already at the party, might as well take some calculated bet. I did a post on IPO before, it's found here. In it, I stated that the chances of doing a quickie (defined as selling on first day of trading) is quite high. Let's add three more data points:

As can be seen, the most recent IPO samples that we had did very well on their first trading day before crashing down. This can be seen on their charts. The 4th one on the lower right is TTJ, IPO price 0.200, trading on 1st April 2010.

Taking the first day data, I calculated the gains made by making an assumption - the selling price is made at the lowest price of the first trading day:

Leader Env - 7.1% gains
Consciencefood - 31.8% gains
Yamada green - 61.4% gains
TTJ - 5% loss

It seems like the chances of making a loss is quite slim.  However, since all the trading price of the IPOs mentioned are around the range of 20 cts, but the upcoming IPOs are not in the penny realm, perhaps the gains would more muted.

Not a lot of shares are out there for GLP, so I think it'll be a catch 22 situation. If you get it it's no good, if you don't get it, it's good. The IPO closes on 14th Oct, 2010 at 10am and begin trading on Monday 18th Oct. If you're interested, you can go to ATM to apply or better yet, do it at the comfort of your own home using internet banking. Just go to the DBS/POSB account, log in and look for investment services on the left column. Then go to electronic security application (ESA) and click yes on the questions at the bottom of the screen. Follow the rest of the instructions and you'll see GLP, priced at 1.96.

Good luck!


Personal quick reference:

GLP : Deadline for IPO application 14th Oct 2010, listing date 18th Oct
MI :Deadline for IPO application 18th Oct 2010, listing date 21st Oct


Musicwhiz said...

Hi LP,

There are a whole chunk of people applying for GLP, hoping to stag it.

Welcome to the speculative event of the year! Someone should pop champagne and blow balloons - the party is just about to begin! (But hor, remember to leave before the clock strikes midnight....)


la papillion said...

Hi mw,

Haha, join the party, have a sip but leave early :)

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