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Answer:
Dear
BuyandHolder,
You're
absolutely right. Initial Public Offerings (IPOs)
are back in the news. In fact, in late November and
during the first half of this month, a surprising
number of them came on the market -- and thus far
this year, over 190 IPOs have seen the light of day.
There hasn't been this much IPO activity since just
before the dot.com boom went south.
Why
the flurry?
Although
there's no definitive answer to the "why" question,
here are several possibilities.
(1)
The recently flurry is probably partly due to
the so-called end of the year phenomenon. Investment
bankers want to take advantage of the end of the year
enthusiasm that generally occurs in the market.
(2)
Past performances have been impressive. IPOs launched
during the course of 2004 have for the most part done
well. According to several studies, IPOs that went
public this year are up 25% to 30% on average from
their initial prices.
(3)
Strong performance has, in turn, created strong
demand. Institutions and individual investors
are looking for new places in which to invest and
many are liking what they see in IPOs.
(4)
Well-known names. A number of this year's IPOs
were launched by solid companies with name recognition.
These have included, in alphabetical order: Assurant,
Dream Works Animation, Google, Knoll Furniture and
Las Vegas Sands. The average investor is clear about
what they are investing in when they encounter such
companies.
Researching
IPOs
An
easy-to-use Internet source for continually updated
information on IPOs is: http://biz.yahoo.com/reports/ipo/htm.
Simply type in the symbol.
A
word of caution
Participating
in an IPO does not come with a guarantee. Some pop
up in price during the first week or so, only to fall
below their initial price. Others never take off.
Some, of course, do extremely well.
Before
you buy into an IPO, I suggest you read an earlier
column on the topic. Click
Here
IPOs
& BUYandHOLD
BUYandHOLD
does not sell shares in IPOs.
Good
luck!
BUYandHOLD
does not recommend any securities. The securities
mentioned above are being used for illustrative and
informational purposes only and should not be regarded
as an offer to sell or as a solicitation of an offer
to buy.
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