ALIBABA IPO stock

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nismoZtuner
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ALIBABA IPO stock

Postby nismoZtuner » Mon Sep 15, 2014 3:00 pm

What do you think about the IPO of Alibaba- anyone planing on hopefully getting some stocks?
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Postby CarefulBuilder14 » Mon Sep 15, 2014 3:37 pm

I avoid any new issue that gets nearly that kind of attention, under the premise that other people know far more about the company than I do.

Any advantage I have is in picking small, boring companies that have been public for a while and don't get a lot of attention. Of course, when financial statements are available online and everyone is an analyst, finding anything that is overlooked is harder than it used to be. I keep a lot in indexes and continue to do so, as well as in Berkshire/Berkshire clones.

As to the value of Alibaba itself, I have no opinion.
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Postby djrez4 » Mon Sep 15, 2014 3:44 pm

nismoZtuner wrote:What do you think about the IPO of Alibaba- anyone planing on hopefully getting some stocks?


Alibaba is like China's Amazon, but with much smaller market cap. They have a lot of room to grow and not much in the way of competition. However, I don't know if I have confidence in the Chinese economy, especially with an authoritarian government playing currency games.

Personally, I don't touch IPOs unless I can get in on the actual IPO itself. Otherwise, you're not really participating in the IPO; you're just buying shares on the open market. I've participated in two IPOs and gained 133% so far. Otherwise, I'm with CarefulBuilder14 - index funds and DGI stocks.
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Postby CarefulBuilder14 » Mon Sep 15, 2014 3:54 pm

djrez4 wrote:Personally, I don't touch IPOs unless I can get in on the actual IPO itself. Otherwise, you're not really participating in the IPO; you're just buying shares on the open market.


djrez4 is right here, and the distinction is very important. Sometimes a market inefficiency is created when bankers convince a company's execs that it is better to sell the shares to the IPO investors at a bargain price. When the stock goes up right away, it is a big happy news story that gives the company good press and makes other investors eager to buy the stock later on the open market or on a secondary.

I don't know how much of Alibaba is being offered, but in recent years many companies have done 'trickle' IPOs where only 5-15% of the company is sold to the public in the IPO. The rest is sold later. To the selling shareholders, an underpriced 'trickle' IPO can make sense because it increases the probability of getting a very favorable price later on when investors are excited for the secondary. Selling 10% of your shares first for a low price and selling the other 90% later at a high price makes more sense than trying to get an average price for all 100% at once.

But, if you're buying shares on the open market, even 24 hours after the IPO buyers have participated, you're paying the market price, not the low price created by the inefficiency.

You don't need a big portfolio to get into some IPOs - ones where not a lot of people are interested. But you do need a big portfolio / a ton of commissions to get into the popular ones - Facebook, Alibaba, etc.

'Crowd' IPOs - where a company uses an auction setting to sell shares to anyone interested in an IPO and doesn't use a bank to negotiate share placement with clients - may be good way for small investors to access IPOs. However, you still would need to know a good deal about the company.
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nismoZtuner
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Postby nismoZtuner » Fri Sep 19, 2014 2:58 pm

looks like the $BABA stock was a fail.. it went up to almost $100 and then died out
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Postby CarefulBuilder14 » Fri Sep 19, 2014 3:08 pm

nismoZtuner wrote:looks like the $BABA stock was a fail.. it went up to almost $100 and then died out


Not for the people who had enough money and clout to get in on the IPO itself. They made 38% today.
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