MEMBER'S LOGINX
| Login Failure | ||||||||
|
||||||||
| Sign Up | Forgot Password? | ||||||||
- Home
- Outlook Arena
- Nov 12, 2008 - IPOs: Imaginary Profits Only?
IPOs: Imaginary Profits Only?
The year 2007 could have been considered as the year of the initial public offerings (IPOs). Majority of the companies' IPOs were oversubscribed numerous times. And this too, in spite of these (IPOs) being fairly overvalued. However, since the beginning of this year, things have changed drastically.
The market sentiment has shifted to the opposite extreme. From buoyancy, the sentiment is now gloomy - both for companies intending to raise fresh money and investors who have burnt their hands in the IPO menace.
As per statistics from Centre for Monitoring Indian Economy (CMIE), the total amount of money raised in the domestic primary market (including public and rights issue and private placement) in the first six months of this fiscal has been Rs 389 bn. This is 60% lesser than the amount of funds raised during the first half FY08.
This is not the case in India alone. It is estimated that a total of 30 large sized IPOs the world over (valued at US$ 13.1 bn) were pulled out during October 2008. Incidentally, it is the highest volume of withdrawn offerings in a single month since 1995. As investors are fleeing to what is perceived as the safest asset to hold in these times i.e., cash, the IPO market has almost completely dried up.
The world has seen several cycles in the IPO market in the past, the last down cycle being the one post the dot-com crash. After this bubble burst in 2000, only 88 IPOs were issued worldwide in 2001 - the lowest annual total since 1979.
As Benjamin Graham writes in his -The Intelligent Investor', "In every case, investors have burned themselves on IPOs, have stayed away for at least two years, but have always returned for another scalding. For as long as stock markets have existed, investors have gone through this manic-depressive cycle."
Graham further writes, "In America's first great IPO boom back in 1825, a man was said to have been squeezed to death in the stampede of speculators trying to buy shares in the new Bank of Southwark. The wealthiest buyers hired thugs to punch their way to the front of the line. Sure enough, by 1829, stocks had lost roughly 25% of their value."
Weighing the evidences objectively, intelligent investors should conclude that IPO does not stand only for -initial public offering'. More accurately, it is also a shorthand for - It's Probably Overpriced, or Imaginary Profits Only, or even Insiders' Private Opportunity. What do you say?
Equitymaster requests your view! Post a comment on "IPOs: Imaginary Profits Only?". Click here!
1 Responses to "IPOs: Imaginary Profits Only?"
More Views on News
Should Mutual Fund Investors Worry About Partial Lockdown? (Outside View)
Apr 12, 2021PersonalFN explains whether the second wave of COVID-19 infections impact your mutual fund investments.
A Unique Sector for Short-Term Profits (Fast Profits Daily)
Apr 12, 2021This ignored sector could deliver big short-term profits.
My Recent Recommendation Will Profit from the Global Supply Chain Crisis (Profit Hunter)
Apr 12, 2021A tiny chemical company, started in the Licence Raj era, is a great example of a new wealth creating opportunity.
Mirae Asset Tax Saver Fund: Seizing Superior Growth Opportunities (Outside View)
Apr 9, 2021PersonalFN's analysis on the features and performance of Mirae Asset Tax Saver Fund.
Time to Change Our Trading Blueprint? (Fast Profits Daily)
Apr 9, 2021The Indian government recently announced cut backs on crude oil imports from Saudi Arabia. Does this change our crude oil trading blueprint. Find out...
More Views on NewsMost Popular
Will the IPOs in 2020 Be as Rewarding as the Ones in 2019
In 2017 funds raised through IPOs is highest over a decade. And the stock market still flying high, some observers are predic...
A Critical Update on the Market (Fast Profits Daily)
Mar 30, 2021In this video, I'll tell you why I am recommending caution in the market at this time.
My Recent Recommendation Will Profit from the Global Supply Chain Crisis (Profit Hunter)
Mar 31, 2021A tiny chemical company, started in the Licence Raj era, is a great example of a new wealth creating opportunity.
My Stock Trading Strategy (Fast Profits Daily)
Mar 31, 2021In this video I'll show you exactly how I go about picking stocks for trading.
What You Need to Find Hundred Baggers (Profit Hunter)
Mar 30, 2021100 baggers of the last decade share this common trait. Here's how to use it to nail future multibaggers.
MoreOUR TOP 5 IDEAS
- India's Revival: A Once-in-a-generation Wealth Making Opportunity
- Are You Making One of These 15 Costly Mistakes While Investing. Learn more!
- Covid-19 Proof Multibagger Stocks - Download this FREE Report Now
- Free Report: The Secret to Increasing Your Trading Profits Daily!
- No Guessing, No Hunches, and No Missed Trends Ever! Join Us on YouTube Now.
S&P BSE SENSEX
Apr 12, 2021 (Close)
MARKET STATS
ABOUT EQUITYMASTER
Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.
FREE NEWSLETTERS
PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
- Basics of Value Investing
- Benjamin Graham
- How to Invest in Gold
- How to Invest in Silver
- Best Stocks to Buy Today
- Warren Buffett - The Value Investor
- The Best Small-cap Stocks to Buy
- The Best Bluechip Stocks to Buy
- Your Ultimate Guide to Penny Stock Investing
- 10 Rules for Successful Long-Term Investing
- How to Invest in the Share Market
- Momentum Moves
FOLLOW
APP
Copyright © Equitymaster Agora Research Private Limited.
Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap
Equitymaster Agora Research Private Limited (Research Analyst) 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
RAJEEV
May 26, 2016Almost all the IPOs have been given "Avoid" rating by EQM. The chart prepared by you shows that most of them have lost money after listing with very few exceptions. Large number of investors apply for IPOs and many of them do make quick money as shown by very high listing of most of the IPO scrips in recent times. If the market trend is up the IPOs are listed at high prices else they go for a loss on listing. The chart has an error as it shows a big loss in VA Wabag shares - not taking into account the split/bonus. VA Tech Wabag is one of the best tech companies. I think we missed an opportunity to invest in this company by missing out on the IPO.