When We Earned 88% Returns From Market Volatility - Views on News from Equitymaster

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The Equitymaster Research Digest

When We Earned 88% Returns From Market Volatility
May 3, 2016

It's raining IPOs - Stay indoors

In my last Research Digest, I spoke about the track record and internal rate of return for the Hidden Treasure service.

Recently, I got a mail from a subscriber asking about our IPO track record.

Now, investors who have been associated with us for long know our stance on IPOs. It is mostly, if not always, AVOID. The reason - IPOs are hardly the best time to invest in a stock. For one, there is not enough track record - neither on the company nor the management. And even if that offers comfort there, the valuations are ridiculous.

We don't believe Equitymaster's IPO track record is all that relevant. This is because while we mostly avoid a 'SUBSCRIBE' view at the time of IPO, we do not hesitate to recommend the stock post IPO once the valuations seem opportune and fundamentals, strong.

Yet, we thought it would be interesting to see how the IPOs we have analyzed (and mostly avoided subscribing to) have fared till date since the day they were listed.

Of the 66 IPOs we've covered (and that still trade) since CY08 to CY15, forty are trading below the closing price on the day of listing. That's a 61% failure rate. Actually, it's higher as the positive returns on some of the IPOs lag the Sensex's returns for the same period.

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