Knowledge is power. This is specially true in the high-stakes world of investing. Individual investors, RIA (Registered Investment Advisors), financial institutions, family offices, hedge funds and professional traders can all benefit from the knowledge and expertise offered by new issue services. Prime brokerage services for professional traders can be a reliable source of information about IPO news, secondary, preferred and convertible bond offerings.
- IPO basics
Initial public offerings (IPO) are used by companies to raise capital to fund expansion, research and other projects. The term came into everyday usage in the late 1990s. Companies typically offer 10 to 15% of their worth for sale through an IPO.
For most IPOs, there is a lock-up period of 3 to 24 months, defined in a legally binding contract between the underwriters and the company. This prevents investors from selling their shares of stock in the company for the specified period. - When to invest
2015 was a good year for IPOs. In general, IPOs follow the stock market and do well when the stock market is doing well. IPOs generally outperform the SandP 500. For example FitBit stock rose by 50% in 2015 after offering more than 36 million shares in June in an IPO with a total worth of $741 million.
In the first quarter of 2016, however, only 11 companies offered IPOs. This is a 69% decline from the fourth quarter of 2015 and a 71% decline over the year. New issue services can help you stay on top of market and IPO trends for an optimal investment strategy. - Who should invest
Institutional investors like hedge funds and investment banks can benefit from large quantities of a stock. These investors can provide the companies huge gains – even triple-digit gains – on their first day of trading. New issue services can offer state of the art information access and trading capabilities. - How a securities brokerage firm can help you
New issue services from a reliable prime broker can help you define your investment strategy. The IPOX-100 index, managed by the ETF (exchange-traded fund) tracks the performance of the hundred largest IPOs in the U.S. for their first 1,000 days. For 2015, the top performers were online retailers Etsy Inc. (ETSY), which was 94% higher at the opening than its indicated price; Shopify Inc. (SHOP) up 65% at opening; and Fitbit (FIT) up 52% at opening.
A prime brokerage services firm offers individualized services and IPO information for professional traders and hedge funds, direct access to algorithms, brokers, and exchanges. With new issue services, state-of-the-art technology and competitive transaction charges, you can benefit from their expertise.
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