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Vonage I'm seriously considering buying at least 100 shares. But, I have a lot of questions
I'm seriously considering buying at least 100 shares. But, I have a lot of questions for Deutsche Bank (which I think has the best fee structure for transfers and maitenance; I have a personal problem with CitiBank and UBS has a scary looking automatic conversion to a full brokerage, which I don't need).
But, can we flip it? Or, do I really want to buy and hold this stock?
So, Vonage is going to let me buy stock at the IPO price:
http://www.vonage-forum.com/article2704.html
Back in the Red Hat days, a day trader colleague said he detected a pattern in IPOs that he was trying to exploit. He felt that most IPOs go through an initial spike of a few hours to a few days, then settle into a more normal trading range.
Incidentally, Red Hat IPOd in 1999 at $14/sh, shot up over $100, and closed at $52.06/sh after 1 day, more than triple the IPO price. People who sold mid-spike made out like bandits. What I didn't realize until today is that, after this initial hype, Red Hat stayed below $14 for many years thereafter (along with all the other tech companies), spiked briefly in late 2003, and is only now showing significant steady increases over that initial $14/sh price. RHAT now trades in the low $30s/sh.
As my brother, the MBA, points out, against such anecdotal first day "spike" theories is the strong market theory, which basically says "Share prices reflect all information and no one can earn excess returns." But, does the strong market theory apply to IPO prices? IPO prices are somehow set by the brokerage and company itself and, as best as I understand, are untested by the market, so I'm not sure how that matches up with the strong theroy. Though, as wikipedia notes in its article, the strong market theory (also known as efficient market hypothesis or EMH) tends to discount the behavior and emotions of trading. http://en.wikipedia.org/wiki/Efficient_market_hypothesis
Anyway, for kicks, I tried to determine if there's any validity to either theory by looking, just randomly and non-scientifically, at the 23 most recent IPOs (information attached below).
Although many of these stocks exhibit the spike that my former coworker described, some went straight down, some steadily grew. Of the 23 in this sample, only 12 are still above their IPO price. However, of the 23 in this sample, 20 were up above their IPO price at some point, usually in the first few days after IPO.
If I am able to set up limit orders, I'd like to put an auto-sell if it rises more than, say, 25%. I might put in an auto-sell if it drops more than 5% in the first few hours, too.
According to one IPO website, Vonage is expected to be a fairly hot IPO (10-25%) (http://www.ipohome.com/marketwatch/responses.asp). Also, according to this website, the Burger King IPO, which is the week before Vonage, is expected to be "very hot."
But, if Deutsche Bank only allows acquisition of the IPO and not active trading, then I'll be in a position where I'll need to transfer the shares to my non-Deutsche Bank Brokerage ASAP in order to set up my desired limit orders.
So, this begs the question, will Deutsche Bank in this IPO allow Vonage customers to sell their shares within the first few hours or days of buying shares or will we be limited? Also, what's involved (time, money and hassle) in transferring Vonage stock from Deutsche Bank to a full service brokerage, such as Wachovia?
I'll definitely look into these questions before committing to the IPO.
Your thoughts?
__________________________________________
(use your favorite financial website to pull up charts for these 23 recent IPOs)
Company Name
Symbol Date Underwriter Price Range IPO Price Current Price Return
Northstar Neuroscience
NSTR 5/5/06 Citigroup $12.00-$14.00 $15.00 $16.60 10.7% jumped to $17.75 in first hours, dropped afterwards, but staying above IPO price
Delek US Holdings
DK 5/4/06 Lehman Brothers $14.00-$16.00 $16.00 $16.42 2.6% jumped to $17.15 in first hours, then dropped afterwards, but staying above IPO price
DynCorp International
DCP 5/4/06 Credit Suisse $15.00-$17.00 $15.00 $15.02 0.1% jumped briefly to $15.20 in first 2 hours, then dropped and returned to $15
CPI International
CPII 4/28/06 UBS Investment Bank $16.00-$18.00 $18.00 $18.02 0.1% jumped to $19.44 in first few hours, then stayed flat at $18
RAM Holdings
RAMR 4/27/06 Banc of America $14.00-$16.00 $13.00 $13.40 3.1% jumped to $13.85 after four days, stayed steady, staying above IPO price
Corel
CREL 4/26/06 Morgan Stanley $18.00-$20.00 $16.00 $16.02 0.1% dropped like a rock immediately, struggled back to $16
Complete Production Services
CPX 4/21/06 Credit Suisse $22.00-$24.00 $24.00 $27.25 13.5% spiked to $28.38 in second week, staying above IPO price
Omrix Biopharmaceuticals
OMRI 4/21/06 UBS Investment Bank $15.00-$17.00 $10.00 $11.55 15.5% flat start, steadily grew, staying above IPO price
Targacept
TRGT 4/12/06 Deutsche Bank $11.00-$13.00 $9.00 $7.90 -12.2% steadily dropped
Vanda Pharmaceuticals
VNDA 4/12/06 J.P. Morgan $12.00-$14.00 $10.00 $10.30 3.0% peaked at the end of 6 trading days, dropped back down to $10 range
Omega Navigation Enterprises
ONAV 4/7/06 Jefferies $19.00-$21.00 $17.00 $16.00 -5.9% down from IPO price
Sealy Corporation
ZZ 4/7/06 Citigroup $14.00-$16.00 $16.00 N/A N/A over $16 for first few days, then fell
Castle Brands
ROX 4/6/06 Oppenheimer & Co. $8.00-$10.00 $9.00 $8.40 -6.7% peaked at $9.70 on first day, then dropped
Goodman Global
GGL 4/6/06 J.P. Morgan $16.00-$18.00 $18.00 $19.75 9.7% immediately up after IPO, stayed up, staying above IPO price
Visicu
EICU 4/5/06 Morgan Stanley $11.00-$13.00 $16.00 $23.90 49.4% huge gain first day, stayed up, staying above IPO price
Himax Technologies
HIMX 3/31/06 Morgan Stanley $7.50-$9.00 $9.00 $8.60 -4.4% modest gain first week, retreat
China GrenTech
GRRF 3/30/06 Bear Stearns $14.00-$16.00 $18.00 $15.85 -11.9% huge start, huge retreat
Clayton Holdings
CLAY 3/24/06 William Blair $15.00-$17.00 $17.00 $15.00 -11.8% huge start, huge retreat
Global Traffic Network
GNET 3/24/06 Feltl and Company $5.00-$5.00 $5.00 $6.28 25.6% huge start, huge retreat, recovery, staying above IPO price
Tim Hortons
THI 3/24/06 Goldman Sachs $18.00-$20.00 $23.16 $28.45 22.8% huge start, huge retreat, but staying above IPO price
Nextest Systems
NEXT 3/22/06 Merrill Lynch $14.00-$16.00 $14.00 $19.15 36.8% huge start, steady growth, staying above IPO price
TransDigm
TDG 3/15/06 Credit Suisse $20.00-$22.00 $21.00 $24.55 16.9% huge start, steady growth, staying above IPO price
Eagle Test Systems, Inc.
EGLT 3/9/06 Banc of America $14.00-$16.00 $15.50 $16.80 8.4% flat start, steady growth, staying above IPO price
Read The Full Thread:
• Post your questions, opinions, etc. on the Vonage IPO.
My first questions...
Do
• Looks like UBS fees are less than the other two when you want to transfer your shares.
• Can someone from Vonage please confirm this: is it not enough to be a permanent
• It is black and white to me: you must be a U.S. citizen.
• Okay - showing my obvious lack of financial expertise but how many people have
• I am in, all the way! :)
• I think we should get 1800 forum members to donate one dollar apiece, and buy into
• As with any stock there are those who invest simply to turn a quick profit (ala day
• http://blogs.zdnet.com/ip-telephony/?p=1078
rpilaud posted "I'm seriously considering buying at least 100 shares. But, I have a lot of questions" on 05/08/2006 |
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