Vonage Bankers Bent Us Over !!

Posts: 243 · Vonage Forum Master Joined: Jan 18, 2004 Posts: 243

clave, your obsoletely correct. IPO's are very risky and for all of the reasons you listed and more.

This is why I doubt that anyone who invests frequently here is complaining all that much because we understood what we were getting ourselves into. The DSP however brought in many "new" investors whom I feel may not have understood exactly what they were getting into.

I'll use blackjack as an analogy. If you play blackjack then you know what I'm talking about. When you go to a casino, if your a real blackjack player you'll go to the higher bet tables and stay away from the lower bet tables. You do this because a table full of black jack players who know what they are doing have better odds of beating the house then a table with casual players. The table with casual players play with only themselves in mind. A table with true players all play for the tables benefit.

Posts: 243 · Vonage Forum Master Joined: Jan 18, 2004 Posts: 243

blakadher wrote:

ckudrna wrote:

Underwritters are obligated to make a market in the stock for months after the issue, this is a known fact.

This is the part I don't understand. The underwriters are responsible for setting the price at what they believe the market will support. They aren't there to prop up the price so that everyone who bought in the IPO makes money.

if that were the case then there would never be a stock that declined. Wink

Posts: 21 · Posted: Fri Jun 02, 2006 5:07 pm Post subject:

I'll try to answer a few questions here to the best of my ability...

gfoulks is right, I have been out of the business for quite some time. I did IT work for an ivy league firm, not quite sure if your Level II setup is as advanced as a brokers quotetron. Brokers can see that Morgan Stanley just bought/sold 100,000 share block of INTC. Out of curiosity I would like to know if your Ameritrade can do that?

clave665, ipos are very risky but they can produce the most reward as well. The traders watching that stock are the one that have made money. Not to mention the brokers that bought stock in their mother in laws names.

blakadher, the underwriters are the sales force for the stock. Usually only the big inversters with the firm get the stock. The inversters are known to the brokers as team players and will hold the stock for quite some time. If you are a flipper it is very hard to get a broker to the phone to take the sell order, but there are some tricks... However this stock was under sold at the ipo level. After all the insiders bought this stock up, at the open is when I would imagine the vonage customers stock would have been purchased. That would have kept the stock moving at the open. Might have anyway. I do not know what kind of volume the stock had at the open but it would have been fun to watch this one.

According to one of my friends there just wasn't enough interest in the stock, a good ipo is one you can't get your hands on, or can't buy as many shares as you want, one that isn't readisly available to the public before the open. Many people believe that anyone with the proper funding can open a Vonage. I think they are the best at what they do - I have an awesome internet connection, cisco equipment, all cat5e wiring no wireless and they sound quality is awesome...

Posts: 476 · Posted: Fri Jun 02, 2006 5:24 pm Post subject:

deviceman wrote:

blakadher, the underwriters are the sales force for the stock. Usually only the big inversters with the firm get the stock. The inversters are known to the brokers as team players and will hold the stock for quite some time. If you are a flipper it is very hard to get a broker to the phone to take the sell order, but there are some tricks... However this stock was under sold at the ipo level. After all the insiders bought this stock up, at the open is when I would imagine the vonage customers stock would have been purchased. That would have kept the stock moving at the open. Might have anyway. I do not know what kind of volume the stock had at the open but it would have been fun to watch this one.

Yes, but that is a far cry from saying it is the underwriter's responsibility to support the price as many people have been claiming in various threads.

Posts: 21 · Posted: Fri Jun 02, 2006 5:35 pm Post subject:

You can't put a gun to a person's head and make them buy something they don't want. I personally thought it would have done great!

Posts: 13 · Vonage Forum Associate Joined: Sep 01, 2005 Posts: 13

I am sure someone will correct me if I am wrong but I believe that a successful IPO not only raises a maximum amount of cash for the company but also sets a price where the stock has pressure to move up. Much of the stock is in the hands of insiders who hired the investment bankers. No legitimate company looking to go public will hire an underwriter who consistently raises a lot of money on IPOs and then sees the stocks tank.

If allowing the Vonage customers to sell immediately created a negative pressure on the stock, then the underwriters should have seen this possibility and either added restrictions or priced it lower.

Everyone who purchased this IPO knew the risks. I am just saying that the blame for the mess should be with the experienced underwriter. Vonage hired them to successfully take them through this process.

Posts: 243 · Vonage Forum Master Joined: Jan 18, 2004 Posts: 243

deviceman wrote:

gfoulks is right, I have been out of the business for quite some time. I did IT work for an ivy league firm, not quite sure if your Level II setup is as advanced as a brokers quotetron. Brokers can see that Morgan Stanley just bought/sold 100,000 share block of INTC. Out of curiosity I would like to know if your Ameritrade can do that?

No I don't have anything like a quotetron (wish I did) but the tools TDAmeritrade offer do the job very nicely. I can't see who is doing the buy/sell but I can see all of the last 20 trades as they happen... Time/Bid and Ask Size/Price.

I can get you a very nice candlestick chart for opening day if you like.

Posts: 5 · New Forum Member Joined: May 31, 2006 Posts: 5

Yes they are. The bankers who price the IPO typically give it to their best customers...institutional customers who do a lot of business with the firm. It's common knowledge that after the IPO the underwriter will make a market in the stock by buying in the open market. This creates upward pricing pressure to help stabilize a new stock. Banks don't want their new "baby" to crash and die, they support the new stock by buying.

However, in this case the banks didn't believe in the stock and much like a cook who won't touch his own cooking, the banks just let it drop and did nothing. That's very sketchy.

Posts: 21 · Posted: Sat Jun 03, 2006 9:14 am Post subject:

gfoulks wrote:

deviceman wrote:

gfoulks is right, I have been out of the business for quite some time. I did IT work for an ivy league firm, not quite sure if your Level II setup is as advanced as a brokers quotetron. Brokers can see that Morgan Stanley just bought/sold 100,000 share block of INTC. Out of curiosity I would like to know if your Ameritrade can do that?

No I don't have anything like a quotetron (wish I did) but the tools TDAmeritrade offer do the job very nicely. I can't see who is doing the buy/sell but I can see all of the last 20 trades as they happen... Time/Bid and Ask Size/Price.

I can get you a very nice candlestick chart for opening day if you like.

That would be awesome, does it show buying vs selling share volume?

Posts: 21 · Posted: Sat Jun 03, 2006 9:17 am Post subject:

GTNator wrote:

Yes they are. The bankers who price the IPO typically give it to their best customers...institutional customers who do a lot of business with the firm. It's common knowledge that after the IPO the underwriter will make a market in the stock by buying in the open market. This creates upward pricing pressure to help stabilize a new stock. Banks don't want their new "baby" to crash and die, they support the new stock by buying.

However, in this case the banks didn't believe in the stock and much like a cook who won't touch his own cooking, the banks just let it drop and did nothing. That's very sketchy.

Who were the underwriters? Did they give some stock to any other firms?