High-profit IPO strategies : finding breakout IPOs for investors and traders

300 Pages·2013·7.28 MB·English

by  Taulli

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Chapter Title
HIGH-PROFIT
IPO STRATEGIES
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HIGH-PROFIT
IPO STRATEGIES
Finding Breakout IPOs
for Investors and Traders
Third Edition
Tom Taulli
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Cover images: Stock background © Sergiy Timashov/iStockphoto,
Wave and Smoke © Jeannette Meier Kamer/iStockphoto
Cover design: C. Wallace
Copyright © 2013 by Tom Taulli. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
Th e second edition of Investing in IPOs Version 2.0 was published by Bloomberg Press in 2001.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form
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Library of Congress Cataloging-in-Publication Data:
Taulli, Tom, 1968-
High-profi t IPO strategies : fi nding breakout IPOs for investors and traders / Tom Taulli. — 3rd ed.
p. cm. — (Bloomberg fi nancial series)
Rev. ed. of: Investing in IPOs. c2001.
Includes bibliographical references and index.
ISBN 978-1-118-35840-5 (cloth); ISBN 978-1-118-42033-1 (ebk);
ISBN 978-1-118-43418-5 (ebk); ISBN 978-1-118-41697-6 (ebk)
1. Going public (Securities). 2. Investments. I. Taulli, Tom, 1968- Investing in IPOs.
II. Title.
HG4028.S7T38 2013
332.63'2042—dc23
2012030210
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
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Contents
Foreword xiii
Introduction xv
PART I: IPO FUNDAMENTALS
CHAPTER 1
Getting IPO Shares 3
Risk 4
Th e Calendar 4
Online Brokers 5
Build Relationships with the Syndicate Firms 8
Dutch Auction 8
Buy on Secondary Markets 10
Private Placements 10
IPO Mutual Funds 10
Directed Share Program 11
Follow-On Off erings 11
Direct Public Off erings 12
IPOs to Avoid 13
Conclusion 14
CHAPTER 2
IPO Basics 15
Why Do Companies Go Public? 15
Reasons Not to Go Public 19
JOBS Act 23
Cast of Characters 23
Conclusion 27
References 27
v
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vvii CCoonntteennttss
CHAPTER 3
IPO Process 29
Laws Th at Impact IPOs 29
Steps of the IPO Process 30
Conclusion 38
PART II: IPOs FOR INVESTORS
CHAPTER 4
Finding the Best IPO Information 41
Information to Get Your Feet Wet 42
In-Depth IPO Information 43
Other IPO Information Resources 45
Conclusion 47
CHAPTER 5
Making Sense of the Prospectus 49
Getting a Copy of the Prospectus 50
Main Sections 50
Front Matter 52
Graphic Material 54
Qualifi cation Requirements 55
Prospectus Summary 56
Risk Factors 58
Letter from Our Founder 59
Market Data and User Metrics 60
Use of Proceeds 60
Dividend Policy 61
Capitalization 61
Dilution 62
Selected Consolidated Financial Data 62
Management’s Discussion and Analysis of Financial Condition and
Results of Operations 62
Business 63
Management 63
Executive Compensation 64
Certain Relationships and Related-Person Transactions 65
Principal and Selling Stockholders 65
Description of Capital Stock 66
Shares Eligible for Future Sale 66
Index to Consolidated Financial Statements 67
Miscellaneous Sections 67
Conclusion 67
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vii
Contents
CHAPTER 6
Balance Sheet 69
Some Fundamentals 69
Balance Sheet Overview 71
Th e Assets 73
Th e Liabilities 78
Conclusion 81
CHAPTER 7
Income Statement 83
Management’s Discussion and Analysis of Financial Condition and
Results of Operations 84
Conclusion 91
CHAPTER 8
Statement of Cash Flows 93
Background 93
Focus on Operating Cash Flows 96
Free Cash Flow 97
Stock Options 98
Factoring 98
Footnotes 98
Fraud and Misrepresentation 99
Conclusion 100
CHAPTER 9
Risk Factors 101
Inexperienced Management Team 101
Need for More Financing 102
Legal Proceedings 103
Market and Customer Base 104
Going Concern 104
Competition 105
Dual-Share Structure 106
CEO Dependence 107
Reliance on the Government 108
Unproven Business Model 109
Limited History of Profi table Operations 109
Small Market Potential 110
Cyclical Businesses 111
Conclusion 111
CHAPTER 10
IPO Investment Strategies 113
Neighborhood Investing 113
Invest in What You Know 114
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viii Contents
Study Mutual Fund Holdings 114
Strong Backers 115
Analyst Coverage 115
IPO Rules of Th umb 116
Buy on the Opening or Wait for the Lockup to Expire? 117
Buying on Margin 118
Options 118
Conclusion 122
CHAPTER 11
Short Selling IPOs 123
How Short Selling Works 123
Risks of Short Selling 126
Taxes 127
Finding IPOs to Short 127
Conclusion 128
PART III: IPO SECTORS
CHAPTER 12
Tech IPOs 131
Th e Cloud 131
Social Networking 133
Mobile 135
Marketplaces 136
Security 136
Big Data 137
Evaluating a Tech IPO 138
Conclusion 140
Reference 140
CHAPTER 13
Biotech IPOs 141
FDA Approval 143
Analyzing Biotech IPOs 144
Conclusion 147
References 148
CHAPTER 14
Finance Sector IPOs 149
Banking 149
Asset Managers 152
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