(4) High Stake Of Management & Promoters
It is one of the key secrets to find blockbuster IPO for listing gains. Company’s management & promoters are the first persons to know a lot more about a company. It is often a good idea to scan the stake of management & promoters in a company planning to go public.
Professional IPO investors prefer to invest where management team holds a high stake in a stock. It usually considered as a great sign that top management still believe in the company’s future.
On the other hand, company with low stake of management & promoters raises doubts about a company & its business potential. Thus, short-term traders can subscribe IPO issue of such organization with high stake of management for gaining first day premiums.
(5) Oversubscribed IPO Issue
It is one of the best secrets to find blockbuster IPO for listing gains. The degree to which a security is oversubscribed is generally expressed in terms of a multiple.
For example, XYZ IPO oversubscribed four times. It indicates that the demand of shares in XYZ IPO is four times the number of shares that will be issued.
This shortage of shares over demand can help to boost the share price on listing day. It is perhaps true for IPOs that are offered at cost-effective valuations along with additional positive triggers.
Although, there is no guarantee of higher premium on listing day due to this factor alone. But, it can help to boost the price of shares in initial days of listing.
For example, Facebook IPO was five times oversubscribed by institutional investors. The company bumped up both number of shares & price range.
However, interest didn’t hold up much past pricing. The stock ended almost flat on the first day of trading before falling sharply in subsequent days.
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