3 IPO Investing Tips You Want to Know

3 IPO Investing Tips You Want to Know
  • Opening Intro -

    The best Initial Public Offerings are usually the most difficult to get stocks in.

    Investors have to live with this truth, however bitter or hard it sounds.


Their offers open so quickly and close even before you get wind of what is going on. You will find most of the available shares reserved for institutional investors. Others go to customers of the stock brokering firm sponsoring the venture. In such cases, the ‘common investor’ is left wallowing in deep wonders.

Good news here; you can buy IPOs in the secondary market after the initial listing in ASX. The prices might not be as low as in the IPO but they are still good bargains. The question only lies in how best one can get such bargains. A few IPO investing tips will surely do.

Understand the risks involved

The IPO market can be a huge source of wealth. Think of investors who bought the initial shares of Westfeilds Corp when they were first floated in the market. Today, they have made substantial gains. This huge shopping center has served as one of those lucrative stocks people want to be part of. Its flagships are located in Los Angeles, New York and London.

Investing in its IPOs was a risk which some investors welcomed with open arms. It is the same case with other stocks. Most IPOs do not have histories as listed companies. As such, you need to know there are risks involved and then assess if they are worth it.

Embrace the IPO loop

Prospective IPO investors find it so frustrating when IPOs open and close almost immediately. You barely get a chance to assess and make your case. It is advisable that you closely follow the ASX Upcoming Listings. It contains information on companies seeking official admission into this stock market. Do your research before the official admission. By the time they are listed, you will have one leg inside the arena.

You can also check the Australian Financial Review, specifically the Street Talk section, for information regarding companies proposing IPOs. Also, be on the lookout for firms testing their offers with institutional investors. You can take such opportunities to identify the brokerage firms active in your preferred floats. Open an account with them when necessary. You will have an upper hand in the game.

Read the prospectus and understand the company

Just like any other investment, you need to understand what you are getting into when dealing with IPOs. Many people find it difficult to read IPOs prospectuses. They might not be easy or fascinating to read but are worth it, trust me. For novice investors, you have every reason to go through them before committing your finances. If you find it difficult to understand the prospectus after reading, simply keep off. You do not want to take the risk of investing in something you don’t understand.

Lastly, be sure to check the management of the company. It reveals more than you can imagine. If you do your background check properly and consider some of these tips, you will be able to take advantage of lucrative IPOs.

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