Are you looking for a hedge fund prime broker? You’re far from alone. Navigating the often murky waters of hedge funds can be difficult for the uninitiated. What are the benefits of IPOs? When should you stake your claim? Do you follow paths left by others or carve your own? All these questions and more will be answered below, with modern statistics and basic explanations to help you get your start. The world of initial public offerings is a vast one, but that only means it’s ripe for the picking!
What Is An IPO?
Let’s start off with the basics. An IPO is short for ‘initial public offering’, a term used for when the very first sale of a stock by a company is broadcasted to the mainstream public. This acronym first slipped into everyday speech all the way back in the late 1990’s, bolstered by the stock market and soon becoming popular vernacular. While this may not seem like a big deal to some, the age old wisdom of ‘first impressions go a long way’ applies! IPOs benefit institutional investors by encouraging them to buy large quantities of a stock before its major debut. IPO prices are, on average, 13% to 15% less than the regular trading price.
What Are Some Beginner’s Tips?
A general rule-of-thumb you should remember is that when the markets are doing well, IPOs will be doing just fine. For example, if you think the SandP 500 is going to be hitting double digits the following year, any and all IPOs will either match or outperform that benchmark. The year 2015 was predicted to be one of the best years for IPOs since 2000, which is no mean feat! Remember that the vast majority of initial public offerings have a lock-up period, which is a legally binding contract that can last anywhere from three to 24 months. This will prevent the selling of any shares of stock for a specific time period. This is important for companies to keep in mind, to better protect their interests in the long-term.
How Are Companies Faring?
Mastering the art of the initial public offering is very much a dance, with the market shifting and turning at a moment’s notice and only the best keeping up. Only 11 companies have come public in the first quarter of 2016 (which includes both blank checks and closed-end funds), down a significant 70% from the previous year and 71% the year before. Among companies that issued secondaries in 2015, nearly half had positive first-day performances and just over half were down on the first day. Only 2% were unchanged. Continuing the secondaries, over 100 companies raised their capital — although this is down from 54% year over year, it’s up a whopping 100% quarter over quarter. A hedge fund prime broker is an expert that can exceed your expectations for IPO services.
Where Do I Find A Hedge Fund Prime Broker?
A hedge fund prime broker can help you with both the basics and deeper complexities of IPO reports, secondary offerings, quarterly snapshots and new issue services. Most hedge funds aren’t registered and, as such, need to be sold carefully to experienced investors. A single hedge fund can have as many as 500 investors or as few as 100. The top performing companies today include Etsy Inc. (at 94%), Shopify (at 65%) and Fitbit (and 52%). Now that you’re caught up on your IPO homework, peruse the market and put your best foot forward!