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Raymond James investment banking Vice Chairman Fred Lane on the outlook for the IPO market and the metrics investors can use to pick an IPO for their ...
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Might find yourself buying the 2012 IPO calendar with a bit more scrutiny after FaceBook but.
Fred lane is here to tell you how you can spot the next big IPO and avoid the -- -- -- is Raymond James investment banks.
Vice chairman Fred that's great to talk to you you know I had to say the IPO.
New spectrum overall for 2012 to -- Canada and response for most investors what do you say that that we could have had some too big what this year.
Well actually if you just look at tech IPOs as an example that basically the winners have outnumbered the losers by about three to want.
But I do look I brought up the net product safe but at a factory and start at FaceBook well now I made it here's the thing that was a fifteen and a half billion dollar IPO.
It's gonna get a lot of prominence is gonna get a lot of media attention as it should.
And it's down 43% so oh my gosh you know the IPO markets and in terrible shambles well actually it's not and and actually the number of deals coming to market.
Is up overall IPOs are up 44%.
Vs last year terms and number deals looking at Q3.
And looking at Q3 2012 vs 2011 -- a 100% so you know it wasn't so long ago I have a good memory -- a -- And that wasn't so long ago that in 2009.
And 2010 and 2011.
-- president.
Nine and ten actually we just weren't Siemens much in the way of IPO IPOs and also I think it's a positive sign in terms of our capital markets functioning properly.
There we are seeing companies coming back to market.
If you don't -- -- names that are -- some of the names though like what another one is they haven't overbought as the this year up with Gilligan Zynga this Zynga and that's sockets on 75% from.
-- offering price you can understand it that investors are worried but you're saying.
If you do a basket if you do a large scale basket.
A technology IPO.
Group I -- for the year are -- did up Anderson that's the -- to play it.
Well actually mean theoretically you could do that -- whether or not you can get an allocation HI PO I don't know FaceBook was extremely difficult.
But if you were able to buy in each of the IPO's theoretically.
At the offering price you'd be you'd be well ahead.
And you know part of the problem is we do try to make this differentiation I think there -- clearly higher quality IPOs.
And companies that are going to do very very well.
And companies it would do less well but let's also remember that we have had a very difficult.
Set of economic circumstances in the backdrop here.
Is going to be very tough and October it's going to be kind of -- a test by fire for the IPO market.
And and you know would that the new dot -- let's face -- we have a we have an election.
Is in process which seems to be.
A toss -- I make no comment about preference -- I don't I like to keep my friends.
And I think that.
I think and we are -- -- hit Bernanke continuing to stimulate the system but we have real uncertainty about the economy about jobs.
Here in the United States Brian overseas.
Okay let's go after it does a couple of other tips do you have that for those that wanna get the -- -- -- the IPO market based -- got some bravery other side.
What makes a good IPO attractive in -- -- what should we be looking for.
Well good -- what makes a good IPO attractive is exactly what makes a good stock attractive so you'd like to see if I'm very happy -- like to see a strong competitive position you'd like to see high barriers to entry.
You know patents trademarks copyrights are only are we obviously a positive.
Having monthly recurring revenues or -- -- you and you get some kind of stickiness to the revenues is a real positive.
Being a leader in a leader in the space and having the financial metrics that go with that so for someone to say hey we -- -- leader.
And the margins are relatively pour doesn't suggest to me that that's consistent with the -- -- -- high quality company I think.
I think that that's face it you know IPOs.
How are clearly.
An area where there are more winners than losers but there are losers so allowing an IPO to be seasoned over time.
There's not a rush to -- the stock particularly for the individual investor.
You can always buy the aftermarket if you -- -- up five or 10% it's not the end of the world.
If you think it's a good long term investments I would argue fundamentals fundamentals fundamentals and and it's really -- hot deal.
It's really a hot deal.
Be careful because sometimes but those deals end -- being overpriced and you may have an end up buying right and selling right but has a long term investment it might not be the right entry.
Long term and watchdog Levi like that -- -- Raymond James investment banking vice chairman thank you Fred thank you.
