Wednesday, August 24, 2005

The IPO Game

I never really played the IPO game. My first IPO investment was in DJ Orthopedic (DJO) back in November 2001. I thought it was going to be easy money since it was supposed to be a "hot" deal. I was allocated a few shares at $17.00 and I was planning to flip it the same day. Well, guess what happened. The shares opened flat at the IPO price $17 and started to decline. I knew instantly that it was trouble. The underwriters were not supporting the stock. I sold the same day for a small loss (I believe it was ~$200). Anyways about a year ago there was a class action lawsuit and I sent in a claim. Today I finally got a check for $59. So my total loss from this ordeal was $140. It was a learning experience. The little guys rarely get a chance to get their hands on a "hot" ipo. If you get a full IPO allotment, there maybe trouble brewing. There's no such thing as easy money in this game.


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