The Investor's Guide to New Issues

by Massey, David

• ISBN13: 9780273611172
• ISBN10: 0273611178
• Format: Hardcover
• Copyright: 1995-12-01
• Publisher: Ft Pr

Summary

Economic recovery in both the mature economies of the Western world and rapid growth in emerging markets has seen both a revival in new issue activity, and the opportunity to profit from opportunities previously closed to investors. With major privatizations spreading across Europe and emerging markets, and demerges and MBOs on the increase throughout the world, the volume and complexity of new issue investment opportunities are on the increase. New issue are a major area of growing opportunity for investors, and involve different investment criteria. The risks associated with them can also be different. New Issues provides all the tools you need to select, invest and deal in new issues, including how to understand new issues and their benefits, choose the best ones (and avoid the bad ones), when and how to apply, analyze the new issue prospectus, realize profit afterwards, and invest overseas and avoid the pitfalls.

Table of Contents

Foreword	xv
Introduction	xvii
What Drives the New Issue Market?	1	(10)
Role of the stock market in raising money	1	(1)
Why do companies come to the new issue market?	2	(6)
Who are the buyers?	8	(3)
Types of New Issue	11	(30)
How does a company achieve a listing?	11	(2)
Offer for sale	13	(9)
Intermediaries offer	22	(4)
Placing	26	(5)
Introduction	31	(1)
Timetables	32	(3)
The US IPO process	35	(6)
Checklist	37	(4)
How to Spot a Good New Issue	41	(36)
When to `fill your boots'	41	(3)
Growth markets	44	(1)
Unique products	45	(3)
History	48	(1)
Brand names	48	(5)
Management	53	(6)
P/e ratios	59	(3)
Profits forecasts	62	(1)
Yield	63	(2)
Partly paid stocks	65	(3)
Dividend cover	68	(2)
Dividend forecasts	70	(1)
Asset values	71	(1)
Property stocks	71	(2)
Takeover targets	73	(4)
Checklist	75	(2)
What Makes a Bad New Issue?	77	(34)
A `price for everything'	77	(2)
Management/Institutions selling out	79	(1)
Management buyouts	80	(1)
Where is the money going?	80	(2)
Is the company assuming debt?	82	(1)
What business is the company in?	83	(1)
What market does the company operate in?	84	(1)
Payback	85	(1)
One-product companies	86	(3)
One supplier/customer	89	(1)
Once bitten, twice shy	89	(3)
Litigation	92	(1)
Who controls the company?	93	(3)
Overseas shareholders	96	(1)
Dividends	97	(1)
Is an issue being hyped?	98	(3)
Why is the company being listed here?	101	(1)
Political concerns and legislation	102	(1)
Regulatory concerns	103	(1)
Liquidity	104	(1)
Market makers	104	(2)
Who is the broker?	106	(5)
Checklist	107	(4)
`Blue Sky' Issues	111	(18)
What is a `blue sky' issue?	111	(2)
Scientific research stocks	113	(11)
High technology applications	124	(2)
Portfolios	126	(3)
Checklist	126	(3)
Major Capital Projects	129	(12)
`Better to travel hopefully than arrive'	129	(4)
What is a major capital project?	133	(1)
What is the problem with these projects?	134	(1)
When is some revenue going to come in?	135	(1)
Volatility and valuations	135	(1)
The next generation	136	(5)
Checklist	138	(3)
Mineral, Oil and Gas Companies	141	(10)
Few issues these days	141	(1)
Special rules	142	(1)
Commodity prices	142	(2)
Share price volatility	144	(1)
Finance	144	(1)
Reserves	145	(1)
Other restrictions	146	(1)
Political risk	147	(4)
Checklist	148	(3)
Property Stocks	151	(10)
The property market	151	(1)
Investment and development property	152	(2)
Covenant	154	(1)
Valuations	155	(1)
Office/commercial/retail	156	(1)
Freehold/long leasehold/short leasehold	157	(1)
Dividend yield	157	(4)
Checklist	158	(3)
Investment Trusts and Warrants	161	(12)
Why buy investment trusts?	161	(1)
The difference between a unit trust and an investment trust	162	(1)
The legal definition	163	(1)
Valuing an investment trust	163	(2)
So what does this mean for the new issue market?	165	(2)
Warrants	167	(6)
Checklist	170	(3)
Are Foreign Markets Attractive?	173	(12)
Why invest abroad?	173	(1)
Getting in...and getting out	174	(1)
Currencies	175	(1)
Quality of information	176	(1)
Emerging market funds	177	(3)
Privatizations	180	(1)
The US market for new issues	180	(1)
ADR/GDR trading	181	(4)
Checklist	182	(3)
Some Further Considerations	185	(14)
Are new issues getting younger?	185	(2)
Is there a season?	187	(1)
PEP schemes	188	(3)
Are smaller companies more attractive?	191	(1)
Market capitalizations	192	(2)
`There is no commission on new issues'	194	(1)
Does the share price matter?	194	(5)
First Day Premiums and Stagging	199	(12)
First day premiums	199	(4)
Is stagging worth it?	203	(4)
Is it worth gearing up?	207	(1)
The Grey Market	208	(3)
The Alternative Investment Market (AIM)	211	(6)
The new market	211	(2)
What companies will be attracted?	213	(1)
Listing rules relaxed	214	(1)
Role of the nominated adviser	214	(1)
Tax breaks	214	(3)
Checklist	215	(2)
Appendix -- What to look for in the prospectus	217	(5)
Glossary	222	(3)
Index	225