It’s not a spread or a confidence interval. You seem to be trying to confuse the argument by introducing additional terms. There is no way 200% is a relevant number to the debate. The fact is that US IPOs have historically gone up by about 17% on opening day, albeit with a wide dispersion of outcomes - any individual IPO could be down 50% or up 150%, however on average IPOs outperform in the first day “pop”. The amount of this effect varies depending on the time period and market environment - for example it was higher during the late 1990s - so saying 5-15% is a reasonable estimate of what to expect. This is thought to be due to the underwriting process “leaving some money on the table” in order to reward first investors for the risk, to generate buzz around the company, etc. Interestingly on average IPOs underperform for the following 3 years after their launch, essentially giving back the first-day gains.
You mad brah? I would be too if I didn’t understand confidence intervals. How hard is it to understand that in the example provided of 5-15% that the high is 200% of the low.
Take out the 90s. Now the new mean is 8% and the low is 6% and the high is 10%. Do you now see that the range is 10% / 6% which is less than 200%?
Or the other example. Let’s look at the 90s. Maybe the mean is 25% and the high is 40% and the low is 10%. That is a range of 300% yet your “spread” is only 30%.
When you have a return set with high volatility you get wide intervals. Take out the volatility, you get narrow intervals.
Looks like you are the moron n’est ce pas? EIther way we are all just making up numbers. Someone has done the study. It has to exist.
First day IPO returns can be found here:http://bear.warrington.ufl.edu/ritter/ipoisr.htm. Click the link that says “Data from figures 1 and 2” to open a spreadsheet of first day IPO returns from 1960-2011. I’ll save you the time though. The numbers are pretty much the same as I’ve already posted. From 2001-2011 average first day return is 11.67% with a standard deviation of 9%.
According to Hoover’s, there have been 24 IPO’s in the 2nd quarter. Those IPO’s exibited the following first day returns:
Min: -13.6% (Edgen Group)
Median: 7.8%
Average: 12.8%
High: 108.7% (Splunk)
StDev: 25.1%
So, what is the appropriate expectation on the first day of an IPO?
That has to be one of the poorest designed Excel datasets I have ever seen. I don’t trust that guys data nor do I trust someone’s analysis of it. FYI though, if it is correct you HAVE NOT posted a mean and standard deviation, you posted a range. This is the FIRST time this info has been posted (if it is correct).
Anywho, as I was saying someone who does research professionally has done the study. It’s out there. Someone go find it.
Just google “average first day IPO returns.” You’ll get several pages of studies that say the long term average is 18%, and if you dig a little you can get the averages excluding the tech bubble and you’ll find it comes out to the low teens.
I’m still less interested in what the exact numbers are than what your definition of a successful first day IPO is. You really haven’t said anything yet. For example, would you rely entirely on stats and just say successful IPO is one that returns X within Y standard deviations? That may work, but I think it would be purely coincidence. There has to be some finesse involved.
So, anything constructve to add Blake? Or do you just want to keep trolling?
Blake’s solution to winning arguments is to simply try to discredit any sign of evidence, data, and/or direct quotations from news articles even when the direct source is given and happens to be a major media source.
Trolling is a game about identity deception, albeit one that is played without the consent of most of the players. The troll attempts to pass as a legitimate participant, sharing the group’s common interests and concerns, but has the primary intent of provoking readers into an emotional response or of otherwise disrupting normal on-topic discussion;
A troll can disrupt the discussion on a newsgroup, disseminate bad advice, and damage the feeling of trust in the newsgroup community.
Is it just me or has anyone else kinda grown to like Blake’s input? I find his constant negativity and need to interject into discussions with inflammatory comments is kinda endearing. I mean this in the same way that I feel about the grumpy dwarf in Snow White or those two old guys sitting on the balcony in the Muppet Show. Their annoying habits grow to be kinda cute and loveable.
Blake is just a cute grumpy fuzzy bear who’s more bark than bite. I say we all show him some group love.
Are you saying you don’t trust Roger Ibbotson’s data? This Roger Ibbotson?
I always Pictured Ibbotson as a double barrelled posh Asian type.
By saying do I have “anything constructive to add” do you mean on top of the only value added and accurate info that was posted in this thread by myself? Because it seems no one but myself seems to understand the relationship between volatility and alpha in financial markets.
Burn! Classic comebeack - 200 points! Take that Sweep of the leg.
Everyone may think the way he/she wants - but it has to be logical. Arguing for the sake of arguing leads nowhere!
Non, ce n’est pas, moron.
I don’t see what duty Morgan Stanley has to the investors of this IPO, aren’t their fees directly tied to the offering size? If anyone who actually works in IB wants to chime in, I’d like to hear your thoughts. Maybe I don’t have the complete picture.
Executives and their assistants, I tell you!!!