The Size of the IPO Company Matters When Investing

So in class today we had an interesting conversation about IPO investments. Based on the conversation, IPO investments for the first 4 years seem to significantly underperform the market. Here's the catch though, if the IPO company is venture backed that works in favor of the IPO company and if it is a large company going public, then that is positive for the company. There is an ETF that looks for these criteria and has done very well. It mirrors the IPOX-100. It's ticker is FPX. Something else that is interesting to read is an article in the Journal of Finance, Dec. 1997, called Myth or Reality? The Long Run Underperformance of IPOs: Evidence from Venture and Nonventure Capital Backed Companies. It's definitely a good read.

Industries with the most IPOs

This may also lead to be very interesting. In order to determine what I think are some of the hottest industries, I'm looking to see what industries are having the most IPO filings. I'm getting this information from Yahoo Finance. From what I saw, the industries with the most IPOs are: Commercial Banking, Insurance, Investment Funds, Leisure, MANUFACTURING, Natural Resource, REITS, Radio, Retail, Telephone, and Transportation. These are the industries I saw with just a quick scan. CNNMoney had an interesting article on IPO markets to watch. Really they're what you would think. Finance, Healthcare and technology, and alternative energy. Another sight you might find interesting is MSNBC Money. They have a section for IPOs, In and Out of Favor Industries, best and worst performing industries over the last month. It might be a good place to start for 'dashboard investing.'

Freight andTransportation

Today I read something very interesting and it may lead to an investment idea, my good friend Stephen Jeffries pointed it out to my investment class. I never knew the amount of freight that is transported by trains. In addition, I never knew that trains were such technological giants. If you don't know what I'm talking about read this article that was on the cover of Popular Mechanics.