Foreword xiii
Introduction xv
PART I: IPO FUNDAMENTALS
CHAPTER 1 Getting IPO Shares 3
Risk 4
The Calendar 4
Online Brokers 5
Build Relationships with the Syndicate Firms 8
Dutch Auction 8
Buy on Secondary Markets 10
Private Placements 10
IPO Mutual Funds 10
Directed Share Program 11
Follow-On Off erings 11
Direct Public Off erings 12
IPOs to Avoid 13
Conclusion 14
CHAPTER 2 IPO Basics 15
Why Do Companies Go Public? 15
Reasons Not to Go Public 19
JOBS Act 23
Cast of Characters 23
Conclusion 27
References 27
CHAPTER 3 IPO Process 29
Laws That Impact IPOs 29
Steps of the IPO Process 30
Conclusion 38
PART II: IPOs FOR INVESTORS
CHAPTER 4 Finding the Best IPO Information 41
Information to Get Your Feet Wet 42
In-Depth IPO Information 43
Other IPO Information Resources 45
Conclusion 47
CHAPTER 5 Making Sense of the Prospectus 49
Getting a Copy of the Prospectus 50
Main Sections 50
Front Matter 52
Graphic Material 54
Qualification Requirements 55
Prospectus Summary 56
Risk Factors 58
Letter from Our Founder 59
Market Data and User Metrics 60
Use of Proceeds 60
Dividend Policy 61
Capitalization 61
Dilution 62
Selected Consolidated Financial Data 62
Management’s Discussion and Analysis of Financial Condition and Results of Operations 62
Business 63
Management 63
Executive Compensation 64
Certain Relationships and Related-Person Transactions 65
Principal and Selling Stockholders 65
Description of Capital Stock 66
Shares Eligible for Future Sale 66
Index to Consolidated Financial Statements 67
Miscellaneous Sections 67
Conclusion 67
CHAPTER 6 Balance Sheet 69
Some Fundamentals 69
Balance Sheet Overview 71
The Assets 73
The Liabilities 78
Conclusion 81
CHAPTER 7 Income Statement 83
Management’s Discussion and Analysis of Financial Condition and Results of Operations 84
Conclusion 91
CHAPTER 8 Statement of Cash Flows 93
Background 93
Focus on Operating Cash Flows 96
Free Cash Flow 97
Stock Options 98
Factoring 98
Footnotes 98
Fraud and Misrepresentation 99
Conclusion 100
CHAPTER 9 Risk Factors 101
Inexperienced Management Team 101
Need for More Financing 102
Legal Proceedings 103
Market and Customer Base 104
Going Concern 104
Competition 105
Dual-Share Structure 106
CEO Dependence 107
Reliance on the Government 108
Unproven Business Model 109
Limited History of Profi table Operations 109
Small Market Potential 110
Cyclical Businesses 111
Conclusion 111
CHAPTER 10 IPO Investment Strategies 113
Neighborhood Investing 113
Invest in What You Know 114
Study Mutual Fund Holdings 114
Strong Backers 115
Analyst Coverage 115
IPO Rules of Thumb 116
Buy on the Opening or Wait for the Lockup to Expire? 117
Buying on Margin 118
Options 118
Conclusion 122
CHAPTER 11 Short Selling IPOs 123
How Short Selling Works 123
Risks of Short Selling 126
Taxes 127
Finding IPOs to Short 127
Conclusion 128
PART III: IPO SECTORS
CHAPTER 12 Tech IPOs 131
The Cloud 131
Social Networking 133
Mobile 135
Marketplaces 136
Security 136
Big Data 137
Evaluating a Tech IPO 138
Conclusion 140
Reference 140
CHAPTER 13 Biotech IPOs 141
FDA Approval 143
Analyzing Biotech IPOs 144
Conclusion 147
References 148
CHAPTER 14 Finance Sector IPOs 149
Banking 149
Asset Managers 152
Private Equity Firms 153
Online Brokerages 154
Insurance 155
Specialized Online Financial Services 156
Conclusion 157
References 158
CHAPTER 15 Retail Sector IPOs 159
Brand 159
Disruptive Threats 160
Major Consumer Changes 161
Timing 161
Check Out the Store 162
Financial Metrics 163
Narrow Base 163
Conclusion 164
References 164
CHAPTER 16 Foreign IPOs 165
Advantages of Foreign IPOs 166
Risks 167
IPO Process for Foreign Deals 170
American Depositary Receipts 171
Direct Investments in Foreign IPOs 171
Conclusion 172
CHAPTER 17 Energy IPOs 175
Crude Oil 175
Natural Gas 176
Coal 177
Alternative Energy 177
Types of Energy Companies 179
Evaluating an Energy Company IPO 179
Master Limited Partnerships 180
Conclusion 181
CHAPTER 18 REIT IPOs 183
Trends in the Real Estate Market 183
Basics of REITs 184
Conclusion 188
PART IV: OTHER IPO INVESTMENTS
CHAPTER 19 IPO Funds 191
Types of Funds 191
Mutual Funds 192
Exchange-Traded Funds 194
Closed-End Funds 195
Hedge Funds 197
Fund Strategies 198
Conclusion 200
References 200
CHAPTER 20 Spin-Offs 201
The Basics 201
Investing in Spin-Offs 204
Conclusion 205
References 205
CHAPTER 21 Fad IPOs 207
Spotting the Fads 208
Knowing When to Get Out of Fad IPOs 212
Conclusion 212
References 213
CHAPTER 22 Secondary Markets, Angel Investing, and Crowd Funding 215
Pre-IPO Funding Process 216
Accredited Investor 216
How to Become an Angel Investor 217
Angel Deal Structures 217
Strategies for Angel Investing 218
Due Diligence and the Term Sheet 221
Secondary Markets 223
Crowd Funding 226
Conclusion 228
CHAPTER 23 The 100x IPO 229
The Amazon.com IPO 229
Conclusion 233
Conclusion 235
Appendix A: The Underwriting Process 239
Appendix B: Analyzing the Financial Statement Items 243
Glossary 247
About the Author 259
Index 261
