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Financial Happenings Blog
Friday, August 04 2006

Rivercity is the latest in a string of new sharemarket floats that has been disappointing.  With an issue price of 50 cents, the stock closed 10% down on this after the first two days trade.  We tend to hear about floats that do really well, however fail to be told that many floats end up 'under water'.  Recent poor performers such as Sydney Roads and Emeco have highlighted that not all is 'blue sky' in the land of floats. 

There is a effect known as the 'losers curse' when talking about investment floats.  It means that if small investors are offered stock in a float, there is a chance this is because none of the big investors, such as institutions, want it.  For example, high profile floats like Babcock and Brown, Tattarsals and Wotif are hard to get access to for the retail investor.  However speculative biotech stocks are more likely to be available. 

Posted by: Scott Francis AT 05:48 am   |  Permalink   |  Email
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