CNN Money has an article today about predicting the next big hedge fund to do an IPO. This is a timely topic because recently Fortress Investment Group became the first hedge fund to be traded on the NYSE.
I recently attended a seminar with the Commissioner of the SEC where he commented on the growing trend of private equity and IPOs. Basically, he said with the markets near all-time highs, and there being a lot of money available for investment, there is going to be a lot of large scale action in the marketplace.
Who will be the next hedge fund to go public? Well, Blackstone Group, a private equity firm has already announced its intentions. There is a lot of curiosity about what will happen on the first day as well as the coming months. Basically, Blackstone Group plans on raising $4 billion in its IPO, but it plans on offering non-voting shares.
No one knows how Blackstone Group will perform on its IPO, but here is what happened with Fortress – Quoted from CNN Money:
“So how has Fortress (Charts) stock done post-IPO? Its shares have recently retreated from $37 to the mid-$20s – fueling criticism that the founders cashed out at the top of the market. Fortress partisans counter that the principals still own almost 80 percent of the company, and similar arguments were heard when Goldman Sachs (Charts) went public in 1999; today the investment bank’s stock has more than tripled, to almost $200 per share.”
So what can we expect when Blackstone and other hedge fund and private equity groups go public? Well, no one knows for sure, but many well publicized IPOs go up very quickly, then retreat within the next few days or weeks. (Too many peope don’t understand making limit orders when buying stocks, they don’t set a price they just click ‘buy’ and the price goes up, up, up)…
I won’t give any advice, but here is a method endorsed by Jim Cramer in Mad Money. if you buy some stock and see it rise dramatically, why not take some off the table and realize gains immediately? If it draws back, you then have the option of buying some back at a lower price, or being happy with your realized gains.
* Disclaimer: I do not own nor do I plan to buy any shares of the aforementioned companies; this is because I like to invest in low cost mutual and index funds. You should only invest based on your understanding of the risks involved and your personal needs.