Your Broker and IPOs he offers: easy money?
A reader (and the owner of www.hungrytable.com an Ottawa restaurant review website), gives us an excellent suggestion regarding online brokers and IPOs. He says that if your Canadian online broker, such as TD Waterhouse, offers new issues of common shares (and notification via email) you should look into acquiring them and them selling them within several weeks. Because of the publicity of the IPO, there will be an increase in trading volume and the share price will most likely rise a couple of percent in the first weeks. He also says that he personally hasn't paid any commission fees on the purchase.
3 comments:
HT (from www.hungrytable.com) responded to Canadian Capitalist's criticism of the IPO idea here:
http://www.canadiancapitalist.com/2007/10/28/invesing-in-ipos-mbs-and-emerging-markets
Edward Palonek from http://www.edwardpalonek.org/ with the current weak US dollar, the Canadian IPOs must be making top dollars. How come we don't hear so much about IPOs' in general?
Thanks
Edward Palonek
While their is no commission to the client, there is a selling agent's fee - which means that the broker is typically paid 4.25% - 5.00% on IPO's and new issues, bought deals and marketed deals from the investment banking team.
The selling agent's fee is clearly indicated on the red-herring prospectus and of course the final prospectus.
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