IPO's or IP Oh No's

According the Australian Financial Review, 80% of domestic IPOs have gone in the red after their first day of trading. Rams (RHG.AX) is a good example of this with a list price of $2.50 and now it languishes at 28c.

This is in direct contrast to a bullish outlook the previous year when 82% of all IPOs went up. The market has consistently gone up over those two years, so why has their been a marked downturn in new companies going to the ASX?

The answer is twofold....

1) Current mainstream companies are going so well with double-digit increases, that investors and punters alike are staying away from less tried and tested, more speculative stocks and sticking to well-known names. Because of this investors are selling out of their speculative positions.

2) The current batch of IPOs are substandard. As last year's IPOs seemed to go in the right direction, many companies decided to go public when it probably wasn't the best decision. Either their business model is not mature enough or their management isn't up to scratch or a combination of these things.

At the moment, IPOs are the flavour of the month for the companies listing but not the investors investing. Has anyone in the Cafe any stories to share about good or bad IPOs they were involved in