How to Invest in IPOs

Video Transcript

"My name is Phillip Beningoso and I'm an investment professional and I'm going to be discussing how to invest in IPO's or Initial Public Offerings. Mainly IPO's are for large companies that want to gain capital for themselves so they are going to initially publicly offer stock to the public in ownership so they can participate in that ownership of the company. It is not normally for small companies although small companies can gain capital as well but there are some expenses involved from the state and from other firms that can get involved in this process. Let me take you through a few quick steps here that will make this process easier to understand and easier for somebody that would be interested in having an idea for their company. Step 1) first you have to find the S1 registration statement that is with the Security In Exchange Commission. This is the information about the initial public offering in itself. That can be found on numerous websites such as freeedgar.com and that information will lead you through the process. 2) Read that section about the underwriter. These underwriters are brokerage firms that take part in the initial publicly offering process. They can gain shares from the company and have so many set shares designated to them to be able to offer to the public. 3) You want to call that firm and let them know you are interested in the process of purchasing them and that you would open up an account with them. 4) Be prepared for rejection because most initial public offerings especially the great ones that are like the ones that dramatically went up in value. I remember Netscape years ago and a variety of other ones like Yahoo that went from $8 or $27 all the way down to $8 and all the way up to $440 a variety of times. 5) Find out whether online discount brokerage firms are going to play a part in it. They can be issued shares and usually it is designated for larger more conservative brokerage firms that are on Wall Street but the online can get some shares and that can make it easier to purchase for you. Open the account at these firms and then you can take part in the brokerage process of the IPO and then all you have to do is basically watch it for the initial price to come out or contact your brokerage firm. Any information provided here is for informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Any investments or strategies mentioned here may not be suitable for everyone. My name is Phillip Beningoso and I'm an investment professional."