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VA Reprices Again
Quite a number of people have written in with the news that VA Linux Systems has re-priced, this time setting their range at $28-30 per share. People have been submitting e-mail reports from E*Trade, so if you are getting anything through there, you must re-confirm. For the friends and family program, remember that you will also be contacted to confirm as well.If you are part of the friends and family program, you can pre-emptively re-confirm by calling the phone number in the initial packet. Otherwise, phone calls will begin 8AM-4PM EST on Friday.
Everyone seems to be quite anxious to jump on the IPO bandwagon to make a quick buck, but get mad when the system (E-Trade in particular) does things that seem unfair. There are a few things to keep in mind when dealing with IPOs:
1. A company can raise its initial offering price. Period. If you are serious about investing, you'll have to have a respectable sum to invest in the first place. Since you have to buy stocks in blocks of 100 (yes, your trade of 37 shares of stock is matched up with someone else's 63 shares thanks to modern technology), plan to have enough cash on hand to buy at least 200 shares. That way, if the range increases, you can still buy a block of 100 shares and use any remaining money to pay for an odd amount of shares when the stock hits the market. It takes money to make money, and IPOs often raise their price ranges when there is a large amount of interest. Which leads into...
2. A quick bit of advice is to avoid IPOs that lower their ranges. Another tip-off to an IPO you might want to avoid is one that extends the time period of their IPO because a small amount of IPO shares have been allocated and the rest is still waiting for a buyer. After all, the price of IPO stock is initially driven up by the demand of everyone wanting to buy their share of the sure-fire performing stock.
3. E-Trade is not a brokerage firm... at least not in the traditional sense. They aren't obligated to call you and let you know that you need to reconfirm your IPO bid (though they will try to contact you through as many as 5 different e-mail addresses). You need to stay glued to E-Trade the two days prior to when the stocks initially hits the market. The first day is to catch that two-hour window with E-Trade to get in your IPO bid for the stock in the first place, and the second day is to reconfirm your IPO bid (which, unfortunately, happens quite often with the good stocks).
4. With E-Trade, make sure you read their IPO readme. Also, feel free to call E-Trade directly at 1-800-STOCKS5 to get the scoop from a real person. It will be about a 30 minute wait in the hold queue, so be patient.
5. Those 100 share block-o-stocks are delegated by a lottery system when there is more interest than supply for an IPO stock. Even if you have the money set aside to purchase stock, you may not get it. It really is the luck of the draw in some cases.
Nobody ever said IPOs were an easy way to get money, only a quick way. Still, the payoffs are worth a little time spent in preparation. Take some time to learn the system before trying to jump into the deal of a lifetime and you'll end up with much better results.
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If this trend of Linux and/or Open Source related companies offering stocks to significant members of the community continues, I think we may have just found how to support the programmers. In fact, this is even better than working for a company: friendly competition develops amongst developers for access to IPO's, increasing code quality and quality of life!
Also, VA's only underwriters are:
Credit Suisse First Boston
Deutsche Banc Alex. Brown
Hambrect & Quist (Not WR Hambrect, diff. comapny altogether)
Lehman Brothers
Other brokers offering the shares purchased them from the syndicate of underwriters and are not under our control. Thanks.
Just trying to clear away any confusion before it begins.
Chris
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Grant Chair, Linux Int.
VP, SVLUG
Co-Editor, Open Sources
Open Source Program Manager, Google, Inc.