Missed the boat on LinkedIn (NYSE:LNKD) last week? Kicking yourself over not jumping at the Yandex (NASDAQ:YNDX) offering tuesday? Don’t beat yourself up too badly, there will be plenty more chances to capitalize on the surging demand for social media and internet startups that’s been driving investors wild lately. With interactive game and platform developer Zynga gearing to make its IPO sometime in the very near future, and Facebook also slated to make its official public offering in the next few months, the IPO market is sure to continue to get hot and bothered with speculation and trading activity.
As it turns out it wasn’t so easy for outsiders like you and I to bank on these recent IPO cash cows anyway. According to financial news sources most of the offerings from recent IPOs were very exclusive, as only corporate insiders and privileged bankers had access to the first shares to hit the markets due to the limited volume of stock made available. Here are some recommendations on how to get yourself included in the “circle of trust” when the next big IPO makes its splash.
1) Talk to Investment Bankers
Find out which guys are financing the IPO that’s piqued your interest and contact financial advisors associated with that firm. If you have any luck of landing early shares its these guys who have the access and credibility to cut you in on early trading action. For example, Morgan Stanley (NYSE:MS) , Merrill Lynch and J.P. Morgan (NYSE:JPM) were banks that worked on the LinkedIn (NYSE:LNKD) deal, so going through financial reps of these companies would have been your best bet last week.
2) Get in Early, Really Early
If you’ve got a really good feeling, try to go through brokers on the secondary market and grab your shares before the company makes its official IPO on public markets. Company insiders have been known to try and offload private shares of hot stocks before the IPO even takes place. Through markets like “SharesPost” and “Second Market,” you can get your slice of the pie early, and prime your portfolio to explode when the company makes its public debut.
3) Jump Aboard IPO Mutual Funds and ETFs
The harsh reality is that average Joe is going to have a tough time convincing investment bankers to cut him in on IPO action, and may have some trouble landing private shares on the secondary markets unless he’s flush with cash. A good way to circumvent these barriers is put your money into IPO-centric Mutual Funds and ETFs. Investing with these guys will save you the hassle of trying to make the trade on your own, and place your money in a much larger pool of assets that can scoop up a much bigger chunk of IPO shares. Funds like these, Global IPO Plus Aftermarket Fund (IPOSX), and First Trust IPOX 100 Index ETF (NYSE:FPX) have offered some pretty tasty returns lately, with FPX up 33% on the year.