Occasionally, retail investors may have the opportunity to be allocated shares through their broker, in a company about to be listed on the Australian Stock Exchange (ASX).
The greatest attraction of taking up the offer is the opportunity to make a substantial “stag-profit” in a quick sale possibly on the day of listing.
This issue was under-written by broking firm Bell Potter. It was strongly supported by institutions as a 5 year old competitor to established death-care stock Invocare floated in 2003 at $1.85.
As a private-equity enterprise, pioneered in 2012 by Albin Kurti, Propel Funeral Partners has grown in that time, to have 80 mostly regional funeral parlors with a 4.1% share of the Australian market.
The issue price was $2.70, and after trading as high as $3.50, it closed Nov 23, 2017, the day of listing, at $3.30, a 22% stag gain for traders who sold.
Since there is no historical share-price record, technical analysis has no role prior to listing in the evaluation of IPOs. It is therefore essential for investors to scrutinize the company prospectus with care, and to seek broking advice, before taking up an offer.
Almost invariably there is softening of the share price after the stags have taken their profit, and the underwriter is no longer supporting the share-price.
This may provide longer-term investors with an opportunity to take-up shares in companies with good growth prospects at prices possibly less than the issue price.
The daily chart at present shows the share-price to be in a downtrend, warning would be buyers to delay their entry for the present.