When making an investment in an IPO, it is clearly important to choose well as not all IPOs perform in the same way in the short and long term. There are no fool-proof rules for IPO stock selection because no one knows for sure how an IPO firm will perform in the after market. However, sometimes there are obvious signs which can help in making informed decisions on IPO investment.
In this chapter I discuss where information on firms planning IPOs can be found and how to analyse an IPO prospectus. Towards the end of the chapter I discuss some strategies of investment in IPOs. As with any investment strategies, these IPO strategies are just theories – they by no means guarantee successful investments.