Facebook IPO great for insiders — but what about investors?

Facebook IPO great for insiders — but what about investors?
Smart money cashing out in a big way; welcome to the modern-day IPO
MAY 18, 2012
If you were patient enough to wait until the second day of trading for the most-hyped public stock offering ever, you might feel good about getting Facebook Inc. Ticker:(FB) at more than 11% below Friday's IPO price. Even so, you're still stuck with a stock that the smart money already is selling. “The IPO has become little more than a way for insiders to cash out,” said George Feiger, chief executive of Contango Capital Advisors Inc., a trust company and advisory firm that manages $3.3 billion in assets. Mr. Feiger isn't down on Facebook for any reason related to the fundamental value of the social-networking company. He is down on it because it represents the epitome of what's wrong with the present-day IPO. “Twenty years ago, a company went public to raise capital for growth, but today, it's just the opposite,” he said. “You have huge pools of private money that fund private businesses.” With that in mind, Mr. Feiger said the best way to tap into the growth of a new business venture is through private-equity and venture-capital funds. “I have no idea what the valuation on Facebook should be, but I know it is the most-hyped IPO in history and insiders are selling out massive amounts of stock,” he said. “Plus, most IPOs are selling below the issue price after 12 months.” /images/newsletters src="/wp-content/uploads2012/05/twitter-bullet.png" Follow Jeff Benjamin

Latest News

Mariner announces an acquisition double, adding $1.7B to its AUA
Mariner announces an acquisition double, adding $1.7B to its AUA

Firms in New York and Arizona are the latest additions to the mega-RIA

Michigan insurance agent to stand trial after charges of insurance fraud
Michigan insurance agent to stand trial after charges of insurance fraud

The agent, Todd Bernstein, 67, has been charged with four counts of insurance fraud linked to allegedly switching clients from one set of annuities to another.

NY Appeals court tosses $500M civil fraud penalty against Trump; upholds injunctive relief
NY Appeals court tosses $500M civil fraud penalty against Trump; upholds injunctive relief

“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the State,” Justice Peter Moulton wrote, while Trump will face limits in his ability to do business in New York.

Andy Sieg faces internal HR investigation into conduct at Citigroup: Report
Andy Sieg faces internal HR investigation into conduct at Citigroup: Report

Sieg, 58, was head of Merrill Wealth Management, left in 2023 and returned that September to Citigroup, where he worked before being hired by Merrill Lynch in 2009.

Understanding people is key to how financial advice has to evolve
Understanding people is key to how financial advice has to evolve

Technology can do a lot of things, but advisors still have undeniable value

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.