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

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

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.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave