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Interactive Brokers IPO update

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After I read its prospectus, I decide not to pursue its open IPO. Another reason is I just bought some HMIN and MR: I want to limit the number of stocks I hold.

IB is a great business. I heard its name first from a friend who recommend it for its low cost and high speed in stock (options) trading. Later on I found it’s very popular among active traders. I read its prospectus (old) last Nov and was impressed by its technology; I also learned “what is market maker” from the reading. But I do have some concern: the valuation and the control share holder. It does have impressive growth though: from market making and brokerage.

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Interactive Broker Open IPO

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(Updated April 16) I placed my bid through WR Hambrecht today.  

I mentioned this a while ago. Today I received email from WR Hambrecht. The bid starts on April 16.

Last Nov I opened the acct at WR Hambrecht in order to get the IBKR open IPO. But I was not disiplined enough, end up picking up other IPO stocks: HLYS, XFML and GSIT. I already sold XFML before getting GSIT. Now I need to sell more to make fund available to IBKR bidding. Interactive Broker is the leading options trader and market maker in the US. The most famous company did open IPO is Google, followed by MorningStar.  

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Interactive Brokers’ Dutch Auction IPO

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Normally as individual investors we don’t have access to the IPOs, as they are usually handled by the big investment bankers (Goldman Sachs, Merril Lynch,…), and the IPO stocks usually are sold to the institutions (a.k.a, rich people) and they can make the easy money.

This has changed by the Google IPO in August 2004, at the time the founders (Larry and Sergin) decided to try the Dutch auction so that individual investors can get a piece. The IPO was not well received because of the not-so-good market condition at the time and confusion over Dutch auction process. This time, Interactive Brokers, will follow the path of Google for its $500 m public offering. They filed the S1 prospectus to SEC today. Here is an introduction regarding how to bid.

Recently the exchange stocks are very hot. NMX (New York Mercantile Exchange) IPO was well received.

Be aware IPO stocks are usually a bit volatile, though.