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Official Payments Holdings, Inc Message Board

  • mentges mentges Jun 22, 1998 1:39 PM Flag

    IPO 'Lockups'

    An article by Mike Robbins in Microsoft Investor
    on IPO's states that : "it's a little secret: new
    stock prices often slump exactly six months after
    they're issued - and that could open a buying
    opportunity. - The reason is "lockups - the agreements between
    an IPO's underwriters and its insiders that prohibit
    those insiders from selling for 180 days after the
    initial public offering." DOES THIS SOULD FAMILIAR?? -
    look at the chart for TIER, and you will see the 6
    month effect. Author goes on to state that these are
    "buying opportunities."

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    • Bingo. There are a fair number of investors who
      are trading out of a triple-bagger, and of course
      there is some management selling in the name of
      "diversification," etc. I am long term bullish as long as they can
      manage to continue delivering on the nuts and bolts of
      their business plan (managing organic growth and doing
      small bolt-on acquisitions). As far as I can tell, they
      have seen their multiple come into line with industry
      averages, and now need to deliver the "E" part of the
      equation. Of course, they now have a nice pot of cash to do
      more acquistions, which with any luck will continue to
      be accretive to "E," and recharge the momentum after
      the six-month effect has been digested by the market.
      Do bear in mind that institutions can only buy
      issues which are liquid, so increased float may increase
      the potential investor base.
      Cheers.

      P.S.
      For the more risk tolerant folks out there, you might
      want to check out CGIX, roughly similar business as
      TIER, but undermanaged and trading at a *huge* discount
      to the market (<20x this years earnings, <2x
      revenues). They have a bad record of disappointing, but
      management may be sand-bagging here in order to beat
      "managed" expectations. At $3.50 this company is a bargain.
      FWIW.

    • I agree completely. Especially now that the
      secondary and the over allotment are complete I think we'll
      see some positive things from TIER. Hopefully the
      Company will make some more acquisitions with the cash
      from the secondary.
      Mike

 
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