Value Trap Alert: Avoid These Two Recent IPOs



Comments (3)

  1. Tom Herod says:

    You were right on the button (so to speak) with most of the points in your post but I wouldn’t be too quick to scold the GAIN Capital folks for reaping the rewards when they went public. I have worked for two companies that went public and we all worked like the dickens to gain our IPO. Making your numbers eight quarters in a row is not something every startup can accomplish. I don’t think the people at GAIN were guilty of insider trading — I’m sure they earned the right to a big payday.

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  2. In the Know says:

    You have no idea what you were talking about.

    The “insiders” who sold shares at the IPO were the private equity companies who took the risks and initially funded GAIN 5 & 7 years ago. Their entire endgame always was an IPO. This is simply what private equity companies do.

    Gain only went public BECAUSE OF THESE companies… SO THAT they could sell. PE companies early-stage invest and then flip companies at the IPO – They do not operate FX firms.

    I’m glad this website allows comments because this is just one more example of “don’t believe everything that’s written on the internet” (especially by some unknown yahoo)

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    Louis Basenese

    Louis Basenese Reply:

    I understand the private equity investment cycle. I also follow the IPO market extensively. And I can tell you from my experience, private equity firms don’t bail en masse if the long-term business opportunity is compelling. They’d be doing their investors a disservice to sell early. So they either doubt the long-term competitiveness of GAIN on some level or sense a top in valuations. Either way, massive selling by insiders, private equity firms or not, is not a positive sign.

    But let’s not confuse a minor point for the main point of the article that foreign currency trading is a losing proposition for everyday investors. And by extension, it’s bound to be a losing proposition for the companies that facilitate foreign currency trading for everyday investors.

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