What is a fair price for the AIB shares?

I see AIB closed at 4.75 today.

Anybody that participated in the offering must be delighted.
 
Sarenco said:
I see AIB closed at 4.75 today.

Anybody that participated in the offering must be delighted.
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IPO stocks tend to be a fairground ride for a while afterwards and after doing some quick research earlier on longer term performance of IPOs generally (with companies like twitter in mind), I was surprised how much IPO float prices tend to be overhyped and in general underperform in the medium term.

this from BusinessInsider:
"When standard factors known to impact performance are taken into account (small cap vs. large cap, value vs. growth), IPO stocks show a tendency to substantially under-perform over a three-five year period after going public. Dr. Jay Ritter at the University of Florida regularly updates his research on this effect. In his most recent results, the average three-year return of IPO stocks lagged the average three-year returns of similar non-IPO stocks by 7.2%."
 
Sure but an 8% pop over two days trading. Nice.

I assume no retail investor that participates in an IPO really cares about the medium term return on the stock. According to one of the weekend papers sell orders were issued for 30% of the stock on day one of trading.

Why any retail investor would buy and hold a minimum of €10k worth of any individual stock over the medium term is beyond me.
 
Brendan Burgess said:
How do you know it was a floor? Could it have been a ceiling?
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Hello Mr. Burgess,

I referred to it as a floor, because the price had dropped back to €4.65 and then remained constant for the afternoon. There did not appear to be upwards pressure on the price over the remainder of the day, hence I did not reference a ceiling but in theory, obviously there could have been both

Sarenco said:
Sure but an 8% pop over two days trading. Nice.....
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While I cannot claim 8%, I am pleased to report a circa 7% gross return on my quick dip. Like all speculators (or dare I say gamblers), having made a profit I now find myself wishing I had placed a lager stake - but at the time, I was satisfied with the level of risk I had taken on

It was not a transaction for widows and orphans, it was always going to be a bit of a flutter and I was never interested in investing in AIB for the long term at this stage (for the reasons originally discussed above).
 
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I also read that mention in the papers that 30% of the purchased shares were back on the market before CoB on Friday - it lends to the comments above that there were plenty speculators in there.

if AIB can get their restructuring sorted and show where the growth will come from, then it will become a standard buy & hold stock once more, irrespective of the price settling above or below the IPO level
 
Closed at 4.85 today - that's more than 10% over the floatation price.

Maybe Mr Earl moved too soon...
 
4.97 - 4.99 this morning - probably getting close to the normal trading range, there was always going to be a discount built into the launch price to get the institutions interested, somewhere in the region of 14% - 18% in my opinion.
 
Closed above 5.00 yesterday - more than 15% above the floatation price.

I suspect there will be a lot of profit taking at this level.
 
This a probably a good example of looking at the evidence of the true value and walking away from a buy and hold position. Fine if you are a speculator but not buy and hold. Another one people might remember was the eircom float. Jumped about 20% and then the slide of reality applied
 
john luc said:
This a probably a good example of looking at the evidence of the true value and walking away from a buy and hold position.
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Hi John

I don't think it's evidence of that at all. Lots of analysts looked at it before and after the flotation and felt that the price was fair.

AIB: One bank, two views, as IPO looms

Government plans to price sale of up to 28.8 per cent stake in AIB this week
www.irishtimes.com

I did my analysis at the time, because none of the Irish brokers was commenting on it beforehand.

The reality is that very few people have had a good consistent record of beating the market.

Brendan
 
Fair enough but to be honest I don't put much fair in brokers as they are as much wrong as they are right. Did you ever hear of the story of when they got a monkey to throw darts a the share page of the wall street paper and the then tracked what he picked. He beat the anylists
 
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