1. If these biofuels IPOs are to continue, be prepared to flip as quickly as possible, or wait years upon years and through multiple disappointments before expecting to see any profit or sustained market valuation gains. The flip has been the only game in town with these companies.
2. Don't put much stake in cash flow models for three years out predicated on taking a lab technology to commercial scale, and for companies that have no profits at the time of their IPO. Hope is not an investment strategy, and if it's going to take years for these companies to prove they can generate cash flow, you can wait, too.
3. Watch for signs of less luminous underwriters on future biofuels offerings. There are still 10 to 15 in the IPO pipeline for this year. The disappearance of the likes of Goldman and Morgan from the IPO filings may suggest the biofuels shell game is coming to an end.
-- Written by Eric Rosenbaum from New York.
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