The Goat in the Python

Editor's Note: Please note that Ben's column, The Quiet Period, won't appear for the next several weeks for a very simple reason: There were no IPOs over the Christmas holidays, and therefore no expiring quiet periods this month. Look for the column again around mid-February, when January's deals begin coming out of the quiet period.

When we introduced this column last week, we received quite a lot of reader email. Much of it was complimentary; some was critical. The criticisms included two very clear directives: Make the table more forward-looking and put the relative numbers of shares, both for the current float and for the released shares, into some relevant context. I heard you and I'm on it.

IPOs: Join the discussion on TSC message boards.

As you can see, I've extended the table to include expiring lockups for the forward two weeks (14 days). This gives you a pretty long view, and if it works for TSC readers, we'll stick with it.

The remaining issue, that of the current float and released share figures, is a bit more complex. Presenting the numbers of shares outstanding vs. the number of released shares in a way that is quick, intuitive and useful is key to making this column valuable as a trading tool. It will be done and it will be done right. Just give me a little time.

This brings up an important point. With so many Web sites putting up their own lockup data, why not just emulate the work that already exists? It comes down to this: At this moment in time, there are literally millions of investors who are looking to the Web for the information they need to make investment decisions.

I've looked at most of the IPO and lockup data that are out there, and I'm convinced that there are problems with most of it. As an example, I compared lockup dates from two other Web sites with my own data and found that the numbers just did not match. Worse still is that, on many of the dates, none of the three data sources matched. That's scary.

I walked away from the above exercise with one thing in my mind: I needed to know that my methods and my data were sound before I moved forward on this lockup project. I had to be confident that my dates were right. This may seem trivial, maybe a bit obsessive, but it is these very dates on which all of our subsequent assumptions on lockups are based. Here are my thoughts.

A lockup period is based on a point in time known as the effective date. It is on this date that the clock begins to tick for those shareholders bound by the lockup agreements. This date is marked when the SEC declares the registration statement (i.e.-- the prospectus) effective. An IPO cannot trade before it is made effective.

The problem comes when we try to establish the exact effective date for an IPO. There is no corresponding Edgar filing that signals SEC effectiveness, and unless you can elicit this data from the underwriter on each deal, there is no record of the effective date anywhere within the SEC paper trail.

The few Web sites that list lockup expiration data seem to vary wildly on just when the effective date is for an IPO. The prevailing method for establishing this date seems to be to use the filing date for the final prospectus, but to use this method assumes, in many cases, an effective date that is after the trade date. This, as I've just explained, is often inaccurate.

To get to the bottom of this, I spoke with more than a few syndicate compliance people and even a certain bespectacled New York lawyer type who is hip to securities transactions. All agreed that fixing an accurate effective date is difficult. So then, what do we do?

From the first day I began collecting IPO data, I included an accurate trade date in my transaction records. The trade date is marked when an actual underwriter allocates shares of an IPO into customer accounts -- an IPO cannot be traded, or allocated, without first being effective. Because IPOs are usually priced on the day that they are made effective or the following day, an IPO's trade date will usually correspond to one of these two days. That is why the trade date is what I've used to begin the counting for lockup expirations.

My point in all of this is that, without the exact effective date, the best that can be accomplished is accuracy to within 24 hours. While this may seem like splitting hairs, making such a distinction on such a basic factor is necessary if we expect to have accurate data. We who produce this data should all work to make it better.

I invite your comments; enjoy the following list:

Lockup End	Deal Name	Symbol	Lead Underwriter
1/22/00	CHEMDEX CORP	(CMDX:OTC)	Morgan Stnly Dean
1/22/00	FREESERVE LTD	(FREE:OTC)	CS First Boston
1/23/00	DRUGSTORE COM INC	(DSCM:OTC)	Morgan Stnly Dean
1/23/00	FOCAL COMMUNICATIONS CORP	(FCOM:OTC)	Salo Smith Barney
1/23/00	LIBERATE TECHNOLOGIES	(LBRT:OTC)	CS First Boston
1/23/00	QUOKKA SPORTS INC	(QKKA:OTC)	Merrill Lynch
1/24/00	AMERICAN NATIONAL CAN GROUP INC	(CAN:NYSE)	CS First Boston
1/24/00	CONTINUUS SOFTWARE CORP	(CNSW:OTC)	US Banc Piper Jaffray
1/24/00	CREO PRODUCTS INC	(CREO:OTC)	Salo Smith Barney
1/24/00	LENNOX INTERNATIONAL INC	(LII:NYSE)	Morgan Stnly Dean
1/24/00	NETIA HOLDINGS	(NTIA:OTC)	Donaldson Lufkin
1/24/00	PACKETEER INC	(PKTR:OTC)	Robertson Stephens
1/25/00	DIGEX INC	(DIGX:OTC)	Bear Stearns
1/25/00	NET2PHONE INC	(NTOP:OTC)	Hambrecht & Quist
1/25/00	PEACE ARCH ENTERTAINMENT GROUP INC	(PAE:AMEX)	Siedler Companies
1/26/00	AIRONET WIRELESS COMMUNICATIONS INC	(AIRO:OTC)	Dain Rauscher Wessels
1/26/00	BIOPURE CORP	(BPUR:OTC)	JP Morgan
1/26/00	MIIX GROUP INC	(MHU:NYSE)	First Union Cap Mkts.
1/26/00	N2H2 INC	(NTWO:OTC)	CIBC World Markets
1/26/00	NETIQ CORP	(NTIQ:OTC)	CS First Boston
1/26/00	WATCHGUARD TECHNOLOGIES INC	(WGRD:OTC)	Dain Rauscher Wessels
1/29/00	1 800 FLOWERS COM INC	(FLWS:OTC)	Goldman Sachs
1/29/00	BIGSTAR ENTERTAINMENT INC	(BGST:OTC)	Prudential Securities
1/30/00	FAIRCHILD SEMICONDUCTOR INTERNATIONAL INC	(FCS:NYSE)	CS First Boston
1/30/00	INTERNET INITIATIVE JAPAN INC	(IIJI:OTC)	Goldman Sachs
1/30/00	QUOTESMITH COM INC	(QUOT:OTC)	Hambrecht & Quist
1/30/00	SPLITROCK SERVICES INC	(SPLT:OTC)	Bear Stearns
1/31/00	HOMESTORE COM INC	(HOMS:OTC)	Morgan Stnly Dean
1/31/00	INTERNET CAPITAL GROUP INC	(ICGE:OTC)	Merrill Lynch
1/31/00	INTERNET GOLD (GOLDEN LINES LTD)	(IGLD:OTC)	Lehman Brothers
1/31/00	PIVOTAL CORP	(PVTL:OTC)	Merrill Lynch
2/1/00	COBALT GROUP INC	(CBLT:OTC)	Robertson Stephens
2/1/00	DATALINK CORP	(DTLK:OTC)	Needham & Co.
2/1/00	INTERACTIVE PICTURES CORP	(IPIX:OTC)	JP Morgan
2/1/00	MISSION CRITICAL SOFTWARE INC	(MCSW:OTC)	Hambrecht & Quist
2/1/00	TUMBLEWEED COMMUNICATIONS CORP	(TMWD:OTC)	CS First Boston
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