Like a lot of disappointed investors, Nigel Dutson, manager of the
Guinness Flight Wireless World
fund watched the spectacular first-day performance of
from the sidelines.
Since its Monday launch, his $7 million fund listed Palm among its portfolio holdings on its
Web site, along with the parenthetical notation, "pending IPO."
reported on Wednesday that the fund had scored an apparent coup, and a Guinness Flight official said that night there was "an air of confidence" that the fund would get shares.
The Web site claim "was very much an oversight," Dutson said on Thursday after learning the fund was shut out of Palm's initial public offering. Palm's listing was removed from the company's Web site Wednesday night.
The fact that a firm like
Investec Guinness Flight
, with $21 billion under management, couldn't get any IPO shares of Palm may be of some comfort to individual investors who suffered the same fate.
Though he was somewhat surprised, Dutson says the cold shoulder wasn't necessarily a shock since he and his colleagues in London aren't big customers of
, one of the powerhouse underwriters bringing Palm to market.
The lucrative IPO is one of the most
anticipated in some time. And it was living up to expectations on Day 1. The stock opened at 145, more than tripling its 38 offering price. It cooled in the early afternoon but stayed above 100.
Investment banks' largest clients typically get the lion's share of hot IPOs, leaving many others in the cold since most deals are vastly over-subscribed. It's a fair bet the folks at mutual fund giants
are all smiles today.
Dutson couldn't ask for a piece of the Palm IPO until his fund launched Monday, which meant he was a bit late to the game. He asked for $100,000 worth of shares, which represented about a 5% stake in the fund at the time. When he found out he'd get none he says he could have appealed for at least some piece of the new issue, but that would've only resulted in a meager 50-share allocation.
So, Dutson is in the same place as many investors, watching the stock to see if he can pick up shares if it comes back to Earth. Until then, he's using Palm's parent,
as a Palm-play with a 5% weighting in the fund.
"We're really buying 3Com because we like Palm," says Dutson.
That hasn't been a bad strategy until today. Riding the Palm wave, 3Com was up 48% this week through Wednesday's close. At midday today, however, it had shed more than 12%.
Dutson likes the parent company, which holds 96% of Palm shares. He says he eagerly anticipates the day, expected to be six months from now, when he can exchange 3Com shares for Palm shares -- unfortunately at Palm's market price, which could be far, far above its offering price.
The affable Dutson isn't too concerned about the one that got away today. Like many others, he expects the wireless sector to bloom and mature, providing myriad opportunities down the road. If that plays out, his could be a fund worth watching and he could get some competition. Wireless World is currently the only wireless-focused fund, but another,
Value Trend's Wireless
fund, is already hot on its heels.