TSCEllen:

Hello everybody and welcome to tonight's chat with TSC's IPO columnist Ben Holmes.

BHolmes:

Evening, folks I'm Ben Holmes, the founder of IPOpros, and I'm excited to answer your questions.

ForbesB23 asks:

How are to 30-60 holding periods for individual investors justifiable?

B Holmes:

They're not, its a way for the underwriters to force you to hold stock.

MONEYMAKER4236 asks:

Mr Holmes, happy to have you writing for

TheStreet.com

. Are you familiar with Dragon Systems, and if so, what impact will the LHSP controversies impact the IPO?

BHolmes:

The Dragon systems IPO has been withdrawn.

davebs_98 asks:

Are you aware of any other brokers which give an investor with under $100K the opportunity to participate in IPO's at the offering price besides Etrade, which has an almost impossibly small time window in which to place requests?

BHolmes:

My short list would be Wit Capital, DLJ Direct as well as ETrade.

davebs_98 asks:

What do predict will happen with the Salon.com Dutch auction style IPO and how it will trade afterwards? There seems little reason for it to post big quick gains above the IPO price, because in theory, anyone who wanted any above that price could have go.

BHolmes:

This is only the 2nd Dutch auction done, so I'd really like to wait and see how it goes.

BHolmes:

before I have an opinion on it.

jsrockford asks:

What's your opinion of the BarnesandNoble.com IPO coming out later this month?

BHolmes:

I have no confidence in the CEO of Barnes and Noble to run an online firm. They should have moved forward with this deal a long time ago.

TJAKEJR asks:

Ben, How do you find out about the follow up stock offerings that you wrote today?

BHolmes:

We list them on our site, but I get them from the SEC's EDGAR database.

MONEYMAKER4236 asks:

What do you make of the disregard/disrespect paid by the market to some of the quality companies that came public, but whose stock has not performed (Gabelli,Korn Ferry)?

BHolmes:

Great question. It makes me mad, because these companies deserve to work, but because they're not they're not Internet companies, their offerings are being ignored.

jonathan2399 asks:

What do you think of Waterhouse and e-machine's IPO's?

BHolmes:

TD Waterhouse should do fine, the Group is strong.

davebs_98 asks:

Is there any way to determine, or at least make a guess as to how many shares are trading hands immediately following an IPO? Much of the float is presumably being held for at least 30 days, and the total volume figures reflect multiple trades.

BHolmes:

The truth is, most shares are tied up or locked up for 180 days, so the float is extremely limited for the first 6 months.

dwayne622 asks:

Any thoughts on today's action in Radio One (ROIA)?

BHolmes:

That deal surprised me--Radio has been a real weak sector for IPO's.

hhwangbo asks:

Have any clue as to how long this Internet IPO craze will last? Perhaps you would like to comment on it?

BHolmes:

Forever--just kidding-there's no telling. I believe in the Internet so I have to believe that it will continue.

TJAKEJR asks:

When is Etoys coming out?

BHolmes:

E Toys is postponed because of the Baby Center deal. We'll just have to wait and see.

brettweir1 asks:

How is the opening price determined on the first day after and IPO?

BHolmes:

The opening price is determined by the market-makers, and it reflects the orders they have to either buy or sell the stock.

CHSAPH asks:

How does NET OBJECTS look?

BHolmes:

I like that deal, it prices tonight by the way.

Icover asks:

Your thoughts on the fact that retail buyers of small shares of IPO's at the offered price who held hostage from brokers if, they choose to flip them quickly?

BHolmes:

The practice bothers me, because its not applied evenly to institutional buyers, and retail buyers.

MONEYMAKER4236 asks:

It upsets me that they limited the issuance of IPO shares of Goldman Sachs to just institutions. Does it seem wrong to you?

BHolmes:

That makes sense for Goldman because their client base is made up of institutions.

biren13 asks:

Where do you think COMPS.COM is headed?

BHolmes:

Comps.com should be a good deal, its a nice scaleable business.

TJAKEJR asks:

I have just opened an account with ETrade. How do you get in on the initial offering price through them?

BHolmes:

Go to their IPO center on their website. The instructions are on the site.

chino1111 asks:

When can we expect to see LATD?

BHolmes:

Looks like the week 5/10.

acfriel64 asks:

What do you think of the Juniper Networks and Williams IPO's?

BHolmes:

The networking stocks have been very strong, they should be ok.

falcomex asks:

Ben, I was one of those people who asked you about secondary offerings -- good article today -- why would insiders sell through a follow on -- rather than just sell to the market?

B Holmes:

T-One, to protect the price of the stock from falling, and 2 holders shares are often what's known as ":Control stock" and are not registered for sale to the public.

dwayne622 asks:

Any thoughts on E Loan?

BHolmes:

E Loan: it's a neat idea, but the company has a very limited operating history, even less so than others.

brettweir1 asks:

What do you look at to determine if an Internet IPO is a worthy investment?

BHolmes:

Good question--look first for revenue growth, then management and a strong underwriting team.

TSCEllen:

Remember folks: This chat is not meant as investment advice; it is instead meant to provide insight into the methods of new and secondary offerings.

tfmcshan asks:

What do you think about MPTH?

BHolmes:

I love that whole group.

mickf99 asks:

Any promising biotech IPO's coming out soon? This sector was beat up last year.

BHolmes:

Biotech--right, and the market continues to hate the biotech IPO's. There's nothing in my database I'd be buying right now.

neweng_98 asks:

How can the average Joe get in on IPO's?

BHolmes:

I covered this topic in depth in a 2-part series on

TheStreet.com

in April.

Birbal13 asks:

I am 0 for 12 on IPO's with Etrade, I think Etrade's IPO Center is a big Marketing ploy. Your Comments Please.

BHolmes:

I think that warrants a call to customer service on E-Trade.

TJAKEJR asks:

Have you heard of an IPO called Webmd?

BHolmes:

There's no terms on this deal as of yet, and I have no opinion.

nelsonj5397 asks:

Near term IPO's., which are appealing?

BHolmes:

I like Adforce, which comes tonight, and Mediametrix, which also prices tonight for tomorrow.

macblast asks:

Ben, other than the random news which we get from the various investing sources, is there one central location you would suggest to stay abreast of the progress towards IPO's for various companies?

BHolmes:

Well, in all modesty, my website, www.IPOPros.com, does exactly that, for a fee, of course.

hhwangbo asks:

Don't shareholders sell in face of a secondary IPO in anticipation of the dilution caused by the additional shares or does that only happen when the holding period is over?

BHolmes:

Sometimes, yes. In some cases, increased liquidity is seen as a good thing for investors.

hhwangbo asks:

If it's retailers, how many retailing do you think actually look at the underwriters of the IPO to make their buying decisions? I would say very few.

BHolmes:

I don't know, but everybody should do their homework and read the filing.

brettweir1 asks:

Do you think the underwriters are getting greedy? For example, FCST being priced at $25.

BHolmes:

Their job is, after all, to maximize the proceeds to the company.

hhwangbo asks:

Is MediaMetrix the first Internet rating related company to IPO?

BHolmes:

It is rumored that Nielson is planning an IPO, but I know of no others.

bbigsby asks:

How important in the "bailout ratio" in these .com's? Isn't a 6 month lock-up like waiting 5 lifetimes with some of these companies?

BHolmes:

I can't imagine what it feels like to wait 6 months for some of these insiders to sell their stock.

Icover asks:

Are there some underwriters that the public should be wary of?

BHolmes:

Underwriters to be wary of: without naming names, I would stay away from underwriters who write small deals.

thugztas asks:

What's your favorite Web site?

BHolmes:

Well, besides my own and

TheStreet.com

, of course, :-)I spend a lot of time on the various Yahoo sites.

ForbesB23 asks:

Can barnesandnoble.com do anywhere near as well as AMZN?

BHolmes:

I think the window for Barnes and Noble .com is rapidly closing.

tfmcshan asks:

Do you think the Internet IPO's have seen their best days?

BHolmes:

I hope not.

falcomex asks:

The Internet IPO's have put the other sector IPO's in the back seat. How would you suggest investing in other sectors? Korn ferry looked good, but flopped as an IPO, but entercom fared relatively well.

BHolmes:

It depends on your investment horizon--if you're a long term player, some of these are probably great buys.

bbigsby asks:

Are investment bankers fearing e-IPO's the way retail brokers are getting killed by on-line?

BHolmes:

Its still too early to tell if the e-offering firms will have any impact in the syndicates.

falcomex asks:

What do you think about direct public offerings, too risky?

BHolmes:

I personally stay away from DPO's.

hhwangbo asks:

Why fear the smaller underwriters? Do you think they will manipulate the price somehow? What advantage does a well-known underwriter provide besides the name over the smaller underwriters?

BHolmes:

A large underwriter hangs his reputation, his ability to institute research, and his willingness to make a market in the stock.

Icover asks:

With respect to the prospectus, are there key points that we should focus in on, other than the usual boilerplate "safe harbor" statements?

BHolmes:

Yes, read the risk section, as well as a balance sheet, and the business summary.

tfmcshan asks:

Do you agree with the 30 and 60 day holding periods required by WIT and E-Trade, or would you flip an IPO?

BHolmes:

My experience has been that they talk tough-but seem to allow flippers to exist.

vype asks:

Do you expect the Wit Capital IPO to do very well?

BHolmes:

Yes, given the strength of the online brokers, Wit should do very well.

FastEddy44 asks:

Ben, how much longer do you think these IPO Internet stocks will run? I mean are there really quality companies out there or are they all hype?

BHolmes:

What we're seeing is a revolution, these companies are on the cutting edge that will eventually touch all of our lives in ways that we can't imagine.

hhwangbo asks:

So what moves stock prices? Especially Internet IPOs, retail or institutions?

BHolmes:

Easy question--more buyers than sellers.

ForbesB23 asks:

Is the IPO market destined to slow down?

BHolmes:

The IPO market runs in cycles, right now its on, but next month it could be off.

gfagbeyiro asks:

At what price do u think the Media Metrix IPO will begin trading tomorrow?

BHolmes:

It's anyone's guess.

chino1111 asks:

Which underwriters do you trust most?

BHolmes:

The ones with the longest and most successful track records.

falcomex asks:

Aside from E-trade and Wit capital, are you aware of any other brokers that offer IPO's to small investors?

BHolmes:

Don't ignore the brick-and-mortar firms--Merrill, Bear Stearns, etc.

MONEYMAKER4236 asks:

Other than technology, what are the interesting sectors with increased IPO activity? Any emerging themes?

BHolmes:

Banking and finance, especially the Online brokerage firms.

geoalex23 asks:

There seems to be a lot of "free" information out there and some of it is not worth much. How do I find useful information?

BHolmes:

You really have to do your homework and know who is behind the information that you're looking at.

bbigsby asks:

Doesn't the current IPO frenzy start feeling like Monopoly Money with the way things are running?

BHolmes:

It does seem a little crazy.

falcomex asks:

Will the Morgan Stanley, Sachs, and CS's continue to pull in the winners or do you think that they'll be pushing through some questionable 3rd tier IPO's?

BHolmes:

The danger of low-quality deals comes toward the end of the market cycle, and comes when the firms feel that the customers have made enough in recent deals that they can afford to take a loser.

bbigsby asks:

Cramer talks about there being a limited pool of money that institutions use in IPO's. Doesn't it feel like quality is becoming important again with two .coms breaking their prices this week?

BHolmes:

Quality has always been important, no more so today than any other time.

FastEddy44 asks:

Ben, I know you say flipping might be tolerated, but I'm afraid of getting locked out for 6 months. I spoke to Wit and that was their reply. Is it worth the risk? You can still take a profit if need be after sixty days if the company is really a good one, correct? Also, aren't some of these companies worth holding onto for the long term, or am I wrong here?

BHolmes:

Forget the policies--take the money and run.

FastEddy44 asks:

But Ben, it's one take and maybe you're done!

BHolmes:

Hi, Ed. Who cares, if you can sell 400 shares up 40 points, who cares?

TSCEllen:

Thanks for being with us Ben.

BHolmes:

Thanks folks, I've really enjoyed it. Good Night.

TSCEllen:

The transcript will be available on TheStreet.com. Make sure to join us for James J. Cramer on Tuesday, May 11 at 5 p.m. EDT.