Why now is the time to be on high alert for value traps

Late stage of the IPO cycle

Philip Harris

Philip Harris

Given the late stage of both of the economic and IPO cycles investors should expect a lowering of the overall quality of new issues as private equity and corporate sellers take advantage of strong markets to off load their weaker investments at premium prices.

While there are lessons to be learned, basic investment principles should help investors differentiate between quality entrants to the market and potentially wealth-destructive new issues. The recent market plight of Aston Martin and Funding Circle are stark reminders of the potential pitfalls of investing in IPOs, with the stocks down 69% and 73% respectively since flotation in October 2018. The next three sustainable IPOs to match Beyond Meat In the case of Aston Martin, while the company creates desirable cars, there were a number of alarm bells for investors. A blue chip roster...

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