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

Late stage of the IPO cycle

clock
Philip Harris
Image:

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...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Equities

Daryl Liew, CIO at REYL Singapore.

REYL's Liew eyes return to overweight positions in Asian quality growth names

'It's a question of timing'

clock 28 June 2022 • 3 min read
Industry Voice: T. Rowe Price's 2022 Midyear Market Outlook summary

Industry Voice: T. Rowe Price's 2022 Midyear Market Outlook summary

Transitioning to a new paradigm

Ritu Vohora, Investment Specialist, Capital Markets at T. Rowe Price
clock 23 June 2022 • 2 min read
Amazon shares are down 40% from its peak

Growth stock pickers feel like 'a kid in a candy shop'

'It is time to go shopping'

clock 22 June 2022 • 4 min read
Trustpilot