who thinks the BIDU p&d was not planned.

[fader]

are you saying that the greenshoe exercise has a predictable effect on the stock price? i think that in a deal that starts trading at more than doulbe the offering price, it's clear on day one that it's oversubscribed and the over-allotments are going to be exercised - the over-allotment allocation is a mechanical process, since the order book has been built prior to the strat of trading - the over-allotment option is a standard provision - so i am not sure exactly what is the logic for your suggestion, perhaps you can explain a bit more.

Quote from EtfTraderLives:

Read the IPO prospectus. If you had, you would have known that Goldman, Piper Jaffrey, and CSFB had 30 days from the initial public offering to purchase 481,304 ADS's at the initial offering price of $27.

Thirty days forward was last Thursday when the stock bottomed out at $77/share. I exploited that information and made some really nice dough on the long side - one of my best swing trades of the year on size.

Sometimes, you have to do your due diligence to make a killing!

 

[fader]

again, not sure what you are getting at here - this deal is a standard ipo just like many others done every day - it's standard practice for the underwriter to make a market it the stock they underwrite - it's standard practice for the banks to get paid in shares if the client company has no cash - does this prevent a deal from tanking? no, there are deals that perform well and there are deals that tank, every day, regardless of whether the underwriting banks get paid in cash or stock... the banks do get stuck with underwater stock on their books.. happens all the time - no matter how much a bank wants to prop the price with their own capital, the market will ultimately decide the value.

Quote from EtfTraderLives:

Ever consider that the float is small and susceptive to quick momentum movement? Adding another 800K when the stock trades 5,000,000 on average a day is NOTHING. Again, CSFB, GSCO, and PIPR GOT 800K+ shares from the company at $27/share as part of their underwriting fees.

Ever consider that the underwriters (GSCO/PIPR/FBCO) happen to also be market makers in the stock?

http://www.nasdaqtrader.com/asp/dai...earchby=issue&Symbol=BIDU&View.x=34&View.y=20

C'mon. Put two and two together to figure it out.

 

[zdreg]

reply to the above
"the market will ultimately decide its value"

you are 100% correct but should have highlighted ultimatelly.
As for now the thieves in white shoes decide what the price should be.
don't forget to remind us that there is a
chinese wall between the research department and trading department.
ome more thing there are no preferred customers

 

[2yearNewbie]

Just to clarify, you are not making anymore money than you would of if you had a natural short at $122. Shorting against the box just locks in your profits, while delaying the gains for tax purposes. IF the stock tanks you are losing on your long but gaing on your short and vice versa. If they big guys did do this, look for them to cover size in JAN.

Quote from gharghur2:

Hi
I'm going to speculate as to what could have happened. You guys can correct me. Okay?

First to answer your ADS question: Baidu.com, Inc. announced its initial public offering of 4,040,402 American depositary shares, or ADSs. Each ADS represents one Class A ordinary share. The ADSs are evidenced by American depository receipts, or ADRs. The ADSs began trading today at $27 per ADS on the NASDAQ National Market under the symbol "BIDU."

Now nobody can short the stock because there is none to be borrowed right? However, if you could purchase the stock (post offering) @ $27 a share, you can short your own stock: it's called short against the box.

In other words, you own 400,000 share @ $27 by exercising the option. The stock is then run up to $122 and you short it, effectively selling at $122 without giving up the stock. So you raked in a $95 profit on each share, and your totally hedged. When stock does come available for shorting purposes, and the stock dives, you cover your short.

Makes sense? [/]