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IPOs which have shaped me

Jul 8, 2019

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My early coverage of 2 IPOs had the biggest impact on my philosophy as an investor and fund manager

Whenever anyone asks me what were some of the things that had the biggest impact on my investment philosophy, I always go back to two of the earliest stocks I covered as an analyst – Unisteel and

As a young stock analyst who had recently joined the industry, I was very interested to learn more about the Initial Public Offerings (IPOs) and wanted to meet as many of the companies and management teams as possible.

Unisteel was in a very “unsexy” business, manufacturing precision engineered fasteners for the data storage device industry., on the other hand, was in the business of pedagogy, leveraging on dotcom and education, which were both lucrative buzzwords in the early 2000s.

Having covered both stocks, I followed their progress keenly.’s IPO was 80 times oversubscribed and its share price surged after listing, while Unisteel’s subsequent price appreciation was more measured. In the following years, the management of both companies played a big part in its fortunes.’s business did not live up to its potential and its share price subsequently nosedived by over 99%. Unisteel’s management continued to build on its strengths and was later bought out by KKR at a good premium to its valuation.

This taught me three big lessons:

1. A little knowledge can be a dangerous thing

Demand was sizzling for and it was almost impossible to squeeze into the IPO meetings arranged for analysts and investors. The IPO manager had to add on numerous sessions to accommodate the demand. Most investors didn’t understand what the business was all about (including me) but they subscribed for it anyway, playing on the hype. Those who didn’t sell on the first couple of days ended up being long-term (suffering) investors.

2. Don’t trust everything you read in an analyst report

Analysts have better access to the management teams of companies. We should leverage on their reports to understand more about the business, get an analysis of the business and receive greater insights into the management’s thoughts and vision. However, we should not take its recommendation as gospel – we need to do our own research and determine if a company is worth investing in.

3. The management team is important

Even if a business is in an exciting growth sector, a mediocre management team may not be able to realise the growth for investors. This makes it important to understand the management team’s direction and/or vision, through analyst reports, news and social media and at Annual General Meetings or seminars.

While it is in the management team’s best interest to inflate their credentials, their corporate actions and the way they interact with shareholders can be a signal.