Beware of the Bankers Bearing Gifts

Over past two years investors have faced a barrage of glowing research from the investment banks trumpeting the blue sky potential of new companies seeking to be floated on the ASX. What is also clear is that the overall quality of these new initial public offerings (IPOs) are declining and that investors right now should be more critical of the bright forecasts contained in the prospectuses. Earlier this week we received the IPO offer documents for a company exposed to the buoyant domestic housing sector, valued based on the assumption that the current demand for new homes and apartments remains unchanged.  Indeed one of their competitors that listed just over six months ago and has already fallen 20%.

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