Speaking to InvestorDaily, the stockbroker and market analyst said that barring a few exceptions – namely Nine Entertainment, Dulux and Beacon Lighting – “if you [bought] IPOs in the last 10 years you’re losing money”.
“Look at Myer: it’s now trading at half of what it was issued at,” he said.
“Everyone thinks: 'Great, we’ll look at Myer – it's a big company that pays big dividends, has great girls who make it look good on TV', but at the end of the day it’s a shocking investment,” said Mr Hickman.
He said some fund managers are in a very awkward position because they have to invest in a certain market cap of a stock and therefore have had to purchase stocks such as Myer, despite the fact it has declined 47 per cent since the initial offering.
“Institutions certainly have to take on board a certain number of shares if a stock is in the top 200,” he said.
In regard to retail investors, the best IPOs are often oversubscribed and investors cannot get involved.
“If it’s going to be a good one, you usually don’t get offered stock. When you get offered stock you normally don’t really want it,” he said.
Each IPO needs to be looked at based on its own individual merits, said Mr Hickman.
“There are a few landmines out there and investors really need to do their research,” he said.
“If people come to you offering you stock in an IPO, I would tend to be a bit sceptical before you start jumping up and down excited.”
