Most shares issued during an IPO change hands on the first day of trading, with investors looking to profit from the so-called IPO listing pop. Some researchers argue that higher allocations to institutional investors results in a check on excessive flipping, as they are long-term investors. However, a study of some recent popular IPOs shows that institutional investors are nearly as inclined to flip their IPO allotments as non-institutional investors. Of the 3.75 million shares issued to institutional investors as part of the book-building process, 3.25 million were disposed by end-December. A close look at both IPOs shows that while the majority of institutional investors who were allotted shares were sellers, a handful of them made high purchases as well.

Source: Mint March 22, 2021 23:48 UTC