Investing in IPOs won’t make you rich quick, advisors say + MORE May 14th

The stock market has a way of crushing the hopes and dreams of investors who buy growth stocks. Problem is, they usually pay far too much for stocks that have grown a great deal only to see them slow down.
While much has been said about earnings growth, academics recently turned their attention to asset growth and the news isn’t good. They figure firms with large asset growth tend to underperform the market.
Professor Kenneth French examined the phenomena. In one study, he split the U.S. stock market into a five by five matrix of 25 portfolios based on size (market capitalization) and 1-year total asset growth (in percentage terms).
He first sorted stocks into five groups by size and then split each group into five portfolios by asset growth. Each of the resulting 25 portfolios was held for a year and then the whole process repeated. In this way he was able to track the performance of each slice of the market from July 1963 to March 2015. The results are shown in the table below.

Annual Performance of U…

VANCOUVER – British Columbia’s securities regulator has dismissed fraud allegations against a hedge fund manager and financial blogger accused of making claims about Silvercorp Metals Inc. (TSX:SVM).
Jon Richard Carnes, who ran the “Alfred Little” financial blog, was accused in December 2013 of anonymously publishing a negative report about Silvercorp aimed at driving down its share price and then profiting from a short position he held.
In its statement of allegations, staff at the British Columbia Securities Commission alleged Carnes posted a report that contained numerous false statements and omitted to state certain information in relation to a mining expert’s report about Silvercorp.
However, in a decision issued Thursday, a BCSC panel dismissed the fraud allegations, saying none of the statements or omissions constitute a prohibited act for the purpose of fraud.
Silvercorp is a mining company and reporting issuer with its head office in Vancouver. It has business operations in China, and its securities trade on the Toronto Stock Exchange and the New York Stock Exchange…

(Fry Design Ltd/Getty Images)
OTTAWA – The hope of a making a quick buck by getting in on the latest hot initial public offering is tempting.
But investment advisers caution that the hope of turning a quick profit by investing in an IPO is probably more mirage than reality.
Investing in a new company comes with risks that investing in already established companies don’t have and that’s if you can get a piece of the latest hot offering.
Sylvain Brisebois, a regional vice-president for BMO Nesbitt Burns, says many investors think an IPO is a sure way to make money, but that’s not true.
Investors old enough to have lived through the dot-com frenzy will remember the windfall profits many early investors in IPOs of start-up tech companies were able to bank. But they will also recall the massive failures many of those became when the bubble burst.
In addition to the risks that come with buying any stock, Brisebois said an IPO has additional risks.
“It is a little bit tougher to do some research because you don’t have as much financial background as you might with a company that’s been trading for a while,” he said…

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