According to the chart provided by IPOhome.com there is a substantial difference in returns between investors who participate in IPO’s and those who have to wait and purchase shares in the aftermarket.

Overall IPO Returns 1999-2004
	1999	2000	2001	2002	2003	2004*
Total Return	276%	-18%	16%	3%	28%	34%
Aftermarket Return	111%	-38%	2%	-5%	14%	21%

Source: Renaissance Capital's IPOhome.com (See chart: IPO Returns)
* Based on offer price to 12/31/04 closing prices.

Fact:
The small investor has been excluded from the IPO marketplace for over 100 years.
To understand this statement it is important to know how the system works.

History of IPO’s
For the last 100 years brokerage firms have dictated who would be allowed to participate in the Initial Public Offering (IPO) that they underwrote. Only the chosen few, their top clients, were allowed to participate in IPO’s. Clients understood that receiving shares of an IPO, or a “Hot” IPO, was a reward for having a sizable portfolio with their firm. Because there is a limited number of shares to sell to the public, commonly referred to as the “allotment”, the brokerage firm only sold these shares to their best clients. They excluded the small investor by informing him that he may not meet certain suitability standards set by the brokerage firm.

If a small investor does not qualify to purchase the shares of an IPO, why is it that he is allowed to purchase the same shares after the stock starts trading in the open marketplace and usually after it has increased 15 to 20%?

Because the brokerage firm has sole authority to sell those IPO shares to anyone they choose. The fact is, it behooves them to take care of their best clients. Even by SEC standards, distributing IPO shares is completely left up to the discretion of the brokerage firm. To read some related SEC articles click here.

Thanks to ePO, investors can now participate in the IPO process. Click here.