ipo Archives - Page 2 of 3

September 23, 2024September 20, 2024

Apple-Goldman fallout: How to prevent cracks in collaborations

Industry players share their strategies for building stronger partnerships

Common threads run through partnerships in dating, dance, and bank-nonbank collaborations alike. While luck may factor in, thorough research, diligence, clear role definitions, and established boundaries can be crucial to taking effective, tangible steps forward and making these relationships successful.

Although the financial services industry has its share of bank-fintech partnerships that have faltered, there are also success stories where rivals have evolved into collaborative partners, working together for mutual benefit.

Over time, every bank or fintech discovers what makes or breaks a partnership for them. This experience of being on both ends of the spectrum leads them to adopt a more cautious and deliberate approach to partnerships. That said, what benefits one organization might not apply to another, as effectiveness varies with the type, nature, and scale of the partnership.

We look at how to manage key aspects and avoid pitfalls to keep partnerships strong, based on perspectives from different players in the financial services industry.

We’ll also delve into the recent twists in one of the most hotly discussed partnerships of late.

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September 16, 2024September 16, 2024

From early glory to present challenges: The story of Bank of Hope

Bank of Hope is building a unified network of banks through mergers — but is it enough?

Last week, we delved into the story of East West Bank in Southern California, founded by Chinese Americans in 1973, and how it evolved into SoCal’s largest publicly traded bank. Not all SoCal-based minority-owned regional banks, however, share this success story. While some began with strong foundations, they now face challenging conditions, particularly those that have been heavily invested in commercial real estate loans. Bank of Hope, a Korean-owned regional bank based in LA and a subsidiary of Hope Bancorp, finds itself in a similar predicament.

Genesis and the challenges encountered since

Originally founded as Wilshire Bank by Korean immigrants in 1980, the institution merged with BBCN Bank in July 2016 and was rebranded as Bank of Hope, with Hope Bancorp as its parent company. Initially centered on the Korean American community, the bank gradually expanded its lending to include other immigrant groups, a shift that signaled its growth. This evolution transitioned the institution from a traditional community bank into a regional bank that now serves consumers, small businesses, and commercial and corporate clients.

Mergers and acquisitions played a key role in the creation of Bank of Hope and remain central to its growth strategy. But its focus on commercial real estate loans has fueled much of its growth and expansion. Little did the bank know that the pandemic would have a major impact on its growth. The pandemic brought a sharp blow to small and mid-sized lenders, leaving the Bank of Hope burdened with a large number of problematic commercial real estate loans.

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September 9, 2024September 9, 2024

From Chinatown roots to SoCal’s focus: How East West Bank became SoCal’s largest publicly traded bank

The tale of how a group of Asian Americans chose to defy the norms in 1973

When mainstream banks fall short of serving minority communities or immigrants, these groups often face prolonged struggles, waiting for more inclusive solutions or settling for the bare minimum. But in 1973, a group of Asian Americans decided to challenge the status quo. They sought to address these unmet financial needs and took a decisive stand to change this reality.

Some of the founding figures of the East West Bank management; Image via EWB LinkedIn

Building a bank from the ground up was a formidable challenge for this minority group. To overcome obstacles, they sought support from friends and allies within the Italian American community to become part of the founding organization, as the government policies at the time did not acknowledge Asian Americans as bank founders.

This is the story of how East West Bank came to be, evolving into the largest publicly traded bank headquartered in Southern California, the 36th largest bank in the US by assets, and the biggest minority depository institution in the country today.

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September 3, 2024September 3, 2024

Inside Alex Chriss’s first year leading PayPal

It’s nearly been a year already — How is Chriss’s journey progressing?

As fall approached last year, PayPal began a major transformation: a change in leadership. While CEO transitions are not uncommon, this one stood out for PayPal. Daniel Schulman, who had been steering the ship since 2014, was departing. Schulman’s tenure was marked by pivotal moments, including the company’s spin-off from eBay and its evolution into an independent, publicly traded entity. Under his leadership, PayPal redefined itself and expanded its global reach. His departure left considerable expectations for his successor, who would need to navigate not only the legacy of Schulman’s transformative years but also address the company’s challenges at the time, including its underperforming stock that had lost nearly 20% value year-to-date and dwindling active user numbers.

On September 27, 2023, PayPal began a new chapter with Alex Chriss stepping into the CEO role.

As the industry digitizes, PayPal’s board sought a leader with a blend of expertise in global payments and technology to drive the company’s growth. When Chriss, who was employed at Intuit, was appointed from a pool of nine candidates, the board expressed strong confidence in their choice. However, the broader industry and analysts had a relatively tepid response, reflecting a cautious curiosity about how Chriss would steer PayPal into its next phase

A year into his tenure, we take a look at Chriss’s journey at PayPal through key events.

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November 24, 2015

Stephen Klein: LOYAL3 is turning IPO stock into a powerful, new brand engagement currency

LOYAL3 first burst onto the investing scene a couple of years ago with a simple premise: connecting people with the brands they love and providing an easy, cheap way to invest in them. The company provides a creative model that’s fee-free for investors. LOYAL3 has grown to include IPO and secondary stock offerings to its investors. Stephen Klein, Chief Marketing Officer of LOYAL3, joins Tradestreaming for an interview about the company’s roots, how investing in stocks has changed and is changing, and how LOYAL3 is approaching product and distribution in 2016.

What is LOYAL3 and what was the genesis story (what was the inspiration the founders had to start the company)?

LOYAL3 is a financial technology company that is transforming the capital markets and concept of stock ownership. For small retail investors, our platform provides a new, easy and affordable way to invest in today’s top brands, and gain access to IPOs at the same time and price as large institutions and investors, with no fees to buy or sell stock. And for companies, we provide an innovative way to engage their affinity groups and allocate IPO and public stock to their employees, customers, partners and fans. The idea for LOYAL3 stemmed from the thesis that ownership builds loyalty, and that enabling employees, customers, etc., to own shares of a company’s stock creates a net positive— for companies, individual investors, and the investing model as a whole. Ownership is a powerful branding and behavioral currency, and everyone should have the ability to invest in the companies they have an affinity for. In short, people care more about things they own than things they don’t, and this principle works for brands.

Has electronic trading and indexing changed the way investors think and behave with individual stocks?

Definitely. There’s been a fundamental shift in the way individuals invest. Investors are more engaged and want to have greater direct control over how they invest. There used to be a very limited set of investing options. But now, there’s a growing array of solutions that simplify the process, reduce or eliminate the fees charged by traditional brokerages, and cater toward each individual’s own personal investment needs.

Are you targeting experienced investors or investors newer to the markets?

We believe investing should be easy and affordable for everyone, so we designed our platform with newer and smaller investors in mind—ease of use, no fees to buy or sell stock, and the ability to purchase fractional shares of coveted stocks with high per-share prices. LOYAL3’s platform also attracts more experienced investors, but because we do not permit short selling or share lending and batch our trade orders, this limits the appeal to institutional investors or active traders.

What’s your IPO offering? How would investors invest in IPOs before using LOYAL3?

Historically, the ability to “invest in IPOs” had been limited to Wall Street and their core clients. It was nearly impossible for the general public to purchase shares before the first day of trading, unless they had a brokerage account and met “requirements” set by that firm, which were most always large sums of money in the investor’s accounts. Now, through the LOYAL3 platform, small retail investors are able to gain new access to IPOs, with the ability to purchase shares for as little as $100, at the same price and time as these institutions and large investors.

How are firms selling their stock via IPO using this service?

IPO issuers work with LOYAL3 because they see the value of offering IPO access to the people who really care about their company, employees, customers, partners, etc., and will bring us into the IPO process as a co-manager or part of the selling syndicate. They see this as a way to thank the people who made their success possible in the first place. So in essence they’re using IPO stock as a powerful and new brand engagement currency. We provide the same IPO services as a traditional investment bank, but also develop customized, branded digital content that enables B2B and B2C companies to engage these groups during their IPO in a more personalized way.

Is your success, in a way, a throwback to what investing used to/should be: affiliating with brands we love, etc.?

Investing has become cumbersome, expensive and overly institutionalized, and we wanted to change that. The idea of being able to own a piece of a brand you know or love makes sense and really resonates with people. It’s the difference between investing and speculating. It’s such a simple concept—if an individual already has an affinity for a company, why shouldn’t they be able to affordably invest in it? We would love to see a day where everyone is able to “own” a piece of the companies that matter most to them.

What’s next for your product service? What should investors be looking out for in 2016?

LOYAL3 regularly explores different types of opportunities that will facilitate new ways for people to invest and will be complementary to our existing offerings. We’re really excited by the possibility of stock loyalty rewards and custodial accounts, and we hope these are two things we’ll be able to offer in the future.

October 23, 2015March 16, 2017

With SecondMarket acquisition, Nasdaq moves closer to liquidifying private shares market

with secondmarket, nasdaq investing in private share transactions

Nasdaq (NDAQ: NSQ) announced that it would acquire private transaction platform, SecondMarket. Founded in 2004, SecondMarket was the 2nd most active private tender market in the US. The company’s primary business is providing liquidity for employees in private companies to conduct private tenders to sell their shares, while providing their employers control over the frequency of the process and who gets to buy/sell shares.

Public markets cooling, hot private markets

[x_pullquote type=”right”]In 2014, there were 211 $40M+ growth rounds – just about one per day. In contrast, there were 15 US IT venture-backed IPOs with offerings greater than $40M last year, slightly more one IPO per month in 2014.[/x_pullquote]This acquisition comes amid a tepid market for tech IPOs. Public tech listings have fallen this year to the lowest point they’ve been in 6 years. Indeed, private companies are raising massive amounts of capital from private sources. Tomasz Tunguz, a venture capitalist, did the math on public/private markets disparity and it’s staggering.

There are a variety of factors behind the drop in successful tech companies deciding to publicly float their shares. Jeremy Kopelman of First Round Capital calls this the “private IPO phenomenon“.

According to the venture capitalist:

In my opinion, there isn’t nearly enough focus on “low frequency trading.” Public companies reprice daily. Private companies don’t have to reprice for years on end.

One key benefit of low-frequency trading in private companies is a long-term focus. It removes arbitrary time constraints on growth and profits. By relying on private financing events as “comps,” we risk pricing new financings (and creating new unicorns) based on stale valuations.

With public transactions cooling, Nasdaq has made it clear the exchange is looking for more growthy markets. Nasdaq established a partnership with SecondMarket’s larger competitor, SharesPost, in 2013. The partnership, called Nasdaq Private Market, never really found a lot of traction and Nasdaq reported it would be buying out SharesPost’s stake in the venture.

With the run-up in funding rounds and valuations on the private market, many companies are turning to tender offers to allow employees to take some cash off the table in a controlled manner, set and managed by the company.

“As companies extend their pre-IPO lives, they face increasing pressure to provide liquidity to employees and early investors,” said Bill Siegel, CEO of SecondMarket. “Our combined offering strives to give private companies a comprehensive, company-controlled solution to attract and retain talent, while also providing tools to effectively manage their equity ownership and secondary liquidity for their employees and shareholders.”

SecondMarket and SharesPost both saw their businesses enter a growth period as Facebook ramped up its business on the social network’s path to IPO. Facebook was not only a driver but it was a huge percentage of the private stockmarkets’ business. After Facebook went public, SecondMarket decided to focus not on one-off transactions but more on the tender offer process, which companies lead and control.

SecondMarket has facilitated over 70 tender offer programs and processed over $2.5 billion in transaction volume. Another player in the market, startup EquityZen is competing over similar business and currently has close to $30 million of private stock available for sale on the platform. The advent of equity crowdfunding was also seen as a way for startups and private companies to conduct “private IPOs” and sell stock to the general public. True openness hasn’t happened because of concerns over existing regulation and a reticence by companies to partake of the new frameworks created by the JOBS Act of 2012 and Regulation A+.

Regardless of how this plays out, Nasdaq is positioning itself to play a major role in the trading of private company shares.

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October 21, 2015

JP Morgan, Motif Investing open up IPO investing

motif investing and jp morgan launch ipo trading

Since its launch, Motif Investing has championed creating low-cost, high-value portfolio creation tools for individual investors.

Founder and CEO of Motif, Hardeep Walia joined me on the Tradestreaming Podcast early in the company’s maturation cycle to talk about how Motif fits into the historical narrative of opening up investing tools and tech to individual investors:

So, what we do is we create indexes around these ideas and we focus on making investing very intuitive. It is as simple as, “I see something, an idea that I want. I want to put money to work and I don’t necessarily want to spend tons of time messing around with research in stocks, because I believe the index will do its job.” Then, we have very sophisticated investors who say, “You know what, just give me a starting point for a portfolio of stocks that actually act on these ideas,” and that’s what Motif is.

Motif announced today that it would take another step to opening up a traditionally opaque part of the investing world: IPOs. As part of a partnership with JP Morgan, the online broker is offering everyone access to IPO shares with as little as a $250 investment.

The new partnership “will broaden access to IPOs to more individual investors,” said Michael Millman, Co-Head of Americas Equity Capital Markets and Head of Technology Investment Banking at J.P. Morgan, in a statement. “Motif’s innovative and easy to use platform is a cutting-edge, differentiated way for issuers to reach investors.” J.P. Morgan will be encouraging its IPO companies to participate in the Motif program. Source

Motif appears serious in bringing its style of investing to the IPO market and it looks like JP Morgan may be the first of bulge bracket firms that bring offerings to the startup online broker.

IPO markets: Profitable, broken, and in need of fixing

IPOs have traditionally been a black box of the brokerage industry. “Book building” for IPOs, the process through which brokers went out to their clients to match supply and demand for shares, was completely opaque. Because IPO shares frequently pop after they list for trading, shares of top offerings were frequently reserved for the best customers of brokerage firms (high net worths and hedge funds).

In sought-after IPOs, it was very hard for general investors to get their hands on them. Because of such scarcity, investors requested larger than appropriate allocations for their portfolios in the hope that they’d end up with a better size allocation when the brokerage firms cut back their customers back . Because of this dynamic, in lackluster public offerings, investors frequently got “stuffed” with more shares than they really wanted.

The IPO process is one of the last holdouts in the face of digital disruption and that’s because IPOs play an important role in the brokerage business — they were a way for the brokerage firms to reward their best customers. Investment banks frequently underprice shares on their floats, providing quick profits to buyers of shares. The other side of this coin is that companies going public leave money on the table because of this underpricing. Investment banks come out looking good and brokerage firms are lauded by their customers.

Historically, there have been various attempts at disrupting the IPO process, including:

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[x_icon_list_item type=”dollar”]Dutch auctions: Investment bank, Hambrecht pioneered a form of dutch auction for IPOs, something it calls OpenIPO. In this model, the investment bank collects bids from all interested investors, big and small, and groups them by how much each is willing to pay for a share. Its bankers then count down from the top bid until they reach the highest price at which the selling company could sell all of the shares it wants to offer. The company can choose that price or, for various reasons, a lower one. Hambrecht then sells at the chosen price all the shares that were bid at that price or higher. One of the most famous IPOs to implement the OpenIPO process was Google, but few companies have really followed suit.[/x_icon_list_item]

[x_icon_list_item type=”dollar”]Equity crowdfunding platforms: With various new regulation in place (2012’s JOBS Act), the market has been kind of waiting to see equity crowdfunding platforms (like AngelList, CircleUp, and OurCrowd have popularized) perform the role of taking a private company into the public realm. It hasn’t quite happened, as regulation still relegates participation on crowdfunding platforms to accredited investors. It will take some more time before the general public will get a chance to transact in private companies.[/x_icon_list_item]

[x_icon_list_item type=”dollar”]Direct to consumer: There are a few firms like Cutting Edge Capital that working on Direct Public Offerings, a takeoff of the IPO but simpler and more accessible to general companies looking to list on a local exchange. Paperwork, filings are all easier to get going and it enables a company to market its securities to a local audience. Other firms, like Loyal3 , are creating investment platforms that make ease the IPO marketing for consumer brands and help them provide shares to loyal customers. Companies like GoPro and GoDaddy have used Loyal3 to distribute shares to their customers.[/x_icon_list_item]

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Motif Investing’s approach is to create a personalized investing experience around individual investors. Individual investors can create thematic portfolios (called, motifs) and trade them with one click for a low fixed fee. Motif customers can share and implement company-built motifs or use those shared by others on the platform.

Who knows, maybe an IPO Motif is in the works.

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April 4, 2011June 27, 2016

How to use Google search data to invest (transcript)

This transcript is of a conversation I had with Dr Joey Engelberg, Professor of Finance at the University of North Carolina’s Kenan-Flagler Business School (listen to the podcast). You can always subscribe to Tradestreaming Radio on iTunes.

In my book, Tradestreaming and on my website, I talk a lot about what I call collateral research. This is information that’s inherently non-financial in nature, but that investors are using to aid in their investment decisions.

Using Google Search Data to Invest by tradestreaming

One example I talk about in the book specifically is Amazon sales data. You can go onto Amazon.com, look up best selling computers, and you can get a list at that moment in time, updated hourly, of what’s selling well. So, if you were an investor in Apple, and Apple was introducing a new product to the market, that information, although it doesn’t say specific sales numbers, of what Apple itself is seeing through selling on Amazon, that information is at least important in the sense of how well a product may be received into the market.

Another area of concern for investors, of interest, is Google search data. Google recognizes that itself, and launched about two years ago on Google Finance something called Google domestic search trends, GDST. That’s a mouthful. What that is basically is Google itself is looking at a vertical search, something about the auto industry, unemployment, something where there are a series of search terms around a particular category, and then mapping them against the volume of other search queries.

So, you can get a feel for, qualitatively, how a certain search term or industry is trending vis a vis the rest of the search market. You can then overlay that information on top of an ETF or a mutual fund that may track that industry, and you can get a view for how well some of that data may, or may not influence future price movements.

Today’s guest on the podcast is Joey Engelberg, who studied this actually quite intensely. He’s a Professor of Finance at the University of North Carolina, the Kenan-Flagler Business School. He previously worked at the SEC, as a research specialist.

He recently produced a paper that caught my eye, called In Search of Attention. That basically looks at Google search data and tries to map it to future price movements. He actually did find a correlation that certain abnormal trends in search data can lead to abnormal returns in the stock market.

Continue reading “How to use Google search data to invest (transcript)”

March 28, 2011July 6, 2016

How to use Google search data to invest (podcast)

tradestream radio, discussing investing and technology

In my book, Tradestream, I talk a lot about what I call “Co-lateral Research”. This is information inherently non-financial in its nature that investors can use to make better investment decisions.

Take Amazon Sales Ranking, for example. Amazon provides almost real-time ranking of its best selling items. While Amazon won’t reveal exactly how many units of Apple’s ($AAPL) iPad it’s selling, investors can get a qualitative feel for how well products are moving.

Summary

UNC Professor Joey Engelberg has been studying another form of co-lateral research, Google search data. He’s been studying search trends for stocks (ie $PCLN or $NFLX) as a way to measure investor attention. Prof Engelberg has found a linkage between changes in search volume and subsequent moves in stock prices. He joins us for this installment of Tradestreaming Radio.

We discuss

which particular stocks investors pay attention do during the trading day
the demand side of news and information for stocks
how Google search volume is correlated to stock pricing
a trading strategy that uses search volume to beat the market

Listen below

Resources:

Listen to the podcast
Subscribe to Tradestreaming Radio on iTunes
Professor Engelberg’s homepage
Engelberg’s paper: In Search of Attention (Engelberg, Da, and Gao) (.pdf)
More episodes of Tradestreaming Radio
Google Insights for Search