seach-icon
  • user-img

    QONEQT in News

    20-Sep-2022 05:56 AM


    thumbnail

    World's Wildest 2,200% Public Offerings Come From Tiny New Jersey Broker

    Fifty miles south of midtown Manhattan, in a red-brick building bounded by a railway track, sits a little-known brokerage behind some of the world's wildest initial public offerings.
    From its base in Red Bank, New Jersey, Network 1 Financial Securities Inc. has underwritten six US microcap IPOs this year that surged by an average 2,190% on their first day of trading.

    That's more than 250 times the performance of offerings underwritten by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, according to Bloomberg-compiled data.

    Unfortunately for investors, the downside for Network 1's listings has proven equally extreme. While still in positive territory, the brokerage's average offering this year plunged 75% from its peak within a month.

    Big moves in tiny stocks are nothing new on Wall Street, but the deals underwritten by Network 1 -- which was founded in 1983 and markets itself as a full-service brokerage for sophisticated investors -- stand out for consistently outsized swings.

    They're part of a remarkable stretch of gut-wrenching volatility in New York IPOs, mostly by companies from China, that have baffled longtime market observers and drawn the attention of US securities regulators.

    In one of the most striking examples underwritten by Network 1, China-based garment maker Addentax Group Corp. soared 13,000% to $656.54 on its August 31 trading debut to briefly become bigger than about a third of S&P 500 Index members.

    That's despite having less than $13 million in revenue for the year ended March. The following day it fell to $30.

    The trend is eerily familiar to market participants in Hong Kong, which was a hotbed for mysterious moves in tiny stocks before a regulatory crackdown brought new offerings to a virtual halt.

    As small Chinese companies that might otherwise have listed in Hong Kong turn to the US as an alternative, Network 1 has emerged as one of the most active players in this growing corner of the market.
    Source: NDTV