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October 18, 2005
BOT starts trading tomorrow, Mon., Oct. 17, 2005, 6:59 PM
The following news release speaks for itself.
CBOT Holdings 3.19M share IPO prices at $54 each (BOT)
By Carolyn Pritchard
SAN FRANCISCO (MarketWatch) " 5:59pm 10/18/05
The Chicago Board of Trade's (BOT) initial public offering of 3.19 million shares priced at $54 each late Tuesday, according to Thomson Financial, raising $172.3 million. The pricing came in above the expected range of $45 to $49. CS First Boston, JP Morgan, Citigroup, Keefe Bruyette and Sandler O'Neill acted as underwriters on the deal. Shares of the world's third largest derivative exchange are due to start trading on the New York Stock Exchange Wednesday."
But, as usual, I'd like to add a dose of reality.
Pardon me if I'm wrong on this one (since I got my info second hand), but doesn't 3.19 million shares represent just six (6) pct of the issued and outstanding stock?
If so, there is a problem. When stock exchanges talk of float", it's supposed to mean something. It's supposed to mean that the shares held by the public can sink a stock if the shareholders are badly treated.
But what's this six percent nonsense? What kind of float is that?
And after the friends of CBOT get through having their orders filled from the Friends List of the underwriters, meaning the public is really getting screwed over big time on this one, I ask again to the 127 VP's of the NYSE, what pct of the shares does the public hold?
Is that a float?
This is the stupid, stupid game that Wall Street plays. They are such pigs, this time I'm going to help them get slaughtered.
You see, Wall Street set up this IPO for themselves. Another free lunch. It's a tight market that they will squeeze to higher prices after their infamous phone rooms get through with their part of the job.
Do you remember the 2000 movie, Boiler Room? If you haven't seen it, rent the video. You'll learn something about these people. It's not as good a movie as Wall Street (1987) with Charlie Sheen and Michael Douglas -- in my top ten movies of all time - but Boiler Room is the appropriate reference for this article, and a movie worthy of your time to watch.
So tomorrow Wall Street intends to start promoting BOT. They hope to push it to $70 (my guess) or higher. And it just might get there. If not, it'll get into the 60's even on the bad day I expect for the broad market tomorrow.
And if you do buy BOT on the way up, shame on you, because you are going to wish you had SOLD it short instead.
And that's where I come in. I'm going to watch this one for a good time to short BOT. And I'm going to tell you, the clients of Wall Street, how you can play their game. You get to play the sell-side. And have the fun, and enjoy the $$$$. :-)
Just remember the movie Boiler Room.
BTW, I happen to love the CBOT as a financial institution. Over the years, they have done some terrific work. I just resent anthing less than a 20 pct float, because any pct under 20 is not a float. It's a sinker.
Posted by Posted by Bill Cara on October 18, 2005 06:59:27 PM | Category: Init Public Offering (IPO)