New Issues

It seems like everybody on the planet wants in on every new issue that
Wall Street can deliver. This frenzy to own new issues has been going on
for quite some time and shows no signs of letting up. Don't go thinking
that buying any new issue is a fast track to big profits. It ain't.

If you're approached to buy a new issue the first thing you do is insist that
they send you a prospectus of the new issue. Never take a broker nor
anyone else's word when making a decision to buy a new issue. The new
issue prospectus will contain information needed to help you decide.

The prospectus will describe the company's business history, financial
situation, management, potential liabilities (litigation), etc, and detailed
information on how they plan to spend the money that's raised. Again, I
suggest that you do your homework before you invest

The first page shows the number of shares being offered, the company
name, description of the unit and it's value, SEC required risk summary,
disclaimers, new issue prices and underwriter commissions, where and
how to purchase the issue, and effective dates for sale of the new issue.

You should then go to the Summary. It contains:

The company's business background, services offered, and product lines.
The explanation of how many shares are being offered.
An explanation of how many shares will be outstanding.
Details of how the proceeds (money raised) will be used.
The proposed symbol for the stock (WXYZ).
Selected financial information for past three years or longer.
Review of the management.
Disclosure of any litigation (lawsuits).
Disclosure of management salaries.
and the SEC required outline of any risk factors.

Spend just as much time analyzing a new issue as you would any other
stock. You have to be on the lookout for any hanky-panky with a new
issue, just as you would with any other stock you'd consider buying. The
interest of the stockholder is not always of paramount importance.