Cincinnati Post – The New York Mercantile Exchange’s IPO is one of the hottest Wall Street has seen in six years, with investors already reaping big returns as the stock’s price doubled. Too badrank-and-file retail investors didn’t see much of it.
Shares in the 134-year-old exchange vaulted some 125 percent on their first day of trading on the New York Stock Exchange, but hedge funds and other major institutions were expected to be among the initial public offering’s biggest winners.
Retail investors essentially were boxed out of owning shares of Nymex Holdings Inc., although they still have a chance to buy in the coming days as the stock price stabilizes. They can also look toward a secondary offering since the Nymex only floated 7 percent of its total shares.
Still, “almost by definition the little guy gets cut out of these deals,” said David Menlow of IPOfinancial.com. “They’re not supposed to work that way, the playing field hasn’t been leveled, and anytime you have situations of limited supply and unlimited demand somebody is going to get shut out.”
With an unusually hot IPO, the first wave of buying typically goes to major banks, brokerages, mutual funds, money managers, and hedge funds. Nymex rivals’ CBOT Holdings Inc., Chicago Mercantile Exchange Holdings Inc., and InterContinental Exchange Inc. all have massive holdings by this class of investors.
