Sam Dickie: Fisher Funds expert on the increase in companies listing on stock exchanges

After a couple of dire years, a growing number of companies are listing on the relevant stock exchanges.

An IPO is a key source of funding for companies, and investors appreciate this change in direction.

Fisher Funds expert Sam Dickie explains further.

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Episode Transcript

Speaker 1 (00:00):
Da Brady is going to be with us out of
the UK and ten minutes time. Do you remember I
was telling you maybe last week that there was the
National MP who'd berated Jacinda Ardern in Parliament and she's
written about it in her book. We now know who
it is is Amy Adams. We know this because Audrey
Young has put it in her column. She says there
is only one MP who meets that description, had a

(00:20):
bob and was respected by labor, and it was Amy Adams,
which is what our sources in the National Party had
also told us, if you recall. Also, did you know
that Grant Robinson has got his own memoir coming out.
It's called Anything Could Happen and it's due out in
two months time. Yay, can't wait? Twenty four away from seven. Now,
after a couple of dire years, we're seeing the number

(00:41):
of companies listing on stock exchanges rise again and IPO
is a key source of funding for companies and investors
get very excited about them. And Sam Dickey from Fisher
Funds is with me and very excited.

Speaker 2 (00:51):
Sam, always very exciting. Way, good evening.

Speaker 1 (00:55):
Now give me some context. Yeah, how many IPOs are happening?
At the moment you know, globally and regionally versus what
we've had in the past.

Speaker 2 (01:02):
Well, the amount of IPOs globally tends to go hand
in hand with the amount of animal spirits or enthusiasm
in the stock market. So if you were selling the
company you own, you'd prefer to sell it when enthusiasm
for stocks is high. So twenty twenty one is a
good benchmark there. It was the everything bubble. Markets were
on fire, second end, cars are on fire, mean stocks
are on fire, and the issuance of IPOs. Then over

(01:25):
three thousand new companies were listed on the Stock Exchange
that year, which is a staggering number. And then in
twenty twenty two that issuance have so half the number
of companies listed the next year, and then halved again
in twenty twenty three. To give you a sense of
the scale. It picked up a little bit in twenty
twenty four, but in the US, for example, in the
last few months, the run rate of companies listing on

(01:45):
the Stock Exchange is doubled as animal spirits are returning. Now,
what's super interesting, this is a bit of an aside,
is in the last year or two India has been
listing more companies than the US is that tiger economy
continues to grow.

Speaker 1 (02:00):
IPOs always good investments, though because there have been some shockers, haven't.

Speaker 2 (02:03):
There definitely not always good investments. And actually you and
I did talk about this about eighteen months ago and
back in twenty twenty three. Of the ten largest IPOs
in the US, and that four year period from twenty
nineteen to twenty twenty three, eighty percent of them were underwater,
and they were underwater by an average of forty percent.
But that was a bit of a harsh time period

(02:24):
because investors were sliding down that slippery slope off the
peak of the last OPO cycle in twenty twenty one.
And if you think about it, when more than twice
as many companies as you would normally see lists on
the stock market, it's just a truism that many of
those IPOs will be lower quality. So more recently, as
the IPO cycle started picking up, usually you'll see higher
quality companies listing at the start in the middle of

(02:46):
the cycle than towards the end, and the returns are
much better. So high profile IPOs in the US like
Core Weed for example, when AI infrastructure play and circle
Internet a cryptoplay have both done very well, up one
hundreds of percent.

Speaker 1 (03:00):
How do you know, I mean, if you're an investor
and you see an IPO, how do you evaluate whether
it's a good one or not.

Speaker 2 (03:06):
Well, it's much trickier because as an investor looking in
from the outside, and there is always an information imbalance
when you evaluate a listed company, you can even know
as much about the management or the board of that
company as to what makes that company tick. And that
imbalance is extreme when it comes to an IPO because
there is no decent historical track record to observe. And

(03:28):
the other thing to remember is all of the smartest
people in the room, so the owners, the management, and
the board, the people who know the most about the
company are usually selling, not buying shares. So that's that
sort of extreme imbalance, so that the bar to invest
in IPOs is high. But if you are going to
invest in IPOs, it's better to do it nearer the
start of the IPO cycle, when the number of listings

(03:50):
is only just starting to pick up. And a final
thing to remember here, there is that many great companies
and this is a new phenomenon in the last few years,
many great companies that choose not to list on the
stock market at all these days to stay private, and
that's because they have access to ample capital from private investors.
And that's one of the many reasons can we save

(04:10):
A Providers like Fisher are moving more into the private
equity space.

Speaker 1 (04:13):
Very interesting stuff. Hey, thanks for talking us through that, Sam.
As always, it's fascinating to talk to you, Sam Dickey
of Fisher Funds.

Speaker 2 (04:20):
For more from Hither Duplessy Allen Drive, listen live to
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