Our hipster brother Rusty is one of those annoying people who always has to be into something before it’s cool (and then promptly loses interest once it becomes “casual”). From obscure underground bands to manbuns to IPOs, if there is something new on the horizon, Rusty is the first to jump right on it. For music and manbuns, this isn’t really a big deal—Rusty can always delete songs from playlists or cut his hair if whatever he’s into becomes too mainstream. But when it comes to IPOs, that isn’t always an option, because penalty bids exist.
“Penalty bids” are provisions attached to the purchase of some IPO stock which say that the purchaser of said stock has to hold onto it for a predetermined amount of time—even if other people start to buy it too, Rusty.
The goal of penalty bids is to keep predatory investors from making short-term IPO profits and then ditching the stock to the detriment of the newly listed company. If Rusty and his broker do decide to sell the shares back early, they’ll face a financial penalty fee. Usually this fee is borne by the broker in the form of reduced commissions, but sometimes it’s passed along to clients.
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Finance: What is a Pac Man Defense?21 Views
Finance a la shmoop what is a pacman defense?
[Pacman eating] yeah well wacka wacka to you too...Hostile takeovers are rare in real life not so
rare in pac-man but when they do happen there exists a whole cadre of strategies
behind defending them at least from the company's perspective being taken over
there and pac-man defense is inarguably the best named strategy of all of
them in essence what happens when we'll say an angry competitor let's call him
blinky Inc tries to buy an angrier competitor let's call them inky inc.
well blinky would be buying shares of inky in the open marketplace filing to [Blinky and inky appear]
go past 15% ownership and eventually own enough shares to elect its own Board of
Directors and make a takeover happen well in a Pac Man defense as blinky is
snarfing up shares of inky, inky buys shares of blinky sort of turning the
tables you know like this and while you're gobbling up that competition and [Pacman gobbling competition]
don't forget to eat a bunch of cherries or a strawberry every once in a while
because you know you still need your fruits and veggies
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What is a Hostile Takeover? A hostile takeover happens when a buyer goes past the management of a company to acquire it. The company’s management...