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Trading Strategies

TRADING STRATEGIES FOR PUBLIC COMPANIES

What follows are a few notes on trading strategies for public companies.

One of the questions often asked by executives considering going public is how to obtain market makers. When a stock first trades, it does so because a broker-dealer sponsored the company to the NASD (“Finra”) and filed the paperwork necessary to trade. For doing this, the broker is given an exclusive ability to trade the stock initially. After the period ends, other brokerage firms may also take part in this process and usually do so if there is sufficient trading activity.

Regular news event must be planned and press releases issued followed by contact with prospective stock purchasers. Press releases are not expensive but are necessary in order to demonstrate that a company is actively growing and pursuing objectives which will increase share value.

When a company first trades, the shareholders who have tradeable stock are reluctant to sell their shares because they are hoping for a rise in stock price. Because of this, it is often quite easy to raise the share price substantially with a few trades and a couple of strong press releases. While it is important to take advantage of situations like this, it is also important to remember that other shares will come into play when the rule 144 holding period ends which may make it more difficult to maintain a high share price. This is why it is necessary to plan ahead.

Learn how to maximize the value of your company by going public.