The hottest thing to hit the market in October wasn't Elvis Presley's report card or Marilyn Monroe's glitter dress. It was a little company called Crossroads Systems, and Memphis' own Morgan Keegan played a key role. On October 20th, Crossroads Systems began trading as a public company, in what is known as an IPO, or initial public offering. It was the fifth biggest gain ever for a U.S. company in its first day of trading. As an investor, one of the best things that can happen to you short of winning the lottery is being offered shares of a hot IPO at the IPO price.
Small investors are way too far down the food chain for such largesse.
Above them, understandably, are institutions and wealthy customers who do a lot of trading and generate big commissions for the underwriting firms. What many small investors don't know, however, is that the investment bankers and even the research analyst who covers the company can get an even better deal. In this case, no one was happier than six investment banking employees at Morgan Keegan who helped Crossroads Systems go public. Getting a share of the Crossroads Systems IPO was a coup for them and for Morgan Keegan, one of the three underwriters, along with SG Cowen Securities Corporation and Dain Rauscher Wessels Investors. IPO Reporter, a newsletter of the industry, said the three relatively small firms beat out larger rivals for the business.