Friday, September 25, 2009

Shanda Games down on day 1 (GAME, ARI, CLNY)

AlphaNinja - I mentioned earlier today the possibility that "The more convoluted the ownership structure, the worse an investment is for shareholders?"

May be true.

Shanda Games (GAME), spun off from Shanghai-based Shanda Interactive, priced at the high end of estimates for its IPO today - $12.50. It's trading down almost 10% right now though, as they may have priced it too high. Seemed like great demand, as they boosted the offering.

For one thing, it might be well overpriced, and Citigroup says to sell the parent company's shares, which are down 10% today:
Citigroup Inc. recommended selling shares of Shanda Interactive, saying valuations are “inflated.”
“Shanda Interactive plus Shanda Games is now valued at $7.5 billion from $3.7 billion before, without any change to underlying revenue and earnings potential,” Citigroup analysts Alicia Yap and Jason Brueschke wrote in a report. “We find it hard to justify.”

Shanda Games org chart:

As for other IPO's this week that have fared poorly, here's "Apollo Commercial Real Estate," (ARI), down about 6% from its IPO offer price yesterday. Yep, another "org" chart.

Colony Financial (CLNY), another mortgage REIT, down only a couple percent.

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