Re: Ravenswood Winery (Nullum Vinum Flaccidum) (Score 1)

Being a zinfandel(*) maven as well as a geek, I bought into the Ravenswood IPO. This was the first IPO done under the auction system for which William Vickery won the Nobel Prize in Economics in 1996.

The system makes a lot of sense from the standpoint of the company going public as well as for the individual investor. It works like this: A deadline for offers is set, along with a target price. Investors bid a number of shares they wish to purchase, along with the highest price they are willing to pay. When all the bids are in, the banker starts filling orders beginning with the highest bid. Everyone who bid at that level gets all the shares they ordered, then the banker goes down to the next highest bid, fills all the orders at that bid, and so on until all the shares are distributed.

The bid price where the shares run out is the price everybody pays, even if they bid higher. So in the case of Ravenswood, I bid 12, and got my shares at 10 1/2. (**)

Everyone bids once, so you don't get the bidding frenzy of a typical auction and everyone gets an equal opportunity to buy (unlike eBay).
The company selling the shares leaves less money on the table, because the price they get is set by the auction and not by an investment banker who underwrites the IPO (and makes windfall profits if it can sell the IPO shares for more than they paid they company for them)
And since the market sets the initial price, you don't get those huge first-day runups and subsequent collapses that marked many IPOs in the stock market bubble.
It's even more efficient to do since most of the deal can be done online, and you don't have to pay brokers for schmoozing big institutional investors.

*--I'm enough of a zinfandel fan that my office is decorated with posters signed by winemakers like Joel Peterson ( Ravenswood ), Kent Rosenblum (Rosenblum Cellars), and Matt Cline (Cline Cellars), so I was familiar with the Ravenswood business plan (***) and knew the shares would be a good investment.

**--It indeed turned out to be a very good investment. A coupla years later, Canandaigua Brands (Almaden, Paul Masson) bought out Ravenswood for $29.50 a share, so I nearly tripled my money.

***--They used the proceeds of the IPO to construct a second winemaking facility, so they could expand production of their County series zins, and start making merlot too.