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The Little Guy Gets Big Shot on 1st Day

Google's 'Dutch auction' IPO plan lets small investors get in on the stock offering.

August 20, 2004|Alex Pham | Times Staff Writer

Thursday was good to the little guy -- and amateur investors like Kerry Gould reveled in it.

As Gould watched Google Inc. stock bounce between $96 and $104 on its first day of trading, the owner of 22 shares said he felt vindicated for ignoring naysayers who predicted small buyers would take a bath.

"I bought it even though there was all this negative talk about it being overpriced," said Gould, who checked the stock price 18 times Thursday. "I was going to prove that my instincts might be right."

The sentiment was repeated over and over by investors who won bids to buy into Google's unorthodox initial public offering for $85 a share. It closed at $100.34 on Nasdaq.

Earning a one-day return of 18% was nice, they said, but many also liked proving wrong the Wall Street wags who pooh-poohed Google's "Dutch auction" to buy shares as too cumbersome, complicated and confusing.

For Gould, an Inglewood resident who sells men's suits on EBay, the auction was a snap and served its intended purpose: to help small investors join the historically exclusive IPO club.

"I don't think it would have been possible for average investors like me to get in without an outlet like this," he said.

Patrick Lister held his breath as he watched his 78 shares ride the market's ebb and flow. The 25-year-old Corona project manager said he tracked the stock on his laptop while watching the Olympics.

"I used to invest in high school for competitions, but with fake money," said Lister, who persuaded his mother to go in with him. "This is my first venture with actual money. It's exciting. I figure I probably own a hinge that's holding up some door inside the Google building. It's not much, but it's something."

The auction process required bidders to buy a minimum of five shares, an unusually small number meant to entice small investors like Roger Fachini, a biologist in Sherman Oaks who believed he could only afford to bid for 10 shares. He won eight.

"This kind of validates the whole Dutch auction process," said Fachini, who's saving for his 4-year-old son's college tuition. "A small investor like me would never have been able to get in under the traditional method."

Others said they were gratified to be part of an event they considered historic.

"This is the most significant offering we've had in the last four years in the technology sector," said Jeffrey Peterson, chief executive of Inc., a Latino-themed Internet portal in Phoenix. "It's hard not to be excited."

He bought 1,000 shares.

Even those who bid too low, said they got caught up.

"When I heard, I was a little disappointed," said Rob Williams, a 30-year-old Seattle program manager who bid $80 and got no shares. "But I've got to say, I think it was fun."

Williams, who said he has made thousands playing past IPOs, said that if he had won, he would have flipped his shares for a quick profit.

"Honestly," he said, "it would only have made $1,500 for me anyway."

All of the shareholders interviewed Thursday said they planned to hang on to their shares -- at least for now.

"As long as it's not zero, I'll hang on to it," said Quoc Do, a software programmer from Riverside who won nine shares. "But tomorrow is another day."

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