Morningstar’s initial public offering concluded successfully last Tuesday. I was allocated 100 shares at $18.50 per share, 50 fewer than I submitted in my Dutch auction bid. MORN is now up to $20.40 per share. While not spectacular, the IPO is considered successful because the stock price never slid below its initial asking price. Usually stocks that go IPO slide after the first couple days of trading. Morningstar never broke it initial price threshold. My next challenge is to figure out when to sell MORN. Do I sell quickly, or do I hold it? I thought about setting a target price to sell at $25/share, a one-third price gain. IPOs are typically volatile at the outset, so it is possible it might make such a gain in the short term during a bull market. Because I purchased shares with cash, I will pay capital gains when I sell. If I wait one year to sell the shares, the capital gains rate will decline. If I believe that MORN is a good investment for the long term, I would prefer to keep them over the long term. My own feeling is that Morningstar will flourish as an independent investment research firm, but in the long term it might be a takeover target by a large financial services firm such as Merrill Lynch or Charles Schwab. That would be a boon to the stock price. I’m not sure yet what I will do, but I am glad that–at least for the time being–I was again successful in securing IPO shares of a promising company through Dutch auction.
Tonight I visited a friend’s house to demo some karaoke songs for the upcoming community talent show. The talent show was a hit last year. We plan to sing a duet together. We narrowed our options down to either "Endless Love" by Lionel Richie and Diana Ross, or "When I Fall in Love," the theme song from the movie "Sleepless in Seattle" popularized by Celine Dion. I’m partial to the second song, perhaps because I’m from Seattle. I think that song better showcases our voices. I can pull off a good rendition of Lionel Richie, but I sing more like Clive Griffen, the one who performed the duet with Celine. (I also plan to sing my signature song, "Oh Pretty Woman" by Roy Orbison, solo at the talent show.) After we settle on a song, we need to work out the logistics at the talent show so that we can sing on stage. We need two microphones and accompanying music on CD or tape. I thought that we could use her karaoke machine, but it’s not portable and needs to be hooked up to a television. We’ll figure it out.