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Comment by jmvoodoo | Hacker News Reader

The bankers work for Zynga in this case, and it seems like they did a good job for their client by selling a large # of shares at above market.

The fund managers, on the other hand, did a horrible job for their clients here.

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If that's all Zynga paid in underwriting fees they got a good deal.

There's usually a 7% commission for underwriting in the US: http://www.theatlantic.com/business/archive/2011/06/is-under.... Odd to be criticizing the underwriters for making too much money when they seem to have cut Zynga a rather good deal.

There's some pushback on whether that standard figure is inflated beyond what it should be in a competitive market, though, partly because it's been held up (like real-estate commissions) as this un-negotiable standard fee that just gets applied. More companies are starting to demand it be negotiated, so it's not clear anybody really pays 7% anymore.

Related op-ed from a while back about how the US government negotiated rates more like 0.5-0.75% when it floated AIG and GM, and comparing the US underwriting rates to those in Asia: http://webcache.googleusercontent.com/search?q=cache:jxDEKOD...

Real estate commissions are negotiable as hell.

In all likelihood most of the fund managers involved have investment horizons longer than the two days that ZNGA has been trading, so declaring them in error seems incredibly premature.

So that implies the fund managers have looked at Zynga's long-term prospects and found them to be good, right?

So why is the market acting in a different manner? Do the fund managers know something the street doesn't, or vice-versa?

The majority of short-term market participants have deemed Zynga's two-day prospects to be poor, and correctly so. The factors that influence them, for the most part, are very different than the factors that long-term investors look at/care about.

In fact, it's entirely possible that the IPO participants are making money in the meantime lending their stock to short-sellers. Yes, the funds that participated in the IPO have a loss on paper, but so does the person who buys a house and sees that interest rates dropped 0.00001% the next day.

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