With SpaceX, OpenAI, and Anthropic, we're likely to see 3 of the largest IPOs ever (by a wide margin) this year. Will existing institutional investors trim other positions to allocate a lot of capital for these mega listings or is this not a concern?

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thewebguyd 35 minutes ago | parent | next [-]

Most likely. Funds generally don't have much unallocated cash, they operate fully invested, so three huge IPOs will force an asset rebalancing which can cause some liquidity drain from the rest of the market.

Plus as insider lockup periods expire, that's a ton of dollars pulled out of the market and into safer assets. It's going to be a huge net exit of capital.

I'd expect a lot of volatility and pretty heavy downward pressure across the rest of tech.

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nemomarx an hour ago | parent | prev [-]

At least all the index funds are obligated to, right?

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qwytw an hour ago | parent | next [-]

Based on current rules they wouldn't included in the S&P 500 for at least several years even based on optimistic scenarios.

Of course IIRC they looking into tweaking the rules to allow some handpicked extremely unprofitable companies in, due to "reasons"....

	▲	s1artibartfast 18 minutes ago \| parent [-]
		They are scared of underperfoming the market and failing to exist as an index. Losing money with everyone else is a more sustainable risk than losing money while other indexes go up.

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chilipepperhott an hour ago | parent | prev | next [-]

Most index funds wait for at least a year before adding a new listing. The only exception that I'm aware of is QQQ and SpaceX.

	▲	qwytw an hour ago \| parent \| next [-]
		Technically they couldn't be added to the S&P 500 etc. until they become profitable.
	▲	nemomarx an hour ago \| parent \| prev [-]
		If space x gets an exception, why wouldn't anthropic?

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bluGill an hour ago | parent | prev | next [-]

Maybe. If you read the fine print they are not. They have the goal of matching the index returns, but they never say anywhere they have exactly the stocks in the index.

Index funds all make active choices and often hold companies not in the original index. They are more passive than a traditional funds that buys and sells all the time, but they still make active choices. When an index changes stocks they can look up the price - but the funds mirroring the index need to make real trades that if not carefully done will change the value of the stocks (and cause the fund to under perform the index), so index funds have plans to prevent this. Compared to a traditional fund an index fund looks passive and there is much much less for the manager to do - but that doesn't mean the managers do nothing.

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nly an hour ago | parent | prev | next [-]

Index funds follow indices and often only rebalance quarterly

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DenisM an hour ago | parent | prev | next [-]

company must have a history of profitability before being included in the S&P 500

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whateveracct an hour ago | parent | prev | next [-]

you and me will all be left holding a small cut of the bag

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outside1234 an hour ago | parent | prev [-]

But only the amount the company floats for many index funds. So in the case of SpaceX, they are only floating 5% of the company. So the number of shares something like VTI has to buy is much smaller than the total market cap (5% of it).