How to find out who is unloading shares of an IPO
— -- Q: How can investors find out who owns the biggest chunk of a company that's having an IPO?
A: When you buy shares of an IPO, you're buying them from someone else. It's a good idea to know who is unloading the shares, and who will be owning the shares alongside you after the initial public offering.
Luckily, this information is so vital to investors that regulators require companies to disclose it. It's just up to investors to know where to find the data. And it requires a little digging.
Using Facebook's IPO, here's how investors can find what investors own the most shares. There are just a few steps:
• Log into Securities and Exchange Commission's website. Point your browser to www.sec.gov. From this front page, hover your mouse pointer over the Filings tab at the top of the screen. Next, choose Search for Company filings. Select the " Company or fund name, ticker symbol" option.
• Enter the IPO name. Type in the name of the company with the IPO in the "Company name" blank. For this example, type in Facebook and click the "Find Companies" button.
• Select the S-1 filing. You'll see a big list of all the filings the company has made. The one you are interested in is the prospectus, which goes by the abbreviation, S-1 in the SEC system. If the S-1 has been updated, you'll see it listed on the SEC's website as S-1/A, or S-1 amended. Click on the documents button. And then click on the red link next to the top line, in this case, next to where it says "amendment No. 8 to registrations statement on forms S-1."
Once you have the document open, you must next find the section regarding the holdings of the top investors. It's typically contained in a section called "Principal and Selling Stockholders." You can click on the link to the Table of Contents to get to that section of the S-1, or you can search for those words.
Doing this with Facebook shows all the big owners of the social networking company's stock. CEO Mark Zuckerberg is by far the largest holder of stock, according to the company's filing. After the IPO, Zuckerberg owned 503.6 million shares. And through his voting rights of other shares, Zuckerberg controls nearly 60% of the company's votes.
Other big shareholders are also listed in the filing including Sheryl Sandberg, Marc Andreessen, Peter Thiel, Accel Partners and Microsoft.
Understanding how to find out who owns what portion of a company is a critical skill for IPO investors. If you're buying, you want to know who is selling and who is also holding.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz