Fortress Investment Group IPO

The Fortress Investment Group IPO was a hot issue.  Investors drove up prices 68 percent on the first day of trading.  The offering is unique because it is the first in American markets of a hedge fund manager.  It reminds me of the Google offering in that only a small fraction of the equity is being sold in the IPO (less than nine percent) and the voting stock (Class B shares) is not being sold at all.  Only Class A shares have been sold in the IPO.  The five principals of the firm will own 78 percent of the total common (Class A and Class B) and 100 percent of the voting common (Class B stock) after the offering.  There is no takeover premium in the stock sold.  Investors seems quite content to make permanent bets on existing management.  If managers leave voluntarily they sacrifice Class B shares, forcing them to exercise their right to convert to Class A.   Twenty or thirty years out, an eternity for the markets, the firm will be faced with a need to change management and no easy way to do it.  Look at the New York Times.