After a yearlong lull, the market for initial public offerings is warming up thanks to highly anticipated deals from Arm Holdings plc and Instacart that will soon test the waters. Before investors jump in, however, consider that none other than Warren Buffett has argued that such newly public stocks might not be worth investing in. The chief executive officer of Berkshire Hathaway , with his legendary keen eye for value, thinks that bargains are rarely found in the IPO market.
6 billion acquisition of Alleghany last year, for example, reportedly mandated that the seller pay Goldman Sachs' advisory fee. Better in auction market The investment icon likens the stock market to an auction market where extraordinary bargains pop up now and again. By contrast, the IPO market resembles a negotiated deal where cheap securities are hard to come by. To illustrate how IPOs can be less appealing, Buffett made an analogy in Berkshire's 2004 annual meeting.