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Annie's IPO: Investing In Companies You Love

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Annie Inc.
Annie Inc.

Organic food lovers, take note: Beloved brand Annie's Inc., maker of instant mac and cheese, various bunny crackers and other packaged fare, is about to go public.

The company announced it was going public late last year. And in a filing on Friday said it would aim to price shares between $14 and $16, according to the Wall Street Journal. In a nod to the brand's rabbit logo, the stock name will trade under the ticker symbol BNNY.

Company founder Anne Withey has a strong track record with the cheese and the 'cheddar'. At age 21 she helped found Smartfood, a white-cheddar bagged popcorn that she sold to Frito-Lay in 1989 for $15 million.

Still, if you're tempted to buy a piece of BNNY, a love of packaged snacks and an appreciation for a young snack-food entrepreneur does not a safe investment make. According to SmartMoney:

Most IPOs lose money, studies show, which makes sense, because they represent a highly informed class of investors deciding to sell. And most of last year's dotcom IPOs -- including LinkedIn(LNKD), Groupon (GRPN), Zynga(ZNGA) -- sit solidly below their first-day opening prices.

Investment advisors sometimes say that knowing a brand is helpful in deciding whether or not to invest. Surely, these hard-core Apple fans don't regret buying up the company stock back when it was languishing. Last month, Bloomberg reported on Rich Bleyle, a retired teacher, who along with his wife Mary bought $16,000 worth of Apple stock in 1997. Now they have $2 million in shares.

But product love doesn't conquer all, and it shouldn't be the foundation of your investment strategy, said Nicole Sherrod, a managing director at TD Ameritrade.

"There are many great products produced by poorly managed companies which ultimately failed," Sherrod stated in an email.

Most of us stay away from buying and selling individual stocks, preferring to sock our retirement funds away in company-provided 401(k)s, index funds or other kinds of funds that purport to reduce the amount of risk we take when investing in the market.

Still, it's easy to get tempted. Take Google, which has seen its share price continually increase since its IPO in August 2004. Shares of Google are worth five times more than they were when they initially hit the market.

Sherrod isn't alone in discouraging emotion-based investments. Terry Burnham, Director of Economics at Acadian Asset Management and a Harvard researcher, strongly recommends that investors carefully research any stock before taking the plunge--and research would mean going beyond a taste-test of spirals versus elbow macaroni.

"If you could have any strategy and not trade emotionally, it's better," Burnham said in an interview with the Associated Press. "It doesn't matter whether it's index, active or passive."

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