Qamar U. Zaman is a hematologist in Cumberland, Md., a bucolic community 140 miles west of Baltimore. But when he's not tending to the sick, Zaman is elbow-deep in one of the riskier areas of the stock market--initial public offerings. Zaman is no gambler, but he has beaten the house consistently for nearly a decade. He's an example of how individuals can do well in sophisticated realms of investing--if they conduct diligent research.

Zaman has bought and sold hundreds of IPOs and now holds about 50, checking their prices as often as three times a day by fax. "One has to watch carefully," he says. "They're very volatile."

How volatile? New stocks can double in a day--or shrink by half. When cisco Systems Inc., a Menlo Park (Calif.) computer outfit, went public in early 1990, Zaman bought 100 shares for $18 each. Now, after numerous splits, Zaman holds 800 shares worth about $50 each--meaning his investment has grown more than twentyfold. But Zaman has also seen a few companies go broke, taking his investment with them. Lately, he has watched his health-care holdings bounce around.

WAKE-UP CALL. Zaman, who came to the U.S. from Pakistan in 1976, got the IPO bug in a prosaic enough fashion--by watching TV. In the early Eighties, when new issues were skyrocketing, Zaman was dazzled by business-news shows reporting on big gains in such hot IPOs as Microsoft Corp. He had lost a bundle by practicing dollar-cost averaging with value stocks that seemed only to lose value. So he set up accounts with four brokerage houses, including underwriters of new issues.

Soon, a few brokers got to know him well enough to clue him in on promising upcoming offerings, getting him limited allocations of 100 or more shares of hot stocks at a time. He became such a good client that one broker now regularly reads him stock-market columns from early editions of New York newspapers most mornings at 7.

But Zaman does his own homework. He reads new-issues newsletters faithfully, along with the general press. Each night, he checks prices on the computer-service Prodigy, and he watches tapes of public TV's Nightly Business Report every evening. By early morning, he's directing his brokers to move him in or out of stocks. "He really works at it," says Robert S. Natale, editor of Standard & Poor's Corp.'s Emerging & Special Situations newsletter and a regular Zaman telephone contact.

Zaman's advice: Do solid research, and maintain sharp discipline. First, he dopes out which industries seem most promising. Then, he buys new issues in them. But he is careful to sell when they begin to descend. "If they are going down on big volume, that's a red flag for me. That indicates that some money-manager is selling," he says. "One has to learn when to cut one's losses, because they just get wider and wider." He'll quickly sell out if a stock drops a quarter below the offering price--a sure sign that demand has faded--but he'll also hold promising stocks for years. He steers clear of IPOs that are priced lower than expected or that come out with fewer shares than expected--another sure danger sign.

SECOND CHOICE. Spreading out the risk is also crucial to Zaman. Although not averse to buying big, he is leery of brokers who offer big positions: That suggests slack demand among institutions that get first crack at IPOs. He also frets about brokers who try to force sloppy seconds on him, offering him shares only after trading has begun, when the price is up. Zaman also warns that no investor should put all his holdings in risky spots. "The most important lesson is to keep in mind how much you are willing to lose," he says.

Zaman, 43, manages to run his portfolio despite a busy schedule. Along with a bustling medical practice, he directs the oncology department at the local hospital. He even finds time to tend to a 3,000-volume collection of first-edition mysteries. But for Zaman, nothing beats the challenge of the biggest mystery around: Where's the next hot IPO?

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