Charles Bobrinskoy, vice chairman of Ariel, said investors are selling existing stocks to buy new IPOs, a trend he described as dangerous.

This shift in capital allocation suggests a growing appetite for high-risk assets over established equities. Such a movement can destabilize portfolios if the new offerings fail to meet expectations or if market concentration becomes too extreme.

Speaking on CNBC's "Squawk on the Street" program, Bobrinskoy said that moving money from diversified holdings into new IPOs creates significant risk. He said that this behavior increases market concentration, a factor that can leave investors vulnerable during volatility.

"Investors are selling stocks to buy new IPOs which is dangerous," Bobrinskoy said.

Other analysts have expressed similar concerns regarding the structure of recent high-profile offerings. Rupert Mitchell said that the decision by SpaceX to set aside a 30% [1] retail tranche for its IPO is worrying. This allocation allows a larger portion of the offering to be accessible to individual investors rather than institutional players.

The trend reflects a broader tension in the current market between the desire for growth through new technology and aerospace ventures and the need for stability. Bobrinskoy's warning highlights the danger of abandoning proven assets to chase the potential of unproven public debuts.

“"Investors are selling stocks to buy new IPOs which is dangerous."”

The warning from Ariel's leadership suggests a growing imbalance in retail investor behavior, where the fear of missing out on high-profile debuts outweighs traditional risk management. By liquidating established positions to fund IPOs, investors may be inadvertently increasing their exposure to volatility and reducing the diversification of their portfolios.