Hi Robert,
First, you shouldn't compare your friend's strategy to a person who follows Warren Buffet, because your friend is going to buy IPOs, while Warren Buffet only purchases established companies, with high cash flows and growth potential, which just happen to be at a low price at the moment.
Something your friend should consider, though, is that very rich people often have access to stock options before the IPO, at a significantly reduced price. For example, Billionaire A may be offered 100,000 shares at $20 each, while when the stock goes public, it may be sold at $30 each when your friend can buy it on the market. This puts him at an immediate disadvantage.
Also, during the initial purchasing phase, companies may provide a contract for a guaranteed return. I know that when the company that I was working at offered stocks to investors, they were guaranteed, in contract, something like a price 20% above their investment after 6 months.
So if you can't get the inside investment, then it is much more risky to invest in an IPO. Then again, a few of my friends purchased VMW when it came out and they've made quite a lot.
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