The IPO market is back in the saddle after its traditional July 4th holiday break. The filings are building, the calendar is filling up and there are a few “little doggies” that could be worth carving out from the herd.
“Ladies and gentlemen, start your engines,” will be heard from the public address system at the IPO Speedway this week. Tesla Motors (TSLA – proposed) will lead the new-issues race and the betting is that it will get the winner’s checkered flag.
Wall Street begins in a graveyard, ends in a river and the road sign points “one way.” About a hundred yards east from the Trinity Church graveyard stands the New York Stock Exchange at the corner of Broad and Wall Street. The deals on this week’s IPO calendar expect to trade on the NYSE.
One IPO is from the financial industry and the other from the technology industry. Each sector has produced more deals this year than from any of the other 10 industries.
“If” you don’t know the horse, bet the jockey” has been the cliché around racetracks for generations. Wall Street’s new-issues calendar is much the same. This week, there’ll be five IPO ponies thundering down the homestretch. And the favorite plus two others will be booted home by the same jockey — make that the same banker.
One deal on this week’s IPO calendar strikes at the very heart of investing. There can be a difference between a company’s fundamentals and the price of its common stock. Sometimes they come together — sometimes they don’t.
The IPO market cruises into June with just two deals on this week’s calendar. None of the IPO experts are looking for opening-day moonshots. Nevertheless, the summer months of June, July and August can be busy. And given last week’s filings, it could be interesting.
Benjamin Franklin’s famous quote “Life’s tragedy is that we get old too soon and wise too late” is especially apropos for last week’s IPO market. After sharp cuts in offering terms, the deals surged in the face of a collapsing stock market. There could be a message wrapped up inside this leading question: Have the bankers learned anything?
The old Wall Street axiom says that when people are thinking one way, look the other. In today’s IPO market, people have been badmouthing Goldman Sachs. What’s more, bankers have been overpricing their deals. And some Wall Street pros are swearing they’ll avoid private-equity IPOs.
There’s something to be said about a 1,000-point plunge in the Dow Jones Industrial Averages. It became the lead story for the media and quickly underscored the flaws in Wall Street’s trading system. Nevertheless, we’ve been there before – overextended debt, a cause of today’s worries, and overtrading. Look back 137 years and consider the following article: “The only thing new is the history we don’t know.”
In case you haven’t noticed, 2010’s IPO traffic is building. In April, 14 new issues were priced. The last time more came to market in a single month was in December 2007 with 23 deals. April’s IPO calendar raised nearly $2 billion. In addition, another 33 companies filed to go public to raise nearly $7 billion.