For IPOs, it’s a cold spring – like the chilly weather that has prevailed in much of the country this month. Some plants thrive when the air is cold and damp. Others won’t bloom until warmer temps prevail.
This week’s IPO calendar contains just four deals. (Details below.) That’s not unusual when the underlying U.S. stock market is in consolidation.
A Chill from Ukraine
Worth remembering: Stocks are bought in hope, held in greed and sold in fear. What drives these emotions is the perception of interest rates, the perception of earnings and from time to time, politics.
Wall Street’s worry beads are getting a workout because of politics – the escalation of tensions over Ukraine and Russia.
In a word, Ukraine is the reason why today’s IPO traffic has slowed to a dribble. But that doesn’t mean the pipeline plus the unseen confidential filings won’t be producing a bountiful harvest when a more favorable stock market returns.
At the close on Friday, April 25, 2014, the Dow Jones Industrial Average was down 1.3 percent from its record closing high set on Dec. 31, 2013. The NASDAQ Composite Index was down 6.48 percent from its recent closing high set on March 5, 2014, and the S&P 500 was down 1.45 percent from its record closing high set on April 2.
A 10 percent pullback from the most recent closing high is generally considered a correction in either an index or a stock. A 20 percent pullback is a bear market.
At Friday’s close, the major indexes were well within the consolidation phase. Given 2013’s performances – the Dow industrials up 29.6 percent, the NASDAQ up 38.3 percent and the S&P 500 up 26.5 percent – the current consolidation should be no cause for alarm.
Pipeline Full of Hope
Today’s IPO pipeline lists over 120 companies that have filed to go public. They are expecting to raise over $18.4 billion. They range from JD.com, China’s largest online direct retailer, which expects to raise $1.5 billion, to Box, a provider of cloud-based, mobile-optimized Enterprise Content Collaboration platform, which is said to be one of about three dozen undeclared Silicon Valley-based companies looking to go public.
Let’s not forget the much reported pending IPO of the giant Chinese Internet company Alibaba.(Note: At press time, there has been no filing; therefore nothing to report.)
Raising the Dough
Wall Street is a place where it’s all about the dough. A credit and private-equity firm and a pizza chain are the two new faces on this week’s IPO calendar, which counts four deals expected to raise about $540 million. Here are the two fresh IPO faces:
Ares Management (ARES – proposed) is a Los Angeles-based global alternative asset manager with about $74 billion of assets under management and 15 offices in the United States, Europe and Asia. (For more information, please click here: Ares Management, L.P.)
Papa Murphys Holdings (FRSH – proposed) is a Vancouver, Washington-based franchisor and operator of the largest Take ‘N’ Bake pizza chain in the United States. The company has about 1,418 Papa Murphy’s Take ‘N’ Bake Pizza stores. It believes it has been rated the No. 1 pizza chain in the United States by multiple third-party consumer studies. (For more information, please click here: Papa Murphys Holdings)
Looking into the following week, the calendar has three IPOs. As we have seen in the past, more names could pop onto the IPO launching pad by the time that Monday, May 5, rolls around.
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.