The IPO Buzz: From Bad to Breakeven

In a nutshell, here’s what happened: Turmoil in the Middle East sent oil prices soaring to record highs near $80 per barrel and some disappointing earnings reports drove the Nasdaq Composite Index down 4.35 per cent for the week. It closed Friday at a 2006 low at 2,037.35, the lowest close in 14 months. On May 18, 2005, the Nasdaq closed at 2,030.65.
Those facts alone might make you think that last week’s IPO market left investors bloodied and bruised. Wrong. It wound up as a breakeven week. But more on that later. (See Win Some, Lose Some section below.)
Since the Nasdaq Composite is considered the barometer of the IPO market and it closed Friday at its 2006 low, that brings up the question: Where does that leave Wall Street’s investment bankers and their new issues?
It takes time for the sting and pain from IPO losses to heal, and for the new-issues market to start to recover. Over the past, that time span has been about four to six weeks after the stock market has bottomed out. 
If Friday turns out to be 2006’s closing low, then the four- to six-week IPO reconstruction period carries us into the Labor Day holiday. And that’s one of the year’s traditionally quiet periods in the IPO market.
It is a little too early to write off the summer for IPOs, but the question remains. However, the calendar is starting to show signs of slowly coming alive.
Next week’s forward IPO calendar has one new deal on the launching pad plus the usual carryovers. The week of July 25 lists five new IPOs.
Now back to today’s IPOs.
Win Some, Lose Some
At the beginning of last week, Wall Street had seven deals lined up, hoping to raise over $1 billion. But it was not all that impressive when you consider four deals had been there several times before.
Three were new to the calendar and they got priced:
  • Allied World Assurance Holdings (NYSE: AWH), a Bermuda-based reinsurance company, priced 8.8 million shares at $34 each on Tuesday evening. That was on the low end of its $34- to $37-per-share filing range. The IPO closed its opening day and the week at $34.25 per share, UP 0.74 percent from its initial offering price.
  • Cowen Group (Nasdaq: COWN), a New York City-based financial services firm, priced 11.2 million shares at $16 each on Wednesday evening. That was well below its $19- to $21-per-share filing range. The IPO closed its opening day at $16.35 per share and ended the week at $16, UNCHANGED from its initial offering price.
  • Valero GP Holdings (NYSE: VEH) is a San Antonio-based company owning an indirect interest in Valero L.P. (NYSE: VLI), a transportation provider of crude oil and refined products. Valero GP Holdings priced 17.3 million shares at $22 each on Thursday evening. That was on the low end of its $22- to $24-per-share filing range. The IPO closed its opening day, Friday, at $22 per share, UNCHANGED from its initial offering price.
However, a unit offering popped up out of nowhere and got priced on Monday:
  • Ascent Solar Technologies Inc. (Nasdaq: ASTIU) a Colorado-based company commercializing certain photovoltaic technology, priced 3 million units at $5.50 each on Monday evening. That was at the mid-point of its $5- to $6-per-unit filing range. The IPO closed its opening day at $5.15 per unit and finished the week at $5.25, DOWN 4.55 percent from its initial offering price.
Had an investor gotten in on all of the week’s deals at their offering prices, it would have been a breakeven trip down the IPO Highway. Nevertheless, that was much better than the Nasdaq Composite, which took a pounding and fell 4.35 percent.
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