The IPO Buzz: IPO Life Beneath the Ice

In January and February, bankers priced a total of 15 IPOs (including two unit offerings), according to the Securities and Exchange Commission filings. Note: That was much better than 2009’s first two months, which produced only one IPO; in 2009, it took until July 1 to get 15 deals out the door.
Aftermarket Performance
This year’s flock of IPOs saw their wheels spin in the aftermarket. At Friday’s close, on Feb. 26, six of this year’s 13 IPOs (excluding the two unit offerings) were in the winner’s circle, seven in the loser’s column and the average aftermarket gain was a paltry gain of 0.23 percent. Nevertheless, their performance was better than the underlying stock market.
The Dow Jones Industrial Average was DOWN 0.99 percent since the first of the year, the Nasdaq Composite Index was DOWN 1.36 percent and the S&P 500 was DOWN 0.95 percent – while the IPO aftermarket was UP for 2010 so far.
However, this year’s IPO performance is not exactly what dreams are made of. But the “dreams in waiting” -– the new filings — are running far ahead of last year’s pace. During 2010’s first two months, 30 companies filed to go public. In contrast, in the previous year, it wasn’t until the week of Aug. 11, 2009, that 30 companies had filed to go public.
Return of the Regionals
And there are interesting developments in this year’s traffic. The most notable is the return of regional bankers.
When it comes to Wall Street underwriters, you usually don’t think of Brean Murray with Redgate Media (NASDAQ: GRM – proposed) already on the calendar for the week of March 8; Canaccord Adams with NEXX Systems; CIBC with FallBrook Technology; Jefferies with three filings, including Reply!(NASDAQ: RPLY – proposed) just filed last week; Thomas Weisel Partners with three deals and its pending offering Nexsan (NASDAQ: NXSN – proposed), which set proposed pricing terms last week. It is expected to move onto the calendar soon. The big boys have been in there, but the smaller ones have started making headway.
You might consider this as a positive development.
Time will tell. Even through this year’s aftermarket performances have not laid the groundwork for a booming IPO market, there just may be more there than meets the eye.
Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and staff do not issue advice, recommendations and opinions.