The past made for poor reading. The present was mostly BOR-ing! And the future? It told an interesting tale.
By Friday, July 28, bankers had priced a total of 124 IPOs in 2006, according to available reports. They raised $23.3 billion. Included among these figures are 26 unit offerings consisting of common stock and warrants.
However, unit offerings are not included in the 2006 IPO Scorecard and in the Last 100 IPOs,Tracking their aftermarket performances can be difficult once a unit ceases trading and its common stock and warrants begin to trade separately. In time, warrants expire.
The 2006 IPO Scorecard shows 98 IPOs have been priced year to date. There were more losers (54) than winners (44), but their average aftermarket performance was a gain of 1.33 percent. Some may think that’s a lousy showing. Yet that still outperformed the Nasdaq Composite Index, the barometer of the IPO market. At the close on Friday, July 28, the Nasdaq was DOWN 5.04 percent for the year.
The Last 100 IPOs Scorecard tracks as it name implies, the last 100 IPOs priced. On July 28, it dated back to December 20, 2005, but the count showed 101 IPOs. There was a reason. On December 20, two IPOs made their debuts, which was why the scorecard reported on 101 IPOs.
Once again, there were more losers (56) than winners (45), but their average aftermarket performance was a gain of 1.14 percent. That still outperformed the Nasdaq Composite Index. It was DOWN 5.77 percent from December 20, 2005.
Last week bankers priced four IPOs, but had to cut offering terms on three to get them out the door. (Yawn.)
They were Crystal River Capital (NYSE: CRY), a REIT; Chart Industries (Nasdaq: GTLS), a manufacturer of engineered equipment, and GeoMet (Nasdaq: GMET), an oil and gas exploration company. Here’s how they did:
- Crystal River priced 9.1 million shares at $23 each, down from a filing of $26 to $29 per share. It started trading on Friday and closed at $22.46, DOWN 2.35 percent from its initial offering price.
- Chart Industries priced 12.5 million shares at $15 each, down from a filing of $19 to $21 per share. It started trading on Wednesday and closed Friday at $15.10, UP 0.67 percent from its initial offering price.
- GeoMet priced 5 million shares at $10 each, down from a filing of 6 million shares at $10 to $12 each. It started trading on Friday and closed at $10.97, UP 9.70 percent from its initial offering price.
With the price of crude oil still around $73 a barrel, it’s probably not that surprising that GeoMet’s IPO scored a gain of nearly 10 percent in its first day of trading.
WNS (Holdings) Ltd. (NYSE: WNS), an offshore provider of business process outsourcing, priced 11.2 million shares at $20 each, up from 11.4 million shares at $18 to $20 each. It started trading on Wednesday and closed Friday at $24.70, UP 23.5 percent from its initial offering price.
Worth noting: The stock market wrapped up last week with a rally after some weak numbers on GDP growth increased hopes that the Fed may soon stop raising interest rates. Investors, it seems, think that 17 rate increases in two years might be more than enough.
For the week, the Dow Jones industrial average was up 3.2 percent, while the Standard & Poor’s 500 Index advanced 3.1 percent. The Nasdaq, the IPO market’s barometer, finished the week with a gain of 3.7 percent.
The future of the IPO market can be glimpsed by watching the lines in front of the filing window at the U.S. Securities and Exchange Commission. Over the last four weeks, it’s been almost as busy as the box office of a Broadway hit. Companies have been filing to go public at the rate of better than one a day. Last week, the pace was even busier than that.
Eight companies filed to go public to raise about $1.1 million, according to records available through the close of business on Friday, July 28. (Please see “IPO Traffic.”) That increased July’s traffic to 30 companies that have filed for IPOs. They hope to raise about $6 billion.
That’s remarkable when one considers the following:
- The Nasdaq Composite Index hit a 14-month closing low on July 14 at 2,037.35 and did it again on July 21, when it ended at 2,020.39.
- During July, bankers were only able to price 12 IPOs that raised $1.6 billion.
- They stumbled coming out of the starting gate. Six of the 12 IPOs closed their opening day below their initial offering prices.
- The average opening-day gain for July’s 12 IPOs was 1.98 percent.
Numbers such as this aren’t what dreams are made of.
Nevertheless, this is Wall Street.
And the message is: People are looking for the market to turn, and when it does, the IPO pipeline will be ready to feed the new-issues calendar.
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