The stock market’s sharp sell-off started in late December and ran into late January. That’s one of the IPO market’s traditional downtimes. They are from mid-December to mid- to late January, a two-week period surrounding the July 4th holiday and from mid-August to mid- to late-September.
On Dec. 26, 2006, the Nasdaq Composite Index closed at 2,724.41, its most recent high, marking the end of the Santa Claus rally. By the end of trading on Jan. 22, the Nasdaq had skidded to a closing low at 2,292.27 — a drop of 15.9 percent.
Only three IPOs have gotten out the door so far in January, according to U.S. Securities and Exchange Commission filings. (This excludes six “blank check” offerings.) These companies made their debuts while most in the IPO market were just stirring from a long winter’s nap.
The following are examples of the mid-December to mid- to late January IPO traffic in the past four years, with the dates looking like bookends on the market’s winter break:
2007 to 2008: The last IPO in 2007 was priced on Dec. 16 (NetSuite – NYSE: N) and the first IPO of 2008 was priced on Jan. 17 (Williams Pipeline Partners – NYSE WMZ).
2006 to 2007: The last IPO in 2006 was priced on Dec. 20 (Universal Power Group – NYSE: UPG) and the first IPO of 2007 was priced on Jan. 11 (Legacy Reserves LP – Nasdaq: LGCY).
2005 to 2006: The last IPO in 2005 was priced on Dec. 21 (NUCRYST Pharmaceuticals – Nasdaq: NCST) and the first IPO of 2006 was priced on Jan. 12 (Linn Energy LLC – Nasdaq: LINE).
2004 to 2005: The last IPO in 2004 was priced on Dec. 16 (MHI Hospitality – NYSE: MDH) and the first IPO of 2005 was priced on Jan. 20 (Celanese – NYSE: CE).
The stock market’s bone-crushing sell-off has made itself felt in many areas, but not the IPO calendar. It can cop out by claiming “seasonal factors” for its slowdown. Some of that is true, but let’s face it; the stock market had a hand.
A Little Sunshine
This week shows six deals – two “blank checks,” two carryovers and two new faces at the IPO window. However, there is a word of caution.
There is a deal on the equities calendar (IPO and secondary) that some call an IPO. It is ReneSol, a Chinese manufacturer of solar wafers. Its shares are traded on the Alternative Investment Market of the London Stock Exchange under the symbol of SOLA.L. It trades at about £3.90, about US$7.50 per share or US$15 per American Depositary Share. Each ADS represents two common shares. You can buy all you want on the AIM ahead of the U.S. offering.