The IPO Buzz: No Time to Get Carried Away

But there’s a caution flag flying on the calendar that people may have missed.

 

Hudson Pacific Properties (HPP – proposed), based in Los Angeles, is a real estate investment trust focusing on owning, operating and acquiring high-quality office properties in select growth markets primarily in Northern and Southern California.

 

Bankers plan to offer 12.8 million shares at $17 to $19 each. The IPO it is expected to start trading on Thursday, June 24.

 

The IPO calendar has produced a total of 12 financial- related new issues this year, according to the U.S. Securities and Exchange Commission filings. Five have been from the real estate investment trust industry.

 

The 2010 REIT scorecard has not been good.

 

There was only one winner among the five, as of the close on Friday, June 18, 2010, and the group had an average loss of 3.38 percent.

 

Nevertheless, its industrial sector has sharply outperformed the major stock market indexes this year. The numbers at Friday’s close were:

 

Dow Jones Composite All REIT Index (Google Finance: .RCI) was up 12.3 percent for the year to date.

 

Fabrinet (FN – proposed), based in the Cayman Islands, is a provider of precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers.

 

Bankers plans to offer 8.5 million shares at $12 to $14 each; the IPO is expected to trade on Friday, June 25.

 

Worth noting: Fabrinet will offer 2.83 million shares and selling shareholders will offer 5.67 million shares

The company’s profit-and-loss statement showed revenues grew from $202 million for the physical year ended June 24, 2006, to $551.1 million for the physical year ended June 27, 2008. Then it hit a speed bump. Fabrinet reported revenues of $411.1 million for the physical year ended June 26, 2009.

 

Net income has been a different matter. Fabrinet’s bottom line was on a downward slop from its record high for the physical year ended June 29, 2007, of $49.7 million, or $1.60 EPS, to $31.3 million, or $1.00 EPS, for the physical year ended June 28, 2009.

 

Now back to the present. Happy to report that both Fabrinet’s top line and bottom line showed a remarkable recovery in its most recent quarter.

 

For the three months ending March 26, 2010, Fabrinet reported net income of $13.5 million, or 44 cents EPS, on revenues of $136.8 million, compared with net income of $3.4 million, or 11 cents EPS, on revenues of $84.4 million for the same period a year ago.

 

The IPO calendar has produced a total of 10 technology- related new issues this year. Its 2010 scorecard is passable. There were six winners among the 10 and the average gain was 1.84 percent.

 

This year’s technology IPOs outperformed its underlying index and other major stock market indexes as well. Here were the numbers at Friday’s close:

 

Dow Jones U.S. Technology Index (Google Finance: .DJUSTC) was down 0.97 percent over the year.

 

Resaca Exploitation (RSOX – actual, not proposed), based in Houston, is an independent oil and gas exploitation company. Its prospectus states:

 

“Our common stock is admitted to trading on the AIM market of the London Stock Exchange (since June 2008) under the symbols “RSOX” and “RSX,” and has been approved for listing on the NYSE Amex upon notice of issuance under the symbol “RSOX.” The last reported sale price of our common stock as reported on the AIM on June 4, 2010, was $3.10 per share (as adjusted for a one-for-five reverse stock split). We anticipate that the public offering price of our common stock will be between $3.20 and $3.60 per share.”

 

Many IPO services are reporting this offering as an IPO. It’s not – you can buy all you want ahead of Thursday’s expected trading date and, apparently, at a lower price.