The IPO Buzz: Open A New Window

All eyes will be on the filing window at the U.S. Securities and Exchange Commission when the agency opens for business on Monday morning. IPO professionals expect that at least a few IPO candidates will file pricing terms. That would set the stage for some deals to get done in a market that spent most of November idling at the gate. (Fans of “Mame” just can’t help themselves if they hum Broadway genius Jerry Herman’s tunes “Open A New Window” and “We Need A Little Christmas” at this time of year.)

WildHorse Resource Development (WRD-proposed) is one name on the watch list. IPO pros are waiting for WildHorse, a Texas and Louisiana oil and gas play, to amend its preliminary prospectus by filing the number of shares and the price range. The financial press has noted that the prospect of looser regulation under the Trump administration could be viewed as beneficial for energy IPOs.

Presidio Inc., a cloud company that caters to the middle market, caused a flurry of excitement when it filed to go public last week. No terms were filed, but the IPO’s size is estimated at $100 million. The company also has not filed a proposed symbol.  Presidio is owned by the private-equity firm, Apollo Global Management.

The biggest noise came the week before Thanksgiving from Snap Inc., with headlines galore about the confidential IPO filing by the parent of Snapchat, the mobile messaging service popular with teens and millennials.

Reefer Madness

Only one IPO – the medical marijuana REIT – has a firm pricing date this week. Innovative Industrial Properties (IIPR – proposed) is scheduled for pricing on Wednesday night, Nov. 30th, to trade on Thursday, Dec. 1st, on the New York Stock Exchange. The company was expected to go public last week. On Friday, the IPO was cut in size to 5 million shares – down from its original scope of 8.8 million shares. The proposed price – $20 per share – stayed the same. The IPO is expected to raise $100 million.

Eagleline Acquisition (IGLEU – proposed) is another carryover on this week’s IPO calendar, with a pricing date listed only as “the week of Nov. 28,” according to Wall Street pros. The “blank check” company’s focus will be on investments in healthcare and housing for the elderly. This is an offering of 15 million units at $10 each to trade on the NASDAQ.

Priming the Pump

The stock market’s climate is warm and friendly for IPOs. The three major U.S. stock indexes roared to record highs again last week, ending Friday’s abbreviated trading session at historic peaks.

 The Dow Jones Industrial Average jumped above 19,000 for the first time in a week cut short by the Thanksgiving holiday. Friday’s close marked a three-week rally since Election Day on Nov. 8.

The NASDAQ Composite Index, the barometer of the IPO market, is up 7.82 percent for the year to date. Since Nov. 8, the NASDAQ has climbed nearly 4 percent.

In 2016, IPOs have outperformed the NASDAQ, with a total return of UP 37.92 percent on average from issue price, according to the IPO Scorecard.

A Lean November

It’s not unusual for the IPO market to come almost to a standstill in November in an election year.  It’s a classic case of Wall Street’s aversion to uncertainty. And in the two previous election years, some unusual circumstances held sway: In November 2008, Wall Street was reeling from the financial crisis and the collapse of Lehman Brothers in mid-September that year. In November 2012, Hurricane Sandy disrupted business on Wall Street, forcing legions of bankers and their clients from their offices and homes in Manhattan and elsewhere in the Tri-State region.

Only two IPOs were priced this November – Smart Sand, up about 13.2 percent from its IPO price, and GDS Holdings Ltd., up 3.3 percent from its IPO price. IPOs were, of course, almost an afterthought in a month when the outcome of the U.S. presidential election dominated headlines around the world.

Looking Ahead

For the week of Dec. 5th, only one IPO is confirmed: Polar Power (POLA – proposed). But that could change when the SEC’s filing window pops open on Monday morning.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinion.