For the record: The Nasdaq Composite Index, the barometer of the IPO market, closed at 2,627.94, DOWN 6.49 percent for the week. Nevertheless, it was still up 8.88 percent for the year and the best performer of all the major indexes. The Dow Jones Industrial Average was up 4.65 percent for the year and the S&P 500 was up 2.5 percent.
But here’s what happened in the Land of IPOs.
Bankers were able to price 13 deals, excluding three “blank check” offerings. There were three big winners -– proof that not everyone succumbed to the ugly weather. And yes, Virginia, there were some red-faced losers. Four deals were priced above their filing ranges, seven below range and that was the clue on what to expect when they started trading. Here’s a guideline:
Increase a deal – double my order
- American Public Education (Nasdaq: APEI), priced 4.7 million shares at $20 each on Thursday evening. That was well ABOVE its filing range. The original price range was $15 to $17 per share and increased to $18 to $19 per share. The IPO closed Friday at $35.92, UP 79.6 percent from its initial offering price.
- AirMedia Group (Nasdaq: AMCN) priced 15 million shares at $15 each on Tuesday evening. That was well ABOVE its filing range. The original price range was $9 to $11 per share and increased to $12 to $14 per share. The IPO closed Friday at $19.40, UP 29.3 percent from its initial offering price.
- SandRidge Energy (NYSE: SD), priced 28.7 million shares at $26 each on Monday evening. That was well ABOVE its filing range of 26 million shares at $22 to $24 each. The IPO closed Friday at $32.70 per share, UP 25.8 percent from its initial offering price.
Cut a deal, cancel my order
- ARYx Therapeutics (Nasdaq: ARYX), priced 5 million shares at $10 each on Tuesday evening. That was well BELOW its filing range. The original price range was $14 to $16 per share, then cut to $10. The IPO closed Friday at $7.85 per share, DOWN 21.5 percent from its initial offering price.
- ICx Technologies (Nasdaq: ICXT), priced 5 million shares at $16 each on Wednesday evening. That was BELOW its filing range of $17 to $19 per share. The IPO closed Friday at $12.60 per share, DOWN 21.3 percent from its initial offering price.
A veteran West Coast hedge fund manager once said, “All you need to know about (the aftermarket performance of) an IPO is to look at the front page of its prospectus.”
Coming a Cropper
Wall Street being what it is, there is always the unexpected. That turned out to be the case with last week’s once hot Chinese IPO – Agria (NYSE: GRO). The agribusiness company’s products include frozen sheep embryos and seedlings designed to thrive in various climates.
Agria priced 17.2 million shares at $16.50 each on Tuesday evening. That was on the high end of its $14.50- to $16.50-per-share filing range. The IPO opened on Wednesday morning at $17 and tanked to a low of $12 per share during its first day of trading. It closed Friday at $12.70 per share, DOWN 23.3 percent from its initial offering price.
That one fooled the experts. The SCOOP consensus call was for a 3-Star performance on its first day of trading. That one missed.
By the way, the SCOOP in IPOScoop is an acronym for (Wall) Street Consensus of Opening Premium. The ratings are a consensus of calls from investment professionals on how they expect an IPO to trade during its opening day in the market. The IPOScoop service is similar to Thomson First Call Research, which provides research and data from over 700 brokerage firms worldwide and publishes the consensus data as First Call estimates.
An Ambitious Calendar
Now it is on to this week, with a rocky stock market in the background. Wall Street’s bankers have posted an aggressive IPO calendar of 20 deals. They aim to raise nearly $4.9 billion.
The SCOOP experts don’t expect all the deals to make it to market and, for those that do, the consensus is — not too many fireworks — half carry a 1-Star SCOOP rating.
But there’s a way to sort the potential winners from losers. It is to look at the front page of the final prospectus and compare it with its earlier preliminary prospectus.
If priced above, “double my order.”
If priced below, “cancel my order.”
Last week was an example.