Scouting the Latest IPOs

Just like opening day at the ballpark, investing in new IPOs holds the potential for shining promise and crushing disappointment. If you simply can't bear to just cheer on your favorites from the sidelines, at least be careful about investing in this league. Many new issues swing for the fences during their first trading days, only to slump once marketing hype has given way to mundane earnings reports.

Don't commit an error by stocking your entire portfolio with rookies. Allocate just a small percentage of your risk capital to IPOs. Scout your potential phenoms carefully, and be choosy about composing your own rotisserie league. Investing with an eye for a season extending long beyond opening day will reward you with quality players capable of staying in the game. With that in mind, we offer our Foolish scouting report of the latest IPOs.

Last week's game

ShoreTel

  • Ticker: Nasdaq: SHOR
  • Industry: Telecom
  • Deal terms: 7.9 million shares, $9.50 per share
  • Lead managers: Lehman and JPMorgan
  • Filed: Apr 13; pricing held over from last week
  • Opening day: July 3, opened at $10, closed at $12.15, 27.9% gain
  • Bleacher banter: Priced at midpoint of its proposed range; deal had first priced at $10.50 per share on June 27, but was then delayed due to a patent infringement suit by Mitel.

On deck
No games are slated for this week.

Game of the week
Go enjoy the beach again this week. Plenty of IPO filings are piling up, so take a prospectus or two with you. If you want to look trendy, make sure you take those of KKR and Och-Ziff, the latest alternative asset managers looking to cash in. If nothing else, they're always good for swatting flies.

Warming up in the bullpen
Airvana, a network infrastructure provider, announced deal terms of 8.3 million shares at $8-$10 per share. The lead manager is Morgan Stanley.

BladeLogic, a data center software provider, announced deal terms of 5 million shares at $12-$14 per share. The lead managers are Morgan Stanley and Merrill Lynch.

Concho Resources, an oil and natural gas company, announced deal terms of 21.2 million shares at $14-$16 per share. The lead managers are JP Morgan and Banc of America.

Encore Bancshares, a bank holding company, announced deal terms of 2 million shares at $20-$22 per share. The lead manager is Keefe Bruyette Woods.

Validus Holdings, a Bermuda-based insurer, announced deal terms of 15.7 million shares at $24-$26 per share. The lead managers are Goldman Sachs and Merrill Lynch.

Sent down to the minors
No other companies postponed offerings slated for last week.

Minor-league developments
Get ready, get set ... not yet! The latest major filings announced during the last week include:

Compellent Technologies

  • Proposed ticker: Nasdaq: CPLT
  • Industry: Network storage company
  • Proposed deal terms: Not yet determined
  • Lead manager: Morgan Stanley
  • Filed: July 2

Constant Contact

  • Proposed ticker: Nasdaq: CTCT
  • Industry: E-mail marketing firm
  • Proposed deal terms: Not yet determined
  • Lead manager: CIBC and Thomas Weisel
  • Filed: July 6

Fuqi International

  • Proposed ticker: Nasdaq: FUQI
  • Industry: Chinese jeweler
  • Proposed deal terms: Not yet determined
  • Lead manager: Merriman Curhan Ford
  • Filed: July 2

Horsehead Holding

  • Proposed ticker: Nasdaq: ZINC
  • Industry: Zinc producer
  • Proposed deal terms: Not yet determined
  • Lead manager: Friedman Billings
  • Filed: July 2

KKR

  • Proposed ticker: NYSE: KKR
  • Industry: Alternative Asset Manager
  • Proposed deal terms: Up to $1.25 billion
  • Lead managers: Morgan Stanley and Citigroup
  • Filed: July 3

Netsuite

  • Proposed ticker: Nasdaq: NETS
  • Industry: Business management software provider
  • Proposed deal terms: Not yet determined
  • Lead manager: Credit Suisse
  • Filed: July 2

Och-Ziff Capital Management

  • Proposed ticker: NYSE: OZM
  • Industry: Alternative asset manager
  • Proposed deal terms: Not yet determined
  • Lead managers: Goldman Sachs and Lehman
  • Filed: July 2

Perfect World

  • Proposed ticker: Nasdaq: PWRD
  • Industry: Chinese online video game developer
  • Proposed deal terms: Not yet determined
  • Lead managers: Morgan Stanley and Credit Suisse
  • Filed: July 2

ViewSonic

  • Proposed ticker: Nasdaq: VIEW
  • Industry: LCD product manufacturer
  • Proposed deal terms: Not yet determined
  • Lead managers: JPMorgan and Banc of America
  • Filed: July 2

Disabled list
Picis
, a hospital software provider, withdrew its planned offering, citing changes in its financing and strategic plans.

Champions
Meet our current champs. Among companies that went public during the last twelve months, these firms' percentage returns from their offer prices to their most recent closing prices rank them as the top five players:

Company

Return

Description

IPO Date

First Solar (Nasdaq: FSLR  )

381.5%

Solar module provider

11/16/06

Riverbed Technology (Nasdaq: RVBD  )

368.6%

Tech

9/20/06

New Oriental Education (NYSE: EDU  )

277.3%

Chinese educational services

9/6/06

Trina Solar (NYSE: TSL  )

213.9%

Chinese solar module provider

12/18/06

Home Inns & Hotels (Nasdaq: HMIN  )

151.3%

Chinese hotel operator

10/25/06

Benchwarmers
Now meet our current benchwarmers -- that's nicer to say than "losers," isn't it?  Among companies that went public during the last twelve months, these firms' percentage returns from their offer prices to their most recent closing prices rank them as the bottom five players:

Company

Return

Description

IPO Date

Netlist (Nasdaq: NLST  )

(63.0%)

Memory device maker

11/29/06

MEDecision (Nasdaq: MEDE  )

(52.3%)

Medical software provider

12/12/06

Achillion Pharmaceuticals (Nasdaq: ACHN  )

(49.1%)

Drug developer

10/25/06

Allot Communications (Nasdaq: ALLT  )

(45.4%)

Israeli tech

11/15/06

Xinhua Finance Media (Nasdaq: XFML  )

(40.7%)

Chinese media company

3/8/07

Groupies & fan clubs
If you don't want to declare your loyalties for specific players, but still want to enjoy the action, consider subscribing to an IPO-focused mutual fund or exchange-traded fund. Of course, do your scouting homework here, too, and make sure you read their prospectuses before buying season tickets.

All our players celebrated last week, with the IPO players slightly outpacing the general market. The prior week's laggard, First Trust IPOX 100 (AMEX: FPX  ) , an ETF, claimed first place with an increase of 2.8%. Meanwhile, the IPO Plus Aftermarket (FUND: IPOSX  ) and the Nasdaq each rose 2.4%, followed by the Russell 2000, which gained 2.2%. Keep reading the Fool to see how your favorite players perform as they mature!

We're publicly offering further Foolishness:

Sources: IPO Scoop.com, Renaissance Capital's IPOhome.com, SEC filings, Reuters.

New Oriental Education is a Global Gains recommendation. JPMorgan Chase is anIncome Investor pick. Try any of our Foolish newsletters free for 30 days.

Fool contributor S.J. Caplan roots for the Cleveland Indians when her husband is watching, and for the Boston Red Sox when he leaves the room. She owns shares of Goldman Sachs, but otherwise holds no financial position in any firms or funds mentioned here. The Fool has a disclosure policy.


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