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 just cheering 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 games
No games were played last week.

On deck

Airvana

  • Proposed ticker: Nasdaq: AIRV
  • Industry: Network infrastructure provider
  • Proposed deal terms: 8.3 million shares, $8-$10 per share
  • Lead manager: Morgan Stanley
  • Filed: April 19

Dice Holdings

  • Proposed ticker: NYSE: DHX
  • Industry: Career website operator
  • Proposed deal terms: 16.7 million shares, $11-$13 per share
  • Lead managers: Credit Suisse and Morgan Stanley
  • Filed: April 5

Encore Bancshares

  • Proposed ticker: NYSE: EBTX
  • Industry: Bank holding company
  • Proposed deal terms: 2 million shares, $20-$22 per share
  • Lead manager: Keefe Bruyette Woods
  • Filed: May 8

hhgregg

  • Proposed ticker: NYSE: HGG
  • Industry: Appliance and electronics retailer
  • Proposed deal terms: 9.4 million shares, $15-$17 per share
  • Lead managers: Credit Suisse and Lehman
  • Filed: April 18

ImaRx Therapeutics

  • Proposed ticker: Nasdaq: IMRX
  • Industry: Drug developer
  • Proposed deal terms: 3 million shares, $6.50-$7.50 per share
  • Lead manager: Maxim
  • Filed: May 4

Limco-Piedmont

  • Proposed ticker: Nasdaq: LIMC
  • Industry: Aerospace maintenance provider
  • Proposed deal terms: 4 million shares, $9.50-$11.50 per share
  • Lead manager: Oppenheimer
  • Filed: April 17

MF Global

  • Proposed ticker: NYSE: MF
  • Industry: Futures and options broker
  • Proposed deal terms: 97.4 million shares, $36-$39 per share
  • Lead managers: Citigroup, JP Morgan, and Lehman
  • Filed: May 31

Netezza

  • Proposed ticker: NYSE: NZ
  • Industry: Data warehouse provider
  • Proposed deal terms: 9 million shares, $9-$11 per share
  • Lead managers: Credit Suisse and Morgan Stanley
  • Filed: March 22

Orbitz Worldwide

  • Proposed ticker: Nasdaq: OWW
  • Industry: Online travel company
  • Proposed deal terms: 34 million shares, $16-$18 per share
  • Lead managers: Morgan Stanley, Goldman Sachs, and Lehman
  • Filed: May 10

SemGroup Energy Partners

  • Proposed ticker: Nasdaq: SGLP
  • Industry: Energy partnership
  • Proposed deal terms: 12.5 million shares, $19-$21 per share
  • Lead managers: Citigroup and Merrill Lynch
  • Filed: March 9

Silver State Bancorp

  • Proposed ticker: Nasdaq: SSBX
  • Industry: Bank holding company
  • Proposed deal terms: 1.5 million shares, $19-$21 per share
  • Lead managers: Sandler O'Neill and Howe Barnes
  • Filed: April 13

Game of the week
OK, after a lull in the IPO calendar the last two weeks, things are heating up again this week. We're looking at a busy calendar, including interesting deals from Airvana, Dice, Netezza, and Orbitz, but MF Global may blow past them all to eclipse Blackstone (NYSE: BX  ) as the richest IPO of the year.

MF Global is a newly formed Bermuda-based holding company which holds the Man Financial brokerage unit of U.K. hedge fund manager Man Group. The company is the leading broker of exchange-listed futures and options in the world, and it provides execution and clearing services for exchange-traded and over-the-counter derivative products, as well as for other foreign exchange products and securities in the cash market. More than 130,000 active client accounts are serviced, including institutions, hedge funds, and other asset managers, as well as professional traders and private clients. Offices are located throughout the world, with the company's principal executive offices headquartered in New York.

According to data for the three months ended March 31, the company ranked first for the volume of exchanged or cleared transactions on various exchanges, including the Chicago Merc (NYSE: CME  ) , and the New York Merc (NYSE: NMX  ) . Revenue is derived from four main sources: commissions from agency execution; commissions from clearing services; markups from principal transactions, primarily consisting of client trades executed on a matched-principal basis; and interest income on cash balances in clients' accounts, most of which are maintained by clearing clients to meet margin requirements. For fiscal 2007, total revenue generated $5.73 billion and net income totaled $188 million, compared to total revenue of $2.6 billion and net income of $59.8 million for the prior year.

MF Global believes that its leading position demonstrates the success of its specialty-brokerage strategy, and feels that significant opportunities for business expansion lie ahead as it capitalizes on a trend toward diversified trading activities. The company has already grown through 17 acquisitions since 1989. Its business model is based on a diversified yet fully integrated structure that allows it to offer a variety of derivative and cash products across a broad range of trading markets through multiple distribution channels.

While there are many attractive reasons to think about investing in MF Global, bear in mind that while the company intends to file financial reports with the SEC and to discuss the longer-term trends in its business, it does not intend to provide quarterly or annual earnings guidance. Shares are expected to begin trading Thursday. As always, make sure you do your own warm-ups and read through a company's offering documents, including the risk factors, before getting in on the game. 

Warming up in the bullpen

  • Dolan Media, a business services company, announced deal terms of 10.5 million shares at $13.50-$15.50 per share. The lead managers are Goldman Sachs and Merrill Lynch.
  • Hireright, an employment screening software provider, announced deal terms of 4.4 million shares at $15-$17 per share. The lead manager is Credit Suisse.
  • Lululemon, a yoga apparel retailer, announced revised deal terms of 16.4 million shares, lowered from an originally planned 18.2 million shares, at $10-$12 per share. The lead managers are Goldman Sachs and Merrill Lynch.
  • MercadoLibre, a Latin American trading platform, announced deal terms of 16.1 million shares at $16-$18 per share. The lead managers are JP Morgan and Merrill Lynch.
  • Monotype Imaging, an imaging solutions provider, announced deal terms of 11 million shares at $13-$15 per share. The lead manager is Banc of America.
  • Perfect World, a Chinese online video game developer, announced deal terms of 11.8 million American depositary shares at $12-$14 per share. Each share will represent five ordinary shares. The lead managers are Morgan Stanley and Credit Suisse.
  • Rex Energy, an oil and gas company, announced deal terms of 14.7 million shares at $11-$13 per share. The lead manager is KeyBanc Capital.
  • VMWare, a virtualization services provider, announced deal terms of 33 million shares at $23-$25 per share. The lead managers are Citigroup, JP Morgan, and Lehman.

Sent down to the minors
No offerings were postponed last week.

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

Abraxas Energy Partners

  • Proposed ticker: Nasdaq: AXLP
  • Industry: Oil and gas company
  • Proposed deal terms: 2 million units, price not yet determined
  • Lead manager: A.G. Edwards
  • Filed: July 13

Approach Resources

  • Proposed ticker: Nasdaq: AREX
  • Industry: Oil and gas company
  • Proposed deal terms: Not yet determined
  • Lead managers: JP Morgan and A.G. Edwards
  • Filed: July 12

E-house (China) Holdings

  • Proposed ticker: NYSE: EJ
  • Industry: Chinese real estate company
  • Proposed deal terms: Not yet determined
  • Lead managers: Credit Suisse and Merrill Lynch
  • Filed: July 10

Intellon

  • Proposed ticker: Nasdaq: ITLN
  • Industry: Semiconductor company
  • Proposed deal terms: Not yet determined
  • Lead managers: Goldman Sachs and Deutsche Bank
  • Filed: July 12

Ulta Salon, Cosmetics & Fragrance

  • Proposed ticker: Nasdaq: ULTA
  • Industry: Salon products retailer
  • Proposed deal terms: Not yet determined
  • Lead managers: JP Morgan and Wachovia
  • Filed: July 9

Voltaire

  • Proposed ticker: Nasdaq: VOLT
  • Industry: Israeli tech
  • Proposed deal terms: 7.7 million shares, $12-$14 per share
  • Lead managers: JP Morgan and Merrill Lynch
  • Filed: July 10

Disabled list
No planned offerings were withdrawn last week.

Champions
Meet our current champs. Among companies that went public during the last 12 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  )

479.9%

Solar module provider

11/16/06

Riverbed Technology (Nasdaq: RVBD  )

372.1%

Tech

9/20/06

New Oriental Education (NYSE: EDU  )

290.3%

Chinese educational services

9/6/06

Trina Solar (NYSE: TSL  )

283.0%

Chinese solar module provider

12/18/06

JA Solar (Nasdaq: JASO  )

183.7%

Chinese solar cell provider

2/6/07

Benchwarmers
Now meet our current benchwarmers -- that's nicer to say than "losers," isn't it?  Among companies that went public during the last 12 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  )

(60.3%)

Memory device maker

11/29/06

MEDecision (Nasdaq: MEDE  )

(54.2%)

Medical software provider

12/12/06

Achillion Pharmaceuticals (Nasdaq: ACHN  )

(48.5%)

Drug developer

10/25/06

3SBio (Nasdaq: SSRX  )

(44.9%)

Chinese biotech

2/6/07

Allot Communications (Nasdaq: ALLT  )

(42.1%)

Israeli tech

11/15/06

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.

For the second consecutive week, all our players celebrated, with the IPO players outpacing the general market. The prior week's champ, First Trust IPOX 100 (AMEX: FPX  ) , an ETF, again claimed first place with an increase of 2.1%, while the IPO Plus Aftermarket (FUND: IPOSX  ) , a mutual fund, climbed 1.8%. The Nasdaq rose 1.5%, followed by the Russell 2000, which gained 0.4%. 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 Motley Fool Global Gains newsletter recommendation.

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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