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 the 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

  • Winner: VMware
    • Ticker: NYSE: VMW
    • Industry: Virtualization services provider
    • Deal terms: 33 million shares, $29 per share
    • Lead managers: Citigroup, JPMorgan, and Lehman
    • Filed: April 26
    • Opening day: Aug. 14, opened at $55, closed at $51, 75.9% gain
    • Bleacher banter: Priced at top of upwardly revised range; ranked as the year's largest one-day gain.

  • Cosan Limited
    • Ticker: NYSE: CZZ
    • Industry: Brazilian sugar and ethanol producer
    • Deal terms: 100 million shares, $10.50 per share
    • Lead managers: Credit Suisse, Goldman Sachs, and Morgan Stanley
    • Filed: June 25
    • Opening day: July 16, opened flat, closed flat, 0% gain
    • Bleacher banter: The offering was split between common stock and Brazilian depositary receipts and was priced just below Wednesday's closing price for the operating company, Cosan SA, which already trades on the Sao Paulo Stock Exchange.

On deck
No offerings are scheduled for this week.

Warming up in the bullpen
Compellent Technologies, a network-storage solutions provider, revised its listing terms so that it will now list on the NYSE under "CML," instead of on the Nasdaq under "CPLT." The lead manager is Morgan Stanley.

Sent down to the minors
CCS Medical and Tully's Coffee each 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 the following.

  • 3Par
    • Proposed ticker: Nasdaq: BLEX
    • Industry: Utility-storage solution provider
    • Proposed deal terms: Not yet determined
    • Lead managers: Goldman Sachs and Credit Suisse
    • Filed: Aug. 14
  • Biolex Therapeutics
    • Proposed ticker: Nasdaq: BLEX
    • Industry: Biopharmaceutical
    • Proposed deal terms: Not yet determined
    • Lead managers: Lehman and Deutsche Bank
    • Filed: Aug. 14
  • Chimera Investment
    • Proposed ticker: NYSE: CIM
    • Industry: Specialty finance company
    • Proposed deal terms: Not yet determined
    • Lead manager: Merrill Lynch
    • Filed: Aug. 17
  • Classmates Media
    • Proposed ticker: Nasdaq: CLAS
    • Industry: Online networking and marketing firm
    • Proposed deal terms: Not yet determined
    • Lead managers: Goldman Sachs and JPMorgan
    • Filed: Aug. 13
  • Concentric Medical
    • Proposed ticker: Nasdaq: CLOT
    • Industry: Medical-device maker
    • Proposed deal terms: Not yet determined
    • Lead managers: Merrill Lynch and Lehman
    • Filed: Aug. 17
  • Maxum Petroleum
    • Proposed ticker: NYSE: MXP
    • Industry: Petroleum products and services provider
    • Proposed deal terms: Not yet determined
    • Lead managers: Credit Suisse, Bear Stearns, and UBS
    • Filed: Aug. 13
  • Nanosphere
    • Proposed ticker: Nasdaq: NSPH
    • Industry: Molecular diagnostics platform operator
    • Proposed deal terms: Not yet determined
    • Lead manager: Credit Suisse
    • Filed: Aug. 13
  • Reliant Technologies
    • Proposed ticker: Nasdaq: RLNT
    • Industry: Medical-device maker
    • Proposed deal terms: Not yet determined
    • Lead managers: Piper Jaffray and Banc of America
    • Filed: Aug. 16
  • Titan Machinery
    • Proposed ticker: Nasdaq: TITN
    • Industry: Agricultural and construction equipment retailer
    • Proposed deal terms: Not yet determined
    • Lead managers: Craig-Hallum Capital and Robert Baird
    • Filed: Aug. 16
  • Value Financial Services
    • Proposed ticker: Nasdaq: VFSI
    • Industry: Consumer-loans provider
    • Proposed deal terms: Not yet determined
    • Lead managers: JMP Securities and Ferris, Baker Watts
    • Filed: Aug. 13

Disabled list
LNR Capital, a REIT, withdrew its planned offering, citing market conditions.

Champions
Meet our current champs. Among companies that went public during the past 12 months, these firms' percentage returns from their offer prices to their most recent closing prices rank them as the top five players.

Company

Ticker

Return

Description

IPO Date

First Solar

(Nasdaq: FSLR  )

326.1%

Solar-module provider

11/16/06

Riverbed Technology

(Nasdaq: RVBD  )

311.7%

Tech

9/20/06

New Oriental Education

(NYSE: EDU  )

237.2%

Chinese educational-services provider

9/6/06

Trina Solar

(NYSE: TSL  )

216.1%

Chinese solar-module provider

12/18/06

Capella Education

(Nasdaq: CPLA  )

141.8%

Online educational-services provider

11/9/06

Benchwarmers
Now meet our current benchwarmers -- that's nicer to say than "losers," isn't it? Among companies that went public during the past 12 months, these firms' percentage returns from their offer prices to their most recent closing prices rank them as the bottom five players.

Company

Ticker

Return

Description

IPO Date

Netlist

(Nasdaq: NLST  )

(72.4%)

Memory-device maker

11/29/06

MEDecision

(Nasdaq: MEDE  )

(60.7%)

Medical-software provider

12/12/06

CBRE Realty Finance

(NYSE: CBF  )

(60.6%)

Specialty-finance REIT

9/27/06

Heelys

(Nasdaq: HLYS  )

(57.4%)

Footwear maker

12/7/06

GSI Technology

(Nasdaq: GSIT  )

(54.4%)

Circuit maker

3/28/07

Groupies and 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 you buy season tickets.

In last week's volatile financial environment, the general market fared better than the IPO players, despite the spectacular debut of VMWare. The Russell 2000 scored first place with a mere 0.3% slip, followed by a 1.6% decline in the Nasdaq. The First Trust IPOX 100 (AMEX: FPX  ) , an ETF, fell 3.4%, while the IPO Plus Aftermarket (FUND: IPOSX  ) , a mutual fund, dropped 3.9%. 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.

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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