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 games
No games were played last week.

On deck
No offerings are scheduled for this week.

It's not the state of the market, but the typical seasonal slowdown that accounts for the quiet calendar. The new-issue market takes a holiday, and trading generally slows down, from the end of August until the second week of September. Keep current with your IPO reading, though. A busy fall season approaches, with roughly 60 companies filing plans to go public within just the past several weeks.

Warming up in the bullpen

  • Abraxas Energy Partners, an oil and gas partnership, revised its listing terms to offer 2.4 million shares, increased from 2 million shares. The lead managers are A.E. Edwards and RBC Capital Markets.
  • McLeod USA, a communications services provider, revised its listing terms to offer 11.1 million shares, increased from 10.7 million shares. The lead managers are Deutsche Bank and Jefferies.
  • ZARS Pharma, a specialty pharmaceutical, announced deal terms of 5 million shares, at $14-$16 per share. The lead managers are Cowen and CIBC.

Sent down to the minors
No offerings were postponed.

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

Adnexus Therapeutics

  • Proposed ticker: Nasdaq: ADNX
  • Industry: Biotech
  • Proposed deal terms: Not yet determined
  • Lead managers: Lehman and UBS
  • Filed: Aug. 21

BioForm Medical

  • Proposed ticker: Nasdaq: BFRM
  • Industry: Medical aesthetics provider
  • Proposed deal terms: Not yet determined
  • Lead managers: JPMorgan and Piper Jaffray
  • Filed: Aug. 20

MedAssets

  • Proposed ticker: Nasdaq: MDAS
  • Industry: Health-care services provider
  • Proposed deal terms: Not yet determined
  • Lead managers: Morgan Stanley and Lehman
  • Filed: Aug. 24

Orion Energy Systems

  • Proposed ticker: Nasdaq: OESX
  • Industry: Energy-management systems provider
  • Proposed deal terms: Not yet determined
  • Lead manager: Thomas Weisel
  • Filed: Aug. 20

Precision Therapeutics

  • Proposed ticker: Nasdaq: PRET
  • Industry: Medical test developer
  • Proposed deal terms: Not yet determined
  • Lead managers: JPMorgan and Piper Jaffray
  • Filed: Aug. 24

Sonics

  • Proposed ticker: Nasdaq: SNCS
  • Industry: Semiconductor solutions provider
  • Proposed deal terms: Not yet determined
  • Lead manager: UBS
  • Filed: Aug. 24

Disabled list
Lexington Strategic Asset, a real estate operating company, and Photowatt Technologies, a solar-cell manufacturer, each withdrew their planned offerings, citing market conditions.

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

Ticker

Return

Description

IPO Date

First Solar

(Nasdaq: FSLR  )

+387.8%

Solar module provider

11/16/06

Riverbed Technology

(Nasdaq: RVBD  )

+350.7%

Tech

9/20/06

New Oriental Education

(NYSE: EDU  )

+249.9%

Chinese educational services

9/6/06

Mindray Medical

(NYSE: MR  )

+152.1%

Chinese medical device maker

9/25/06

VMware

(NYSE: VMW  )

+145.9%

Virtualization software provider

8/13/07

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

Ticker

Return

Description

IPO Date

Netlist

(Nasdaq: NLST  )

-70.1%

Memory device maker

11/29/06

MEDecision

(Nasdaq: MEDE  )

-59.5%

Medical software provider

12/12/06

Heely's

(Nasdaq: HLYS  )

-54.6%

Footwear maker

12/7/06

CBRE Realty Finance

(NYSE: CBF  )

-54.4%

Specialty finance REIT

9/27/06

Optium

(Nasdaq: OPTM  )

-53.9%

Fiber optics provider

10/26/06

Groupies & fan clubs
If you don't want to declare your loyalty 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've read their prospectuses before you buy season tickets.

Equities recovered some lost ground last week. Although the new-issue market was quiet, the First Trust IPOX 100 (AMEX: FPX  ) , an ETF, jumped 4.6%. The Nasdaq followed with a 2.9% increase, while the IPO Plus Aftermarket (FUND: IPOSX  ) , a mutual fund, rose 1.8%, and the Russell 2000 gained 1.6%. Keep reading the Fool to see how your favorite players perform as they mature!

We're publicly offering further Foolishness:

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's disclosure policy is too scrupulous to even steal a base.


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