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
Winner: AeroVironment

• Ticker: Nasdaq: AVAV
• Industry: Aircraft systems provider
• Deal terms: 6.7 million shares, $17 per share
• Lead manager: Goldman Sachs
• Filed: Sept. 28
• Opening day: Jan. 23, opened at $25, closed at $23.93, 40.8% gain
• Bleacher banter: Priced above its projected range of $14-$16 per share

Meruelo Maddux Properties

• Ticker: Nasdaq: MMPI
• Industry: California real estate developer
• Deal terms: 40 million shares, $10 per share
• Lead manager: Friedman Billings
• Filed: Sept. 19
• Opening day: Jan. 25, opened at $10.25, closed at $10.60, 6% gain
• Bleacher banter: Priced below its projected range of $12-$14 per share

Loser: Oculus Innovative Sciences

• Ticker: Nasdaq: OCLS
• Industry: Health products manufacturer
• Deal terms: 3.5 million shares, $8 per share
• Lead manager: Roth Capital
• Filed: July 3
• Opening day: Jan. 25, opened at $7.75, closed at $7.80, 2.5% loss
• Bleacher banter: Priced at low end of its projected range; deal carried over from prior week

On deck

Animal Health International

• Proposed ticker: Nasdaq: AHII
• Industry: Animal health products distributor
• Proposed deal terms: 11.8 million shares, $10-$12 per share
• Lead manager: J.P. Morgan
• Filed: Sept. 28

Duncan Energy Partners L.P.

• Proposed ticker: NYSE: DEP
• Industry: Oil and gas services provider
• Proposed deal terms: 13 million units, $19-$21 per unit
• Lead managers: Lehman Brothers and UBS
• Filed: Nov. 2

Employers Holdings

• Proposed ticker: NYSE: EIG
• Industry: Insurance provider
• Proposed deal terms: 23 million shares, $14-$16 per share
• Lead manager: J.P. Morgan
• Filed: Dec. 4

HFF

• Proposed ticker: NYSE: HF
• Industry: Real estate services provider
• Proposed deal terms: 14.3 million shares, $15-$17 per share
• Lead managers: Goldman Sachs and Morgan Stanley
• Filed: Nov. 9

Molecular Insight Pharmaceuticals

• Proposed ticker: Nasdaq: MIPI
• Industry: Biotech
• Proposed deal terms: 5 million shares, $14-$16 per share
• Lead managers: RBC Capital Markets and Jefferies
• Filed: Nov. 8

XTENT

• Proposed ticker: Nasdaq: XTNT
• Industry: Medical device maker
• Proposed deal terms: 4.7 million shares, $16-$18 per share
• Lead manager: Piper Jaffray
• Filed: Nov. 8

Game of the Week
Let's take a look at Employers Holdings in a week lacking any apparent superstars.

Employers Holdings, a Reno, Nev.-based company formed in 2000, provides workers' compensation insurance to small businesses primarily located in California and Nevada. The company had a total of $3.2 billion assets as of Sept. 30, 2006.

While the subject of insurance may put some people to sleep, the company's financials do not. For the nine months ended Sept. 30, Employers generated $116.5 million of net income and $359.2 million of total revenues, compared to $63.1 million of net income and $371 million of total revenues for the prior year.

The company believes that, compared to the insurance industry in general, it faces fewer competitors, more attractive pricing, and strong repeat business in the market it serves. Products are distributed through independent agents and certain distribution relationships.

Shares are expected to begin trading on 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
Accuray, a biotech, announced deal terms of 13.3 million shares at $14-$16 per share. The lead managers are J.P. Morgan and UBS.

Optimer Pharmaceuticals, a biotech, announced deal terms of 5.25 million shares at $12-$14 per share. The lead managers are Piper Jaffray and Jefferies.

VeriChip Corporation, a radio frequency identification system provider, announced deal terms of 4.3 million shares at $6.50-$8.50 per share. The lead manager is Merriman Curhan Ford.

Sent down to the minors
No company announced postponements of planned offerings last week.

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

Haynes International

• Proposed ticker: Nasdaq: HAYN
• Industry: Alloy manufacturer
• Proposed deal terms: Not yet determined
• Lead manager: J.P. Morgan
• Filed: Jan. 25

Monotype Imaging

• Proposed ticker: Nasdaq: TYPE
• Industry: Imaging solutions provider
• Proposed deal terms: Not yet determined
• Lead manager: Banc of America
• Filed: Jan. 26

Neutral Tandem

• Proposed ticker: Nasdaq: TNDM
• Industry: Telecom
• Proposed deal terms: Not yet determined
• Lead manager: Morgan Stanley
• Filed: Jan. 22

Synta Pharmaceuticals

• Proposed ticker: Nasdaq: SNTA
• Industry: Biotech
• Proposed deal terms: 6 million shares, $14-$16 per share; expected to price week of Feb. 5
• Lead managers: Bear Stearns and Lehman Brothers
• Filed: Jan. 23

Disabled list
No company withdrew a planned offering 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:

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:

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 buying season tickets.

Last week, the IPO Plus Aftermarket (FUND:IPOSX), a mutual fund, raced ahead 1.2%, while both the First Trust IPOX 100 (AMEX:FPX), an ETF, and the Russell 2000 advanced 0.4%. The Nasdaq lagged behind, slipping 0.6%.

Keep reading the Fool to see how your favorite players perform as they mature!

We're publicly offering further Foolishness:

• The IPO Lock-Up Period

Sources: 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 holds no financial position in any firms or funds mentioned here. Omrix Biopharmaceuticals is a Motley Fool Rule Breakers recommendation. JPMorgan Chase and Bank of America are Income Investor picks. The Fool has a disclosure policy.