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 toward 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
Several games were played last week, with all but one scoring wins. The players are ranked below, according to their returns from their offering price to the close of their first trading day.

Winner: ExlService Holdings

• Ticker: Nasdaq: EXLS
• Industry: Offshore business outsourcing
• Deal terms: 5 million shares, $13.50 per share
• Lead managers: Citigroup, Goldman Sachs, Merrill Lynch, and Thomas Weisel
• Filed: Dec. 6, 2004
• Opening day: Oct. 20, opened at $15.95, closed at $18.84, 39.6% gain
• Bleacher banter: Priced above its expected range of $10-$12

First runner-up: Stanley

• Ticker: NYSE: SXE
• Industry: Government consultant
• Deal terms: 6.3 million shares, $13 per share
• Lead manager: Citigroup
• Filed: May 12
• Opening day: Oct. 18, opened at $16.50, closed at $15.50, 19.2% gain
• Bleacher banter: Priced at midpoint of its expected range

Second runner-up: First Mercury Financial

• Ticker: NYSE: FMR
• Industry: Insurance underwriter
• Deal terms: 9.7 million shares, $17 per share
• Lead managers: JPMorgan Chase and Keefe, Bruyette & Woods
• Filed: May 31
• Opening day: Oct. 18, opened at $19, closed at $19.50, 14.7% gain
• Bleacher banter: Priced at midpoint of its expected range

Susser Holdings

• Ticker: Nasdaq: SUSS
• Industry: Convenience store operator
• Deal terms: Six million shares, $16.50 per share
• Lead managers: Merrill Lynch, JPMorgan Chase, and Jefferies
• Filed: May 12
• Opening day: Oct. 19, opened at $17.10, closed at $18, 9.1% gain
• Bleacher banter: Priced close to low end of its expected $16-$18 range

Universal Compression Partners

• Ticker: Nasdaq: UCLP
• Industry: Natural gas services provider
• Deal terms: 5.5 million shares, $21 per share
• Lead managers: Merrill Lynch and Lehman Brothers
• Filed: June 27
• Opening day: Oct. 17, opened at $22.50, closed at $22.53, 7.3% gain
• Bleacher banter: Priced at high end of its expected range

Trubion Pharmaceuticals

• Ticker: Nasdaq: TRBN
• Industry: Biotech
• Deal terms: 4 million shares, $13 per share
• Lead managers: Morgan Stanley, Bank of America, Pacific Growth Equities, and Lazard Capital Markets
• Filed: June 2
• Opening day: Oct. 18, opened flat, closed at $13.09, 0.7% gain
• Bleacher banter: Priced at low end of its expected range

Loser: LeMaitre Vascular

• Ticker: Nasdaq: LMAT
• Industry: Medical device supplier
• Deal terms: 6 million shares, $7 per share
• Lead managers: Goldman Sachs, CIBC World Markets, Cowen & Company, and Thomas Weisel
• Filed: April 26
• Opening day: Oct. 19, opened at $6.50, closed at $6.20, 11.4% loss
• Bleacher banter: Priced below its expected range of $8-$10

On deck
A number of major IPOs are slated for the coming week, including the following:

Achillion Pharmaceuticals

• Proposed ticker: Nasdaq: ACHN
• Industry: Biotech
• Proposed deal terms: 4.5 million shares, $14-$16 per share
• Lead managers: Cowen & Company, CIBC World Markets, and JMP Securities
• Filed: March 31

Cadence Pharmaceuticals

• Proposed ticker: Nasdaq: CADX
• Industry: Biotech
• Proposed deal terms: 6 million shares, $11-$13 per share
• Lead managers: Merrill Lynch, Deutsche Bank, Pacific Growth Equities, and JMP Securities
• Filed: July 17

Catalyst Pharmaceutical Partners

• Proposed ticker: Nasdaq: CPRX
• Industry: Biotech
• Proposed deal terms: 3 million shares, $11-$13 per share
• Lead managers: First Albany Capital and Stifel Nicolaus
• Filed: July 25

Douglas Emmett

• Proposed ticker: NYSE: DEI
• Industry: Property manager
• Proposed deal terms: 55 million shares, $19-$21 per share
• Lead managers: Lehman Brothers, Merrill Lynch, and Citigroup
• Filed: June 16

Eagle Rock Energy Partners

• Proposed ticker: Nasdaq: EROC
• Industry: Natural-gas producer
• Proposed deal terms: 12.5 million units, $19-$21 per unit
• Lead managers: UBS, Lehman Brothers, and Goldman Sachs
• Filed: June 6

GateHouse Media

• Proposed ticker: NYSE: GHS
• Industry: Publishing-services provider
• Proposed deal terms: 11.5 million shares, $16-$18 per share
• Lead managers: Goldman Sachs and Wachovia
• Filed: July 21

Home Inns & Hotel Management

• Proposed ticker: Nasdaq: HMIN
• Industry: Chinese economy-hotel operator
• Proposed deal terms: 7.9 million ADSs, $10-$12 per share
• Lead managers: Credit Suisse, Merrill Lynch, and Deutsche Bank
• Filed: Oct. 4

Optium Corporation

• Proposed ticker: Nasdaq: OPTM
• Industry: Telecom
• Proposed deal terms: 5.2 million shares, $13.50-$15.50 per share
• Lead managers: Morgan Stanley, Credit Suisse, Cowen, and Jefferies
• Filed: June 29

Game of the week
Watch the REIT. If for no other reason than to escape the monotony of a trio of biotechs coming public this week, Douglas Emmett offers something decidedly different.

The 35-year-old California-based REIT focuses on high-end office and multifamily properties in Los Angeles and Honolulu. Douglas Emmett's 55 properties generate approximately $373 million in annual rent, and the company believes that a shortage of supply allows it to provide continued cash flow growth. The company plans to pay a yearly dividend of $0.70 per share. The offering is expected to begin trading on Wednesday and be one of the year's largest, raising $1.1 billion.

As always, make sure you do your own warmups and read a company's offering documents before getting in on the game!

Warming up in the bullpen

• Innophos Holdings, a phosphate producer, announced deal terms of 8.7 million shares, offered at $14-$16 per share. The deal is expected to price the week of Oct. 30, and the lead managers are Credit Suisse, Bear Stearns, and UBS.
  
  
• Metabolix, a biotech, announced deal terms of 5.8 million shares, offered at $12-$14 per share. The lead manager is Piper Jaffray.
  
  
• OneBeacon Insurance Group, an insurance company, announced deal terms of 20 million shares, offered at $24-$26 per share. The lead manager is Lehman Brothers.

Sent down to the minors
Asthmatx is postponing its offering, originally scheduled for last week.

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

Time Warner Cable

• Proposed ticker: NYSE: TWC
• Industry: Cable operator
• Proposed deal terms: Not yet determined
• Lead managers: Not yet determined
• Filed: Oct. 18

Disabled list
BioVex is withdrawing their offering, citing "unfavorable market conditions."

Current champions
Meet our current 2006 champs. Among companies that went public this calendar year, these firms' percentage returns from their offer prices to last week's closing price rank them as the top five players:

Current benchwarmers
Now meet our current 2006 benchwarmers -- that's nicer to say than "losers," isn't it? Among companies that went public this calendar year, these firms' percentage returns from their offer prices to last week's closing price 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 market fared a bit better than the general market. The First Trust IPOX 100 (FPX), an ETF, gained 1.2%, and the IPO Plus Aftermarket (IPOSX), a mutual fund, edged up 0.1%. Meanwhile, the Nasdaq slipped 0.6%, and the Russell 2000 slipped 0.1%.

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.

Bank of America and JPMorgan Chase are Motley Fool Income Investor picks. To discover our full list of dynamic dividend payers, try our premium income newsletter service 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 holds no financial position in any firms or funds mentioned here. The Fool has a disclosure policy.