It's been more than a month since I last visited the new IPOs on Motley Fool CAPS, the Fool's investing intelligence community. After all, the beginning of the year is usually a bit slow for the capital markets. Now that we've given the bankers a chance to get some deals to the market, it's high time to check on what CAPS players think of some of these fresh issues.
According to Renaissance Capital's IPOHome.com website, we're coming off a pretty decent year for IPOs in 2006. Overall, there were 198 total deals, raising a total of $43 billion. That's still dwarfed by the go-go years of 1999 and 2000, each of which saw more than 400 IPOs raising more than double 2006's total proceeds. But it's also a good deal better than 2001-2003, in the aftermath of the bubble, a time during which slightly more than 200 total deals were done. Last year's hot issues included Riverbed Technology and Rule Breakers pick Omrix Biopharmaceuticals.
We're still early in the New Year, but below are five recent IPOs rated on CAPS. All still need more votes before they garner an official CAPS rating, but initial support looks strong across the board.
|
Stock |
Return |
Total |
CAPS |
CAPS Rating |
|---|---|---|---|---|
|
Employers Holdings |
17.9% |
2 |
2 |
|
|
Animal Health International |
16.8% |
3 |
3 |
|
|
HFF |
14.4% |
4 |
4 |
|
|
Duncan Energy Partners |
10.3% |
5 |
5 |
|
|
XTENT |
0% |
1 |
1 |
An employer worth holding
Employers Holdings is a recently converted mutual insurance company that focuses on workers compensation insurance in low- and medium-hazard industries. Morgan Stanley led the offering, supported by Cochran Caronia, Fox-Pitt, Kelton, and Keefe, Bruyette & Woods, banks that are particularly strong in the financial services industry. The deal priced at $17 per share, topping the original range of $14-$16.
Employers Holdings does more than three quarters of its business in California and much of the balance in Nevada. It competes with a number of firms in those markets, including AIG, Liberty Mutual, and Zenith National. The worker's comp insurance market is known for cyclicality, and downward pressure on rates for the first nine months of 2006 led to a decrease in premiums written versus 2005. Thanks to a loss and loss adjustment ratio that fell by nearly 50% -- helped by new California regulatory reforms -- net income rose 85%.
An early supporter of Employers Holdings on CAPS, rwdenney5, contributed:
"[This] is a good insurance company that has been around for quite awhile ... Prior to Nevada's deregulation a few years ago, EIG was the only player in the Nevada worker's comp industry. Since then they have had to find a smaller niche and have done so nicely. They now specialize in writing low to medium risk policies for small to medium sized businesses where the margins are slightly higher."
Take this IPO to heart
It was an eventful day yesterday for drug-eluting stents (DES), the market that XTENT calls home. A Wall Street Journal article floated the idea that the Centers for Medicare & Medicaid Services, the agency which controls the payment policies for Medicare and Medicaid, might reconsider its policy towards DES. Meanwhile, a press release from Boston Scientific revealed that a recent Wake Forest study showed DES offering lower risks of heart attack, death, and the need for re-intervention compared to bare metal stents.
At a total $5.3 billion, the DES market is currently dominated by behemoths like Johnson & Johnson and Boston Scientific. However, the products have recently come under fire for the possibility that they increase the risk of blood clots and heart attacks in certain patients. XTENT, which has developed stents that are customizable in both length and diameter, has not had its products approved by the FDA yet, and it does not expect to enter the U.S. market until the first half of 2010. Even so, a major change in DES regulation would have a major impact on XTENT's prospects.
Got some thoughts on these IPOs? Head over to CAPS, and help them earn their stripes. While you're there, check out other opinions from more than 21,000 CAPS members on the 3,700 stocks currently rated. CAPS is entirely free, and if that hasn't been medically proven good for your heart, at least you know it's good for your wallet.
Want more IPO action? Check out our previous roundup.
Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. He is currently ranked 4,688 out of 21,781 Fools on CAPS -- check him out. Johnson & Johnson is a Motley Fool Income Investor choice. The Fool's disclosure policy is always a promising offering.
