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
Players had time to rest during last week's holiday period, in which no games took place.

On deck
Three major IPOs are slated for the coming week:

Allied World Assurance

• Proposed ticker: NYSE: AWH
• Industry: Property and casualty insurance, reinsurance
• Proposed deal terms: $34-$37 per share; 8.8 million shares
• Lead manager: Goldman Sachs

Cowen Group

• Proposed ticker: Nasdaq: COWN
• Industry: Investment banking
• Proposed deal terms: $19-$21 per share; 11.2 million shares
• Lead managers: Cowen & Company, Credit Suisse, and Merrill Lynch

Valero GP Holdings

• Proposed ticker: NYSE: VEH
• Industry: Oil and gas
• Proposed deal terms: $22-$24 per share; 17.3 million shares
• Lead underwriter: Lehman Brothers

Game of the week
While the sexy energy sector may well make Valero the heartthrob of the new-issue market this week, Cowen merits the closest look.

The boutique investment bank, dating to 1918, has its own rich New York City history of catering to high-net-worth individuals. It's spinning off from SocieteGenerale, which acquired the firm in 1998. Cowen will not receive any of the proceeds but will make a cash payment to its French parent. Similar firms have done well in recent public offerings, including Greenhill (NYSE:GHL) and Lazard (NYSE:LAZ). But it's no longer certain whether these offerings' window of success remains open.

The current economic outlook of higher rates and slowing growth has affected the financial sector. Thomas Weisel (NASDAQ:TWPG), which came public in early February, is now down almost 5% from its first day of trading. Cowen's fate may influence still more competitors intending to enter the game, including Ryan Beck, Evercore, and Keefe Bruyette & Woods.

Warming up in the bullpen
Buckeye GP Holdings, a petroleum pipeline operator, increased the size of its proposed offering from 12.5 million units to 14.1 million units and set a price range of $19-$21. Lead managers include Goldman Sachs, Merrill Lynch, Citigroup Global Markets, and UBS.

Sent down to the minors
After a lengthy stint in the on-deck circle, Biersch Brewery, an operator of casual restaurants (and probably a good choice for postgame dining), is going on standby notice, citing poor market conditions.

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

Oculus Innovative Sciences

• Proposed ticker: Nasdaq: OCLS
• Industry: Medical products related to wound care
• Proposed deal terms: As much as $80.5 million
• Lead managers: A.G. Edwards, Jefferies & Co.
• Filed: July 3

Stallion Oilfield

• Proposed ticker: Nasdaq: SOFS
• Industry: Oil well site support and construction
• Proposed deal terms: As much as $287.5 million
• Lead managers: Lehman Brothers, Credit Suisse, and UBS
• Filed: July 3

WNS Holdings Ltd.

• Proposed ticker: NYSE: WNS
• Industry: Indian offshore business process outsourcing
• Proposed deal terms: 10.4 million American depositary shares priced between $18 and $20
• Lead managers: Morgan Stanley, Deutsche Bank, Merrill Lynch, Citigroup, and UBS
• Filed: July 3

Tube City IMS

• Proposed ticker: Nasdaq: TCMS
• Industry: Steel mill outsourcing services
• Proposed deal terms: Not specified yet
• Lead managers: Credit Suisse, UBS, Jefferies & Co.
• Filed: July 7

Disabled list
These former wannabes announced their withdrawals of planned offerings without citing reasons: Clearwire, Stroud Energy, and QuatrxPharmaceuticals.

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, First Trust IPOX 100 (AMEX:FPX), an ETF, and the IPO Plus Aftermarket (FUND:IPOSX), a mutual fund, lost 2.5% and 2.2%, respectively. They were slightly outscored by the Nasdaq; it dropped 1.9%, while the Russell 2000 slipped 2.1%.

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

We're publicly offering further Foolishness:

• IPO Market Gets Loop-y
• IPOs' Dirty Little Secret

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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.