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
Several games were played, with an Israeli satellite company scoring the clearest victory. The players are ranked according to their returns from their offering price to the close of their first trading day.

Winner: RRSat Global Communications

• Ticker: Nasdaq: RRST
• Industry: Israeli telecom
• Deal terms: 3.8 million shares, $12.50 per share
• Lead managers: CIBC World Markets and Thomas Weisel
• Filed: Oct. 11
• Opening day: Nov. 1, opened at $14.02, closed at $15.03; 20.2% gain
• Bleacher banter: Priced within its proposed range

Globalstar

• Ticker: Nasdaq: GSAT
• Industry: Mobile satellite provider
• Deal terms: 7.5 million shares, $17 per share
• Lead managers: Wachovia and JPMorgan
• Filed: July 17
• Opening day: Nov. 2, opened at $17.01, closed at $17.52; 3.1% gain
• Bleacher banter: Priced at midpoint of its range; issued over 15% more shares offered than anticipated. The company started in the 1990s and filed for bankruptcy in 2002. Investor Thermo Capital Partners acquired it out of bankruptcy in 2004.

Innophos Holdings

• Ticker: Nasdaq: IPHS
• Industry: Phosphates producer
• Deal terms: 8.7 million shares, $12 per share
• Lead managers: Credit Suisse, Bear Stearns, and UBS
• Filed: July 19
• Opening day: Nov. 2, opened flat, closed at $12.07; 0.6% gain
• Bleacher banter: Priced at low end of lowered range of $12 to $13, revised on Nov. 2 from $14 to $16

Loser: ORBCOMM

• Ticker: Nasdaq: ORBC
• Industry: Satellite operator
• Deal terms: 9.2 million shares, $11 per share
• Lead managers: UBS, Morgan Stanley, and Banc of America
• Filed: May 12
• Opening day: Nov. 3, opened flat, closed at $7.75; 29.5% loss
• Bleacher banter: Priced below its expected $12-to-$14 range; issued 2 million fewer insider shares

On deck
A busy week for the IPO market includes these offerings:

ACA Capital Holdings

• Proposed ticker: NYSE: ACA
• Industry: Asset manager
• Proposed deal terms: 10.8 million shares, $15 to $17 per share
• Lead managers: Credit Suisse, JPMorgan, and Bear Stearns
• Filed: May 10

ActivBiotics

• Proposed ticker: Nasdaq: ACTV
• Industry: Biotech
• Proposed deal terms: 4 million shares, $12 to $14 per share
• Lead manager: HSBC
• Filed: Aug. 14

Canadian Solar

• Proposed ticker: Nasdaq: CSIQ
• Industry: Solar power systems manufacturer
• Proposed deal terms: 7.7 million shares, $13 to $15 per share
• Lead managers: Deutsche Bank and Lehman Brothers
• Filed: Oct. 23

Capella Education

• Proposed ticker: Nasdaq: CPLA
• Industry: Online education services provider
• Proposed deal terms: 4 million shares, $17.50 to $19.50 per share
• Lead manager: Credit Suisse
• Filed: Oct. 23

KBW

• Proposed ticker: NYSE: KBW
• Industry: Investment bank
• Proposed deal terms: 6.5 million shares, $19 to $21 per share
• Lead managers: Merrill Lynch and Keefe, Bruyette & Woods
• Filed: April 18, 2005

Metabolix

• Proposed ticker: Nasdaq: MBLX
• Industry: Biotech
• Proposed deal terms: 5.8 million shares, $12 to $14 per share
• Lead manager: Piper Jaffray
• Filed: July 14

OneBeacon Insurance Group

• Proposed ticker: NYSE: OB
• Industry: Insurance underwriter
• Proposed deal terms: 20 million shares, $24 to $26 per share
• Lead manager: Lehman Brothers
• Filed: Aug. 4

Physicians Formula Holdings

• Proposed ticker: Nasdaq: FACE
• Industry: Cosmetics manufacturer
• Proposed deal terms: 6.3 million shares, $15 to $17 per share
• Lead managers: Deutsche Bank and Citigroup
• Filed: Aug. 25

Thermage

• Proposed ticker: Nasdaq: THRM
• Industry: Medical device maker
• Proposed deal terms: 6 million shares, $11 to $13 per share
• Lead manager: Merrill Lynch
• Filed: Aug. 10

Games of the week
In a busy week of offerings, there's one that could be a tiebreaker among mixed results from debuts this year in its sector.

The game: KBW.

KBW is an investment bank that focuses on small- and mid-cap companies in the financial services industry. The company, based in Manhattan, has been around for 44 years and boasts solid and growing financial results. Clients include more than 489 banks, insurance companies, and other financial companies at home and around the world.

Two other investment banks have gone public in recent months. Stock in Thomas Weisel (NASDAQ:TWPG), a San Francisco-based investment bank catering to tech, health care, and consumer products, has risen 15% from the offering price in February. On the flip side, Cowen Group (NASDAQ:COWN), an investment bank specializing in health care, tech, media, telecom, and the consumer sectors, has slid 8.8% from its offering price in July. KBW's niche and strong record may swing the results to 2-1 in favor of winning investment-sector IPOs this year.

As always, make sure you do your own warm-ups and read a company's offering documents before getting into the game.

Warming up in the bullpen
Constellation Energy Partners, which develops oil and gas properties, announced deal terms of 4.5 million shares at $19 to $21 per share. The lead managers are Citigroup and Lehman Brothers.

First Solar, a solar-module manufacturer, announced deal terms of 17.5 million shares at $17 to $19 per share. The lead managers are Credit Suisse and Morgan Stanley.

Hansen, which makes medical devices, announced deal terms of 6.3 million shares at $11 to $13 per share. The lead managers are Morgan Stanley and JPMorgan.

KBR, a spinoff of Halliburton (NYSE:HAL), announced deal terms of 27.8 million shares at $15 to $17 per share. The lead managers are Credit Suisse, Goldman Sachs, and UBS.

MEDecision, a software provider, announced deal terms of 5.5 million shares at $14 to $16 per share. The lead manager is Cowen.

Netlist, which makes memory devices, announced deal terms of 6.3 million shares at $7 to $9 per share. The lead manager is Thomas Weisel.

The New York Mercantile Exchange, a commodity futures exchange, announced deal terms of 6 million shares at $48 to $52 per share. The deal is expected to price the week of Nov. 13 and the lead managers are JPMorgan and Merrill Lynch.

Spirit Aerosystems Holdings, an aircraft parts manufacturer, announced deal terms of 52 million shares at $23 to $25 per share. The lead managers are Credit Suisse, Goldman Sachs, and Morgan Stanley.

Venoco, an oil and gas developer, announced deal terms of 12.5 million shares at $19 to $21 per share. The lead managers are Credit Suisse, Lehman Brothers, and JPMorgan.

WSB Financial Group, a bank holding company, announced deal terms of 2.3 million shares at $14 to $16 per share. The lead manager is D.A. Davidson.

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

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

AerCap Holdings

• Proposed ticker: NYSE: AER
• Industry: Global aircraft lessor
• Proposed deal terms: 26.1 million shares, $22 to $24 per share
• Lead manager: Morgan Stanley, Goldman Sachs, and Lehman Brothers
• Filed: Nov. 2; expected to price the week of Nov. 20

Allot Communications

• Proposed ticker: Nasdaq: ALLT
• Industry: Israeli networking tech
• Proposed deal terms: 6.5 million shares, $9 to $11 per share
• Lead manager: Lehman Brothers, Deutsche Bank, CIBCWorld Markets, and RBCCapital Markets
• Filed: Oct. 31

Duncan Energy Partners

• Proposed ticker: NYSE: DEP
• Industry: Gas service provider
• Proposed deal terms: Not yet determined
• Lead manager: Lehman Brothers
• Filed: Nov. 2

Ellora Energy

• Proposed ticker: Nasdaq: LORA
• Industry: Oil and gas explorer
• Proposed deal terms: Not yet determined
• Lead manager: A.G. Edwards
• Filed: Nov. 3

Highland Financial Trust

• Proposed ticker: Nasdaq: HIGH
• Industry: Specialized financial services
• Proposed deal terms: Not yet determined
• Lead manager: Citigroup and JPMorgan
• Filed: Oct. 31

Super Micro Computer

• Proposed ticker: Nasdaq: SMCM
• Industry: Server system tech
• Proposed deal terms: Not yet determined
• Lead manager: Morgan Stanley and Merrill Lynch
• Filed: Nov. 2

U.S. Auto Parts Network

• Proposed ticker: Nasdaq: PRTS
• Industry: Online auto parts reseller
• Proposed deal terms: Not yet determined
• Lead manager: RBC Capital Markets and Thomas Weisel
• Filed: Nov. 2

Disabled list
Otis Spunkmeyer Holdings, which makes cookies and other baked goods, withdrew its offering, citing an agreement to be acquired by IAWS Group.

Current champions
Meet our 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 2006 benchwarmers -- that's nicer to say than losers, isn't it? Among companies that went public this 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 again fared better than the general market. The First Trust IPOX 100 (AMEX:FPX), an exchange-traded fund, gained a measly 0.3%, and the IPO Plus Aftermarket (FUND:IPOSX), a mutual fund, lost 0.7%. Meanwhile, the Nasdaq fell 0.8% and the Russell 2000 came in last, dropping 1.7%.

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.

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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.