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: CastlePoint Holdings

• Ticker: Nasdaq: CPHL
• Industry: Insurance
• Deal terms: 6.1 million shares, $14.50 per share
• Lead manager: Friedman Billings
• Filed: Jan. 11
• Opening day: March 23, opened at $15.60, closed at $16.15, 11.4% gain
• Bleacher banter: Priced slightly above the midpoint of its proposed range; sold 1.6 million additional shares

Glu Mobile

• Ticker: Nasdaq: GLUU
• Industry: Mobile phone game provider
• Deal terms: 7.3 million shares, $11.50 per share
• Lead manager: Goldman Sachs
• Filed: Dec. 19
• Opening day: March 22, opened flat, closed at $12.29, 6.9% gain
• Bleacher banter: Priced near the high end of its proposed range

Haynes International

• Ticker: Nasdaq: HAYN
• Industry: Alloy manufacturer
• Deal terms: 2.1 million shares, $65 per share
• Lead manager: J.P. Morgan
• Filed: Jan. 25
• Opening day: March 20, opened at $67.50, closed at $68.19, 4.9% gain
• Bleacher banter: Priced above its proposed range of $61-$64 per share

Cheniere Energy Partners

• Ticker: NYSE: CQP
• Industry: Liquefied natural gas terminal operator
• Deal terms: 12.5 million shares, $21 per share
• Lead managers: Citigroup, Merrill Lynch, and Credit Suisse
• Filed: Dec. 21
• Opening day: March 21, opened at $22, closed at $21.71, 3.4% gain
• Bleacher banter: Priced at high end of its proposed range

On deck

Aruba Networks

• Proposed ticker: Nasdaq: ARUN
• Industry: Security software provider
• Proposed deal terms: 8 million shares, $8-$10 per share
• Lead manager: Goldman Sachs
• Filed: Dec. 15

Capital Product Partners

• Proposed ticker: Nasdaq: CPLP
• Industry: Greek shipping vessel charterer
• Proposed deal terms: 11.8 million American depositary shares, $19-$21 per share
• Lead manager: Merrill Lynch
• Filed: March 19

eTelecare Global Solutions

• Proposed ticker: Nasdaq: ETEL
• Industry: Outsourcing provider
• Proposed deal terms: 5.5 million shares, $12.50-$14.50 per share
• Lead managers: Morgan Stanley and Deutsche Bank
• Filed: March 13

Flagstone Reinusrance

• Proposed ticker: NYSE: FSR
• Industry: Bermuda-based reinsurer
• Proposed deal terms: 13 million American depositary shares, $12.50-$14.50 per share
• Lead managers: Lehman and Citigroup
• Filed: Oct. 24

GSI Technology

• Proposed ticker: Nasdaq: GSIT
• Industry: Circuit maker
• Proposed deal terms: 8 million shares, $6.50-$8 per share
• Lead managers: Needham and W.R. Hambrecht
• Filed: Jan. 10

Seno Rx

• Proposed ticker: Nasdaq: SENO
• Industry: Medical device maker
• Proposed deal terms: 5.5 million shares, $11-$13 per share
• Lead manager: Banc of America
• Filed: May 26

Super Micro Computer

• Proposed ticker: Nasdaq: SMCI
• Industry: Computer component manufacturer
• Proposed deal terms: 8 million shares, $9.50-$11.50 per share
• Lead manager: Merrill Lynch
• Filed: Nov. 2

Game of the week
The game schedule is picking up and includes some interesting offerings to watch this week. Remember, "interesting" doesn't always mean "lucrative," and an offering presented as a game of the week may be selected for an intriguing aspect to the deal rather than solely for its potential return.

Let's look at Aruba Networks, a California-based company formed in 2002 which manufactures wireless network components that provide secure access to corporate data, voice, and video applications. The company's products allow a user to roam freely through a corporate environment and remote locations while maintaining secure access to network resources.

Investing in Aruba Networks is not for the faint of heart. The company has yet to turn a profit, posting a $12 million net loss for last year, up from a $32.6 million loss in 2005. The company's revenue growth is its calling card, reaching $72.5 million in 2006 from $12 million in 2005, amid increased investment in product development.

A bullish stance would point out that the market for wireless networks is maturing and that Aruba Networks benefits from a strategic relationship with Microsoft (NASDAQ:MSFT). The company's customers include Burlington Northern Santa Fe (NYSE:BNI), Google (NASDAQ:GOOG), and the U.S. Air Force. Investors may also have in mind the IPO of Riverbed Technology (NASDAQ:RVBD), a computer networking company that went public last year and remains one of the top performers over the past 12 months.

A bearish view need only point to Glu Mobile, a mobile-phone-game publisher that went public last week and struggled to remain in the black by the end of the week following a solid first-day performance. While Aruba Networks may need the cash to help foster product development, you may prefer to hold onto yours while investors reassess the climate for risky tech offerings.

Shares are expected to begin trading today. 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
Veraz Networks, a softswitches provider, announced deal terms of 9 million shares at $10-$12 per share. The lead managers are Credit Suisse and Lehman.

Pharmassett, a pharmaceutical company, announced deal terms of 6 million shares at $12-$14 per share. The lead managers are Banc of America, UBS, and JMP Securities.

Sent down to the minors
No planned offerings scheduled for last week were postponed.

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

Aegerion Pharmaceuticals

• Proposed ticker: Nasdaq: AEGR
• Industry: Pharmaceutical
• Proposed deal terms: Not yet determined
• Lead managers: Lehman and CIBC
• Filed: March 21

Blackstone Group

• Proposed ticker: NYSE: BX
• Industry: Financial services
• Proposed deal terms: Not yet determined; market cap up to $4 million
• Lead managers: Morgan Stanley and Citigroup
• Filed: March 22

Capital Product Partners

• Proposed ticker: Nasdaq: CPLP
• Industry: Shipping vessel charterer
• Proposed deal terms: 11.75 million shares, $19-$21 per share
• Lead managers: Merrill Lynch and UBS
• Filed: March 20

Limelight Networks

• Proposed ticker: Nasdaq: LLNW
• Industry: Content delivery service provider
• Proposed deal terms: Not yet determined
• Lead managers: Goldman Sachs and Morgan Stanley
• Filed: March 23

Mcleod USA

• Proposed ticker: Nasdaq: MUSA
• Industry: Communications services provider
• Proposed deal terms: Not yet determined
• Lead managers: Deutsche Bank and Jefferies
• Filed: March 22

Netezza

• Proposed ticker: Nasdaq: NTZA
• Industry: Data warehouse provider
• Proposed deal terms: Not yet determined
• Lead managers: Credit Suisse and Morgan Stanley
• Filed: March 23

NimbleGen Systems

• Proposed ticker: Nasdaq: NMBL
• Industry: Microarray provider
• Proposed deal terms: Not yet determined
• Lead manager: J.P. Morgan
• Filed: March 19

Simcere Pharmaceutical

• Proposed ticker: NYSE: SCR
• Industry: Chinese pharmaceutical
• Proposed deal terms: Not yet determined
• Lead manager: Goldman Sachs
• Filed: March 23

Disabled list
No planned offerings were withdrawn 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, equities rose, and the First Trust IPOX 100 (AMEX:FPX), an ETF, gained 3.9%, the same percentage advance as the Russell 2000. The IPO Plus Aftermarket (FUND:IPOSX), a mutual fund, rose 2.2%, and the Nasdaq added 3.5%

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.