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 that extends 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: Acorn International

• Ticker: NYSE: ATV
• Industry: Chinese marketing firm
• Deal terms: 7.7 million American depositary shares, $15.50 per share
• Lead managers: Merrill Lynch and Deutsche Bank
• Filed: April 5
• Opening day: May 3, opened at $19.90, closed at $21.50, 38.7% gain
• Bleacher banter: Priced above its proposed range of $12.50-$14.50 per share; among the best debuts of the year.

Cavium Networks

• Ticker: Nasdaq: CAVM
• Industry: Semiconductor provider
• Deal terms: 6.75 million shares, $13.50 per share
• Lead managers: Morgan Stanley and Lehman
• Filed: Feb. 13
• Opening day: May 2, opened at $16.50, closed at $16.45, 21.9% gain
• Bleacher banter: Priced above its revised higher range of $12-$13 per share, and increased size of offering by 500,000 shares.

Interactive Brokers

• Ticker: Nasdaq: IBKR
• Industry: Electronics broker
• Deal terms: 40 million shares, $30.01 per share
• Lead managers: W.R. Hambrecht and HSBC
• Filed: Nov. 27
• Opening day: May 4, opened at $33, closed at $31.30, 4.3% gain
• Bleacher banter: Strong retail and institutional demand for sale conducted through the Dutch auction process; priced at midpoint of revised upward range of $27-$31 per share and doubled the number of shares sold from that originally proposed; surpassed MetroPCS (NYSE:PCS) to become the largest deal yet in 2007.

Qiao Xing Mobile Communication

• Ticker: NYSE: QXM
• Industry: Chinese mobile handset manufacturer
• Deal terms: 16.7 million American depositary shares, $12 per share
• Lead manager: UBS
• Filed: April 17
• Opening day: May 3, opened flat, closed at $11.31, 5.8% loss
• Bleacher banter: Priced at midpoint of its proposed range and decreased offering by 3.4 million shares.

Loser: NeurogesX

• Ticker: Nasdaq: NGSX
• Industry: Biopharmaceutical
• Deal terms: 4 million shares, $11 per share
• Lead manager: Morgan Stanley
• Filed: Feb. 7
• Opening day: May 2, opened at $10.99, closed at $10.25, 6.8% loss
• Bleacher banter: Priced below its proposed range of $13-$15 per share.

On deck
Aecom Technology

• Proposed ticker: NYSE: ACM
• Industry: Architectural and engineering design firm
• Proposed deal terms: 35.2 million shares, $18-$20 per share
• Lead managers: Morgan Stanley, Merrill Lynch, and UBS
• Filed: March 8

Biodel

• Proposed ticker: Nasdaq: BIOD
• Industry: Pharmaceutical
• Proposed deal terms: 5 million shares, $14-$16 per share
• Lead manager: Morgan Stanley
• Filed: Feb. 7

JMP Group

• Proposed ticker: NYSE: JMP
• Industry: Investment bank
• Proposed deal terms: 7.9 million shares, $10.50-$12.50 per share
• Lead managers: JMP Securities, Merrill Lynch, and Keefe, Bruyette Woods
• Filed: Feb. 14

Pinnacle Gas Resources

• Proposed ticker: Nasdaq: PINN
• Industry: Natural gas exploration
• Proposed deal terms: 3.8 million shares, $10-$12 per share
• Lead manager: Friedman Billings
• Filed: Dec. 21

Solera Holdings

• Proposed ticker: NYSE: SLH
• Industry: Software and services provider
• Proposed deal terms: 21.9 million shares, $15-$17 per share
• Lead managers: Goldman Sachs and JP Morgan
• Filed: Feb. 1

TomoTherapy

• Proposed ticker: Nasdaq: TTPY
• Industry: Medical device developer
• Proposed deal terms: 10.9 million shares, $15-$17 per share
• Lead managers: Merrill Lynch, Piper Jaffray, and Thomas Weisel
• Filed: Feb. 12

Game of the week
TomoTherapy could provide a healthy boost to the IPO market this week.

The Wisconsin-based medical device developer, formed in 1997, employs roughly 492, and provides radiation treatment for cancer patients through its HiArt system.

Financial results are impressive. For the quarter ended
Dec. 31, the company reported $59.6 million of revenue and $7.2 million net income, compared with $21.9 million of revenue and a $108,000 net loss for the same period a year ago. For 2006, the company posted $153.1 million of revenue and $12.8 million net income, compared with $75.8 million of revenue and a $239,000 net loss for the prior year. The company had an accumulated deficit of $186 million as of Dec. 31, 2006.

Competition is tough, and the company relies on its HiArt system for substantially all of its revenue. TomoTherapy believes it can become a leading global provider of its radiation therapy systems through raising market awareness, increasing its sales staff, improving operating leverage, enhancing customer support, and continuing research and development initiatives. Proceeds of the offering will be used for this strategy, as well as for working capital and other general corporate purposes, including the possibility of acquisitions or investments. 

Shares are expected to begin trading Wednesday. 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

• China Sunergy, a Chinese solar cell product manufacturer, announced deal terms of 8.5 million American depositary shares at $8-$10 per share. The lead manager is Merrill Lynch.
• Clean Energy Fuels, an alternative energy provider, announced deal terms of 20 million shares at $13-$17 per share. The lead manager is WR Hambrecht.
• EnerNOC, an energy conservation company, announced deal terms of 3.75 million shares at $21-$23 per share. The lead managers are Credit Suisse and Morgan Stanley.
• RSC Holdings, an equipment leasing firm, announced deal terms of 20.8 million shares at $23-$25 per share. The lead managers are Deustche Bank, Morgan Stanley, and Lehman.
• STARLIMS, an Israeli laboratory software provider, announced deal terms of 2.1 million shares at $13.50-$15.50 per share. The lead managers are Oppenheimer and JMP Securities.
• TriMas Corp., an equipment manufacturer, announced deal terms of 11 million shares at $11-$13 per share. The lead managers are Goldman Sachs and Merrill Lynch.

Sent down to the minors

• AMC Entertainment, a movie theater operator, canceled its planned offering scheduled for last week in the wake of a poor debut from cinema chain Cinemark Holdings (NYSE:CNK) without citing a reason or stating whether it will be rescheduled.
• CardioMems, a biotech, and EndoCeutics, a Canadian biopharma, each remain on standby for their offerings.

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

Consonus Technologies

• Proposed ticker: Nasdaq: CONS
• Industry: Information technology provider
• Proposed deal terms: Not yet determined
• Lead manager: Not yet determined
• Filed: May 4

Cross Match Technologies

• Proposed ticker: Nasdaq: CROS
• Industry: Biometrics provider
• Proposed deal terms: Not yet determined
• Lead manager: Credit Suisse
• Filed: April 30

Cumberland Pharmaceuticals

• Proposed ticker: Nasdaq: CPIX
• Industry: Pharmaceutical
• Proposed deal terms: Not yet determined
• Lead manager: UBS
• Filed: May 1

Devax

• Proposed ticker: Nasdaq: DEVX
• Industry: Medical device developer
• Proposed deal terms: Not yet determined
• Lead manager: Bear Stearns
• Filed: May 4

Eurand

• Proposed ticker: Nasdaq: EURX
• Industry: Dutch pharmaceutical
• Proposed deal terms: 7 million American depositary shares, $17-$19 per share
• Lead managers: Deutsche Bank and Lehman
• Filed: May 1

ImaRX Therapeutics

• Proposed ticker: Nasdaq: IMRX
• Industry: Drug developer
• Proposed deal terms: 3 million shares, $6.50-$7.50 per share
• Lead manager: Maxim Group
• Filed: May 1 (refiling)

Lululemon

• Proposed ticker: Nasdaq: LULU
• Industry: Athletics apparel retailer
• Proposed deal terms: Not yet determined
• Lead managers: Goldman Sachs and Merrill Lynch
• Filed: May 1

NanoDynamics

• Proposed ticker: Nasdaq: NDMX
• Industry: Clean energy provider
• Proposed deal terms: Not yet determined
• Lead manager: Jefferies 
• Filed: May 4

PNA Group Holding

• Proposed ticker: NYSE: PNA
• Industry: Steel distributor
• Proposed deal terms: Not yet determined
• Lead managers: Citigroup, UBS, and Goldman Sachs
• Filed: April 30

Virgin Mobile USA

• Proposed ticker: NYSE: VM
• Industry: Wireless service provider
• Proposed deal terms: Not yet determined
• Lead managers: Lehman, Merrill Lynch, and Banc of America
• Filed: May 1

Disabled list

• Madison River Communications, a telephone operator, withdrew its planned offering last week without citing a reason.
• Perlegen Sciences, a biopharmaceutical, withdrew its planned offering last week, stating that "such withdrawal is consistent with the public interest and the protection of investors."

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 & 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.

Our seasoned IPO players turned in a mixed performance last week. The First Trust IPOX 100 (AMEX:FPX), an ETF, led the field with a 1.3% gain, while the IPO Plus Aftermarket (FUND:IPOSX), a mutual fund, fell 1.2%. The general market did just fine, with the Nasdaq rising 0.6%, and the Russell 2000 increasing 0.4%.

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.

MasterCard is an Inside Value recommendation.  New Oriental Education is a Global Gains pick. 

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 owns shares of Goldman Sachs but otherwise holds no financial position in any firms or funds mentioned here. The Fool has a disclosure policy.