New issues on the stock exchange had a superb 2014. All told, over 270 IPOs hit the markets, the highest figure since the dot.com feeding frenzy of 2000.
As such, this year is going to have a hard act to follow. But as 2015 kicks into gear, the IPO market is beginning to stir. This week will see the market debuts of several new stocks, two of which are set to draw more than $100 million from their IPOs.
Before taking a brief look at these companies, one word of caution: Investing in IPOs carries an above-average level of risk, as initial stock prices can be far from the value the market eventually puts on the company's shares. These types of plays therefore provide great upside potential, but investors also run the risk of losing a substantial part of an investment.
Thanks for listening to the public service announcement. Now, on to those two newcomers for the week:
Patriot National
This niche financial firm concentrates on the provision of workers' compensation for various types of clients, including public sector entities and insurance companies. It offers a wide menu of services, both designing and servicing such programs. Patriot National charges fees for its services, which mitigates risk as the firm doesn't directly write policies and thus is not required to pay claims. The company posted a profit in the January to September period of last year, although it's shown losses in earlier periods.
Patriot National's IPO is slated to hit the market on Friday. Just over 8.3 million shares are to be sold for between $16 and $18 per share, and the stock will trade under the symbol PN on the New York Stock Exchange. The lead underwriters are UBS Investment Bank, Bank of Montreal's BMO Capital Markets, and SunTrust's Robinson Humphrey.
Sutherland Asset Management
Mortgage real estate investment trusts -- companies that specialize in mortgage-backed securities -- comprise one segment of finance that has seen weakness lately. Essentially, mREITs utilize short-term funding to buy longer-term mortgage backed securities. The problem is, the Federal Reserve is almost certain to raise its short-term reference rates in the very near future, souring this business model for a great many mREITs.
Compounding that disadvantage, the recently formed Sutherland has little operating history of its own to go by, although it reported a profit in its most recently reported quarter, as well as in the first nine months of 2014.
Just under 17 million shares of Sutherland Asset Management will go on sale Friday, under the ticker symbol SLD. Busy UBS Investment Bank is among the underwriting syndicate, which is rounded out by JMP Group's JMP Securities, Stifel's Stifel Nicolaus and Keefe, Bruyette & Woods, and Macquarie.
