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

• Winner: Biodel
• Ticker: Nasdaq: BIOD
• Industry: Pharmaceutical
• Deal terms: 5 million shares, $15 per share
• Lead manager: Morgan Stanley
• Filed: Feb. 7
• Opening day: May 11, opened at $16.50, closed at $18, 20% gain
• Bleacher banter: Priced at midpoint of its proposed range
  
  
• TomoTherapy
• Ticker: Nasdaq: TTPY
• Industry: Medical-device developer
• Deal terms: 11.7 million shares, $19 per share
• Lead managers: Merrill Lynch, Piper Jaffray, and Thomas Weisel
• Filed: Feb. 12
• Opening day: May 9, opened at $24, closed at $22.67, 19.3% gain
• Bleacher banter: Priced above its proposed range of $15-$17 per share and increased size of offering by 800,000 shares
  
  
• Solera Holdings
• Ticker: NYSE: SLH
• Industry: Software and services provider
• Deal terms: 21.9 million shares, $16 per share
• Lead managers: Goldman Sachs and JP Morgan
• Filed: Feb. 1
• Opening day: May 11, opened at $16.25, closed at $18.40, 15% gain
• Bleacher banter: Priced at midpoint of its proposed range, increased size of offering by 4.4 million shares
  
  
• JMP Group
• Ticker: NYSE: JMP
• Industry: Investment bank
• Deal terms: 8 million shares, $11 per share
• Lead managers: JMP Securities, Merrill Lynch, and Keefe, Bruyette Woods
• Filed: Feb. 14
• Opening day: May 11, opened at $11.50, closed at $12.30,  11.8% gain
• Bleacher banter: Priced slightly below midpoint of its proposed range and increased number of shares sold by shareholders by 100,000 shares
  
  
• Aecom Technology
• Ticker: NYSE: ACM
• Industry: Architectural and engineering design firm
• Deal terms: 35.2 million shares, $20 per share
• Lead managers: Morgan Stanley, Merrill Lynch, and UBS
• Filed: March 8
• Opening day: May 10, opened at $21.10, closed at $21.10, 5.5% gain
• Bleacher banter: Priced at high end of its proposed range

On deck

• CAI International
• Proposed ticker: NYSE: CAP
• Industry: Container leasing company
• Proposed deal terms: 5.8 million shares, $14-$16 per share
• Lead manager: Piper Jaffray
• Filed: Feb. 7
  
  
• China Sunergy
• Proposed ticker: Nasdaq: CSUN
• Industry: Chinese solar-cell product manufacturer
• Proposed deal terms: 8.5 million American depositary shares, $8-$10 per share
• Lead manager: Merrill Lynch
• Filed: April 26
  
  
• Continental Resources
• Proposed ticker: NYSE: CLR
• Industry: Oil and gas company
• Proposed deal terms: 29.5 million shares, $16-$18 per share
• Lead managers: JP Morgan and Merrill Lynch
• Filed: March 7
  
  
• EnerNOC
• Proposed ticker: Nasdaq: ENOC
• Industry: Energy-conservation solution provider
• Proposed deal terms: 3.8 million shares, $21-$23 per share
• Lead managers: Credit Suisse and Morgan Stanley
• Filed: Feb. 12
  
  
• Eurand
• Proposed ticker: Nasdaq: EURX
• Industry: Dutch pharmaceutical
• Proposed deal terms: 7 million shares, $17-$19 per share
• Lead managers: Deutsche Bank and Lehman
• Filed: May 1
  
  
• Insulet
• Proposed ticker: Nasdaq: PODD
• Industry: Insulin-infusion system developer
• Proposed deal terms: 6.7 million shares, $14-$16 per share
• Lead managers: JP Morgan and Merrill Lynch
• 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
  
  
• Skilled Health Care Group
• Proposed ticker: NYSE: SKH
• Industry: Health-care services provider
• Proposed deal terms: 16.7 million shares, $14-$16 per share
• Lead manager: Credit Suisse
• Filed: Oct. 10
  
  
• TechTarget
• Proposed ticker: Nasdaq: TTGT
• Industry: Network operator
• Proposed deal terms: 7.7 million shares, $12-$14 per share
• Lead managers: Morgan Stanley and Lehman
• Filed: Feb. 7
  
  
• TriMas
• Proposed ticker: NYSE: TRS
• Industry: Equipment manufacturer
• Proposed deal terms: 11 million shares, $11-$13 per share
• Lead managers: Goldman Sachs and Merrill Lynch
• Filed: Aug. 3 (refiling)

Game of the week
Following the strong debut of TomoTherapy last week, let's take a look at Insulet, another medical-device developer.

The Massachusetts-based company, formed in 2000, develops, manufactures, and markets a proprietary insulin-infusion system called the OnmiPod Insulin Management System. The company claims its system is the only commercially available one of its kind, which combines the functionality of a conventional insulin pump with a glucose monitor in a discreet two-part design that can offer lifestyle benefits to people with insulin-dependent diabetes.

Unlike TomoTherapy, however, the company has not yet turned a profit. Competition exists from larger players, too, and the company relies on its OmniPod system for all of its revenue. Sales of the OmniPod system began in October 2005, and sales and marketing efforts remain focused for now on the eastern United States.

For 2006, the company posted $3.7 million of revenue and a $36 million net loss, compared with $50,000 of revenue and a $22 million net loss for the prior year. The company had an accumulated deficit of $102 million as of Dec. 31 and expects its rate of loss to continue to increase on a quarterly basis at least until 2008.

The company will use the proceeds of the offering for general corporate purposes, which may include completion and improvement of its existing automated line and construction of a second automated line to increase manufacturing capacity, expansion of sales and marketing activities, and research and development.

Insulet estimates that of the approximately 1.2 million people with Type 1 diabetes in this country, only approximately 21% use any form of continuous subcutaneous insulin infusion therapy, and that less than 1% of people with insulin-requiring Type 2 diabetes used that type of therapy last year. The company believes that its system, which combines the functionality of a pump with a blood glucose meter, can become the therapy system of choice for health-care professionals, patients, and third-party payers through promoting awareness of the product, trial experience, continued reduction of manufacturing costs, and expansion of third-party-payer coverage.

Shares are expected to begin trading tomorrow. 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

• Helicos Biosciences, a life-sciences company, announced deal terms of 5.4 million shares at $13-$15 per share. The lead manager is UBS.
  
  
• EndoCeutics, a Canadian pharmaceutical, announced revised deal terms of 5.75 million shares at $7-$9 per share, lowered from $11-$13 per share. The lead manager is First Albany.

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

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

• B&G Foods
• Proposed ticker: NYSE: BGS
• Industry: Food manufacturer
• Proposed deal terms: 13.9 million shares, $12-$14 per share
• Lead managers: Credit Suisse and Lehman
• Filed: May 9
  
  
• CCS Medical
• Proposed ticker: Nasdaq: CCSM
• Industry: Medical-supplies distributor
• Proposed deal terms: Not yet determined
• Lead managers: Lehman, Goldman Sachs, Wachovia Securities, and Raymond James
• Filed: May 11
  
  
• Deltek
• Proposed ticker: Nasdaq: PROJ
• Industry: Software provider
• Proposed deal terms: Not yet determined
• Lead manager: Credit Suisse
• Filed: May 9
  
  
• Encore Bancshares
• Proposed ticker: Nasdaq: EBTX
• Industry: Bank holding company
• Proposed deal terms: Not yet determined
• Lead manager: Keefe Bruyette Woods
• Filed: May 9
  
  
• Genpact
• Proposed ticker: NYSE: G
• Industry: Bermuda-based business-services company
• Proposed deal terms: Not yet determined
• Lead manager: Morgan Stanley, Citigroup, and JP Morgan
• Filed: May 11
  
  
• MercadoLibre
• Proposed ticker: Nasdaq: MELI
• Industry: Latin American trading platform
• Proposed deal terms: Not yet determined
• Lead manager: JP Morgan and Merrill Lynch
• Filed: May 11
  
  
• Encore Energy Partners LP
• Proposed ticker: NYSE: ENP
• Industry: Oil and natural gas company
• Proposed deal terms: 9 million units, price range not yet determined
• Lead manager: UBS and Lehman
• Filed: May 11
  
  
• Targanta Therapeutics
• Proposed ticker: Nasdaq: TARG
• Industry: Biotech
• Proposed deal terms: Not yet determined
• Lead manager: Credit Suisse
• Filed: May 11
  
  
• Yingli Green Energy
• Proposed ticker: NYSE: YGE
• Industry: Chinese photovoltaic-product manufacturer
• Proposed deal terms: Not yet determined
• Lead manager: Goldman Sachs and UBS
• Filed: May 11

Disabled list

• CardioMems, a biotech, withdrew its planned offering on May 4, citing market conditions.

Champions
Meet our current champs. Among companies that went public during the past 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 past 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 the prospectuses before buying season tickets.

Our seasoned IPO players turned in a mixed performance again last week, as blue chips advanced but the broader market stagnated. This time, however, the IPO Plus Aftermarket (FUND:IPOSX), a mutual fund, gained 0.3%, while the First Trust IPOX 100 (AMEX:FPX), an ETF, slipped 0.4%, the same percentage loss registered by both the Nasdaq and the Russell 2000.

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 for information in this column included Renaissance Capital's IPOhome.com, SEC filings, and Reuters.

MasterCard is an Inside Value recommendation. New Oriental Education is a Global Gains selection. Try out either Foolish investing service free for 30 days.

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.