IPO Boutique: Indicate for the best, avoid the rest

This is a post from February 2019 that is still relevant for those who BUY IPOs and Secondaries on a regular basis.

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Navigating the syndicate markets is a double-edged sword.

It’s a niche area of investing where you can be right 9 out of 10 times and still finish in the red.

And that’s the reason why (we believe) IPO Boutique is so valuable.

Indicate for the best, avoid the rest.

In capital markets, it’s very much a follow the herd mentality. The best deals are multiple-times oversubscribed.  Everyone wants their “piece”. The allocations are tiny.  In 2018, examples of these deals were Elastic N.V. (ESTC), ZScaler (ZS) or Autolus Therapeutics (AUTL) with gains of 94%, 71% and 65% at first trade, respectively.

On the flip side…how about the bad ones? Urovant Sciences, Constellation Pharma (CNST), MOGU Inc (MOGU) or Bain Capital Specialty Finance (BCSF) all fall in that category with returns of -10% or greater at first trade.

If you were one of the investors who placed an indication in one of those it is very likely you got all that you asked for.

Translation: You had a bad day.

IPO Boutique provides the critical information and data-points to help make the decisions on which IPOs to go in for and, more importantly, which ones to stay away from.

We provide subscription levels, price guidance and commentary with 40-years of history in this area under our belts. Our goal is to give our clients an advantage at first trade. What happens with their shares after that is their prerogative.

How did we do in 2018? (Note: Our rating scale goes 1-5, five being the best)

• 5-Rated: 0 Deals
• 4-Rated: 35 Deals, 37.2% average gain at first trade
• 3-Rated: 74 Deals, 14.1% average gain at first trade
• 2-Rated: 71 Deals, 6.8% average gain at first trade
• 1-Rated: 1 Deal, -11.1% average gain at first trade

The stats tell a clear story: deals that meet our criteria to warrant a higher rating performs accordingly.

And note…typically our 2-rated deals perform between 1%-3% but in 2018 there was large variance in Chinese IPOs that opened with strength and declined very quickly.

If you have the access to capital markets and are placing indications on IPOs and Secondary Offerings on a regular basis, you can’t afford to guess which deal will be in demand.

Have doubts about IPO Boutique? No problem — try us out for a week in February. Contact Jeff Zell (JZell@IPOBoutique.Com) for more information.