April 2017 IPO Boutique Track Record Recap

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The IPO market was the most active month year-to-date as 18 companies went public for a total cash raise of $3.84bn.  This included two deals that raised greater than $500m — Schneider National (NYSE: SNDR) and Azul SA (NYSE: AZUL).

Five deals priced above range and four priced below range in April. The average gain at first trade was 10.8% above the offering price — a strong number but a decline from the 17.4% gain above the offering price at first trade that was posted in March. April’s best deal were Floor and Decor Holdings (NYSE: FND) and Okta, Inc. (NYSE: OKTA) with gains of 44.0% and 38.6%, respectively, at first trade. ‘FND’  hit a first-day high of 54.5% above the offering price marking the best single-day performance of an IPO in 2017 thus far.

Compared to 2016, the IPO market is well-ahead of last year’s pace. There have been 42 deals that have come to market in 2017 versus 13 that came to market in this same period in 2016.

This post will allow us to post our results and emphasize the value of IPOBoutique’s senior managing partner Scott Sweet’s ratings. You can check out our entire track record at this link.

Five-Rating

We consider these IPOs to be the best of the best. In our nine years of keeping a track-record we have given just 14 ‘five-ratings’ and all 14 have hit their respective targets. However, in April 2017, we did not give a ‘five’ rating.

Four-Rating

We consider these IPOs to be very strong buys and we anticipate 1-to-2 points of premium or higher in the first week of trading.  In March 2017, we gave four ‘4’ ratings and the group (Okta, Inc, Yext Inc., Floor & Decor & Cloudera) averaged a 32.1% return above the offering price at first trade. All four hit their respective targets It should be noted that there have been eight ‘4’ rated IPOs in 2017 so far and the eight have averaged a 34.6% gain at first trade.

Three-Rating 

We consider these IPOs to be moderate buys and we anticipate 1/2 to 1 point premium or more likely in the cases of these new issues. This past month ten deals debuted that we rated as a ‘three’ with an average return of 3.8% above the offering price. The best ‘3’ rated deal this month was NCS Multistage Holdings (Nasdaq: NCSM) which opened $3.00 above its $17.00 offering price for a 17.6% gain at first trade. We have given 22 IPOs in 2017 a ‘3’ rating and those have produced, on average, a premium of $1.08 above the offering price at first trade.

Two-Rating

We consider these IPOs to be “neutral” and thus do not have a particular point threshold to hit in order for us to deem it as ‘hitting its target’. We gave four deals a ‘two-rating’ this past month and these deals had an average return of 6.9% above the offering price at first trade. So far in 2017 we have given a total of 11 IPOs a ‘2’ rating and those 11 have produced, on average, just a $0.31 return above the offering price at first trade.

One-Rating

We advise our subscribers to avoid these IPOs as we consider them to be risky. In our nine years of keeping a track-record we have given just 49 ‘one’ ratings. In April, we did not give a ‘one’ rating.

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