February 2015 IPO Track Record Recap

It was a second-straight ‘lighter’ month in terms of quantity of IPOs that came to market as just 10 deals priced as compared to 19 deals in February 2014.  There have been a total of 23 deals that have priced thus far in 2014 as compared to 36 at this same point a year ago.

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.  Here is a recap of our performance from January 2015.

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 February 2015, 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. premium above the offering price at first trade. In February 2015, we rated one IPO with a ‘four’: Inovalon Holdings (Nasdaq: INOV). Inovalon priced ($27.00) $1.00 above an already increased range and opened 23% higher. ‘INOV’ sold off in its opening week to below the offering price but has since rebounded and closed Friday’s trading session at $31.06. So far through 2015, the average return above the IPO price at first trade for ‘four’ rated deals is, on average, a staggering $18.09. In 2014, we rated 42 of 276 IPOs who debuted with a ‘four’ rating and these IPOs produced an average of $8.73 above the IPO price 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 four deals debuted that we rated as a ‘three’ with an average rate of return of $2.76 above the offering price at first trade. For a second consecutive month, all of our three-rated deals hit their respective targets. The best of the bunch was Columbia Pipeline Partners (NYSE: CPPL) which opened $5.00 above the $23.00 pricing. Additionally, the low float (2.5m shares) deal from Avenue Financial Holdings (Nasdaq: AVNU) opened 30% above its offering price. Other ‘three’ rated IPOs this month included Easterly Government Properties (NYSE: DEA) and Invitae Corporation (NYSE: NVTA).  There have been 13 IPOs that IPOBoutique has rated as a ‘3’ this year with the average return above the offering price at first trade being $3.49. In 2014, we rated 95 of the 276 IPOs that came to market with a ‘three’ rating and the average gain above the IPO price at first trade was $1.95.

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’. Five of the 10 deals from the month of February we gave two ratings with the average first trade coming in $0.56 below the IPO price. Two deals, Check Cap (Nasdaq: CHEKU) & Great AJax (NYSE: AJX), opened flat and Inotek Pharmaceuticals (Nasdaq: ITEK) opened $0.10 above the offering price. Two biotech deals, Nexvet Biopharma (Nasdaq: NVET) and Bellerophon Therapeutics (Nasdaq: BLPH) opened below their offering prices by $0.88 and $2.00, respectively.  So far in 2015, IPO Boutique has rated a total of 11 deals with a ‘two’ rating and those deals have returned an average of $0.19 below the offering price at first trade. A total of 62 of the 124 (50%) deals we rated as a ‘two’ either opened at or below its respective offering price. The average gain above the IPO price at first trade for the 124 deals was $0.36.

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 February, we did not give a ‘one’ rating.

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