February 2017 IPO Track Record Recap

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The IPO market was active for the first half of February but then deals came to a screeching halt. Eleven total deals set terms yet only seven came to market. This included the $1.54bn cash raise from Invitation Homes which was the largest cash raise since First Data Corporation raised $2.56bn in October 2015.

Zero deals priced above range in February, three priced below range and the remaining four priced within range. The average gain at first trade was 2.8% above the offering price with the month’s best deal being Foundation Building Material’s 12.9% gain at first trade. Of the four deals that were scheduled to come to market and did not, one was acquired, Mauser Group, just days before its debut date. This marked the second time in 2017 that a deal was acquired in the middle of its roadshow — the other instance being AppDynamics. Three deals (Braeburn Pharmaceuticals, IC Power Pte & Endra Life Sciences) were postponed due to market conditions.

Compared to 2016, the IPO market is well-ahead of pace. There have been 14 deals that have come to market in 2017 versus four 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 February 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 February 2017, we did not give a ‘four’ rating and have not given a four-rating during this calendar year.

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 two deals debuted that we rated as a ‘three’ with an average return of $0.58 above the offering price. The best ‘3’ rated deal this month was Ramaco Resources which opened $1.05 above its $13.50 offering price. We have given eight IPOs in 2017 a ‘3’ rating and those have produced, on average, a premium of $1.53 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 five deals a ‘two-rating’ this past month and these five deals had an average return of $0.46 above the offering price at first trade. So far in 2017 we have given a total of six IPOs a ‘2’ rating and those six have produced, on average, just a $0.10 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 February, we did not give a ‘one’ rating.

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