November 2015 – IPO Track Record Recap

The IPO market was slow, as expected, in the month of November as investors took a break for the Thanksgiving holiday. A discount theme was prevalent among new issues coming to market as six of the twelve deals this month priced below their initial ranges. It should be noted that many deals attempted to come to market but had to postpone due to a lack of interest from investors or, as the underwriters like to say, due to market conditions. In November 2014 a total of 26 IPOs debuted. Thus far in 2015, a total of 151 IPOs have priced as compared to 247 that priced at the 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 past performances:

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 November 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 above the offering price at first trade. In November 2015, we dished out zero, ‘four-ratings’. To this point in 2015 we have rated a total of 31 deals with a ‘four-rating’ and the average opening above the offering is $8.38. In 2014, we rated 42 IPOs with a ‘four’ rating and these deals 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 there were five deals that we rated as a ‘3’ that debuted and all five succesfully hit our set target. Mimecast (Nasdaq: MIME), Duluth Holdings (Nasdaq: DLTH) and Wave Life Sciences PTE (Nasdaq: WVE) each opened around $1.00 above their respective offering prices to produce solid gains. Equity Bancshares (Nasdaq: EQBK) opened wiht a $1.75 premium over the $22.50 pricing and has since held its gains on the open market. Instructure (NYSE: INST) opened flat but traded very well in the aftermarket hitting a first-week high of $18.24 or 14% above the offering price. The five deals that we rated with a ‘3’ rating produced, on average, a $0.96 premium above the offering price at first trade.There have been 60 IPOs that IPOBoutique has rated as a ‘3’ this year with the average return above the offering price at first trade being $2.18. In 2014, we rated 95 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’. We gave seven deals a ‘two-rating’ this past month and two of them opened flat. The seven deals produced a opening trade return of $1.06 above the offering price at first trade. So far in 2015, IPO Boutique has rated a total of 60 deals with a ‘two’ rating and those deals have returned an average of $0.1663 above the offering price at first trade. In 2014, we rated a total of 124 deals a ‘two-rating’ and the average gain above the IPO price at first trade for the 124 deals was $0.36 above the offering price.

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

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November 2015 – IPO Track Record Recap