October 2015 IPO Track Record Recap

The IPO market showed signs of life with 18 deals coming to market. However, slightly less than half of these deals were healthcare related (8 of 18) and many of the deals in October saw the buy-side firmly in control as 13 of the deals were priced below their initial intended ranges, respectively. In October 2014 a total of 29 IPOs debuted. Thus far in 2015, a total of 139 IPOs have priced as compared to 221 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 October 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 October 2015, we dished out one, ‘four-ratings’. Ferrari (NYSE: RACE) opened with an eight-point premium above the offering price–good for an 11% gain above the offering price. 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 nine deals that we rated as a ‘3’ that debuted. It was increasingly difficult to decipher deals with strength in October due to the market’s lack of appetite for new issues. We constantly had to go back and forth from our sources to determine if the amount of price sensitivity was sufficient to produce a first week gain. Six of the nine deals that we rated as a ‘3’ did indeed meet our personal rating system. The best of the bunch was CytomX Therapeutics (Nasdaq: CTMX) which priced at $12.00 and opened at $16.00 for a 33% gain at the offering price. Myokardia (Nasdaq: MYOK) priced $5.00 below the offering price and opened with a 10.8% gain at first trade. We had a good read on the regional bank deal this past month, Allegiance Bancshares (Nasdaq: ABTX), as it opened $1.55 above he $21.00 offering price. Aclaris Therapeutics (Nasdaq: ACRS) and Multi Packaging Solutions International Limited (Nasdaq: MPSX) each traded well in the after market as they hit as high as 27% and 35% above their offering price in their opening weeks, respectively. The nine deals that we rated with a ‘3’ rating produced, on average, a $0.62 premium above the offering price at first trade.There have been 55 IPOs that IPOBoutique has rated as a ‘3’ this year with the average return above the offering price at first trade being $2.29. 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 eight deals a ‘two-rating’ this past month and three of them opened either flat or below the offering price. The worst of the bunch was Novocure Limited (Nasdaq: NVCR) which opened $1.84 below the $22.00 offering price. The eight deals produced a opening trade return of $0.02 below the offering price at first trade. So far in 2015, IPO Boutique has rated a total of 53 deals with a ‘two’ rating and those deals have returned an average of $0.0477 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 October, we did not give a ‘one’ rating.

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October 2015 IPO Track Record Recap