initial public offerings (IPOs) trading on American exchanges

Wednesday, November 13, 2013

2013 IPOs : best & worst

Update: Prosensa Holding (RNA) was acquired by BioMarin Pharmaceutical (BMRN) for $840 million. (November 2014)
  • Best: Container Store, Potbelly, Noodles & Co., Sprouts Farmers Markets
  • Worst: Prosensa Holding (RNA), LipoScience (LPDX)
Potbelly. Noodles & Co. Sprouts Farmers Markets. These are all the huge winning initial public offerings this year. These are the deals most people like to talk about because they've all more than doubled from their IPO prices.

But investors will have a tougher time finding others bragging about buying into IPOs that didn't fare so well this year. And there have been plenty of dogs in what's been a pretty solid year for IPOs.

All three of the worst performing IPOs in 2013 so far have been health care deals, says Prosensa Holding (RNA), a biotech company working on treatments for diseases including muscular dystrophy, is down more than 66% from the $13 a share offering price. The company disappointed investors in September when saying one of its top drugs in development didn't make it to late-stage clinical trials.

Following Propensa is LipoScience (LPDX), a maker of diagnostics to test patients, which has seen its shares fall 48% from its IPO price of $9 a share. The company told investors in August that demand for its diagnostics test wasn't growing as fast as its costs were. The company lost $2.4 million in the quarter ended in June. And behind LipoScience as the worst IPO of the year is KaloBios (KBIO), down 48% from its $8 a share IPO price.

These big disappointments in the IPO market are a reminder to investors that making money on unproven stocks isn't as easy as it might seem. Even though the IPO market is raging, and most IPOs are doing well, there are still the laggards.

First-day pops: The Container Store, a retailer that sells organizational materials such as shelves and storage boxes, saw its shares more than double in value on the first day of trading after the initial public offering last week. The shares rose from its $18 a share to $36.20 a share. Container Store was the fifth U.S.- listed IPO to double in its first day of trading this year.
It is the biggest year for 100 per cent one-day jumps since 2000. In 2012, just one IPO, a company named plunk, doubled on its first day, said Jay Ritter, professor of finance at the University of Florida. No IPOs doubled on their first day in 2009, 2008 or 2007, Ritter said. IPOs on average have gained 16 per cent on their first day this year, Renaissance said, the highest in at least a decade.
Strong deal pricing. Demand has been so strong for new share issues that underwriters aren’t cutting the price to stoke demand. So far this year, just 28 per cent of IPOs have been priced below their initial expected price range, showing a sign of strength not seen since 2009, analyst Renaissance Capital said.
Busy calendar of deals. Already this year, 182 companies have seen their shares start trading, up 50 per cent from this point last year, said Renaissance. At the current pace, there could be 220 IPOs in 2013, making it the busiest year for IPOs since 2000 by topping the 217 deals in 2004, Renaissance said.

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