IPOs, Initial Public Offerings: pre & post IPO

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1.  What’s your mission?  Our mission is help subscribers make money and understand the IPO market, by producing IPO analyst reports, pre-IPO.

After the JOBS Act, bulge-bracket investment banking firms typically publish analyst reports 25 days after the IPO.  Caution:  if those firms were part of the IPO underwriting team don’t expect any hard-hitting analysis.

For IPO Premium subscribers there are two investment tracks. One track simply buys, sells & doesn’t hold. Another track is interested in potential after market opportunities.  14 day free trial.  Sign up here

2.  Hot IPO Alert webinars
Includes ‘Hot IPO Alert‘ webinars with well-known guests.   Subscribers can submit questions by text or be unmuted, after reading our IPO Analyst Reports.

3.  What are ‘IPO after-market’ opportunities?  See recent examples below

  • +144% InvenSense (INVN).   One of our highest scored stocks of 2011 was InvenSense (INVN). INVN priced at $7.50 November 15 and is now up 144% recently to $18.30 in about three months. You could have bought it in the IPO after-market for $8.25 and received an 118% gain in three months.  INVN IPO report    quote
  • +50% Laredo Petroleum (LPI). We concluded it was a buy in the after-market the first day, December 15, 2011,  at $17.41.  LPI IPO report   quote
  • +41% Chesapeake Granite Wash Trust (CHKR) which IPO’d November 10, 2011 at $19 traded down a little and recently traded around $26.86, up 41%.  And at $19 CHKR was projected to pay a yield in 2012 of 13%.  CHKR IPOreport    quote
  • +70% Michael Kors (KORS) in the IPO after-market.  We concluded it was a buy in the after-market the first day under $25, at an average price of $24.50 December 15, 2011.  KORS recently traded around $41.34.   KORS IPOreport    quote

4. How do I use the site?
The subscribers IPO calendar is the driver to the site.  It’s the upper right link and includes links to IPO reports.

If you have an active account brokerage account you can get some IPOs, but you want to avoid some IPOs.

We help you decide which to take & which to avoid.  Our ratings with IPO reports are normally posted by the Thursday before the week the IPO, which gives you time to work with your brokers.

If you are not active in the IPO market there are opportunities in the IPO after-market from time-to-time.  We let you know our conclusions and outline our thought process.  Our track record is very good on the upside.

On the downside, for example, we were a committed bear on Groupon since five months before its IPO, which was November 4, 2011.  Preservation of capital is key.

  • Groupon: The Good and the Bad, June 8 read
  • Groupon: No Sustaining Competitive Advantage, June 10 read

We’ve noticed over the years that temporary ‘discontinuities’ exist in the IPO after-market.  And when they do happen it usually gets corrected in a 2 to 4 month time period.  Google was an exception.

We do a lot of the up-front research but the buy/sell decisions are yours.  We are not (nor do we want to be) a licensed broker dealer or registered investment adviser.

5.  What’s your basic analytical approach?
It’s very important to look at the sequential quarterly trend for the recent 4-6 quarters, in terms of top line revenue, gross margins, large expense items and of course profit. That way one can often identify trends that are not apparent when comparing a recent quarter with last year’s quarter, which is ok for large established companies, not so much for fast growing tech IPO companies.

We are often early in our conclusions regarding the IPO after-market, and sometimes it takes time for our thoughts to ‘play out’. We try & identify fast growing companies that may be selling at discounts relative to quarterly growth rates  and/or discounts relative to others in their industry.

6.  What’s the 180 day lockup rule & why is it important? Explained here.

After the lockup period then insiders can sell stock and that increases the supply of stock.  Often more supply = lower price, at least temporarily.  180 day lockup dates posted for subscribers.

7.  What financial ratios do you use?  See ‘Glossary of IPO Analysis Terms’  here.

8.  How does your rating/scoring system work?  Explained here.  The rating/scoring systems evolved from working with venture capital firms in the mid-90’s.

9. Any IPO received a rating score 20 in the past? And how can I access archived IPO ratings and recommendations?

For around 2006 or so see http://gaskinsco.com/grade-score.htm which shows the general range of grades/scores.

  • In the current slow non-growth environment C+ & 8 is about as high as we go.
  • For the current site you can see archived reports here
  • Earlier reports (going back around 10 years or so) are available by ticker. For example http://gaskinsco.com/linkto-invn.shtml and replace ‘invn’ with the ticker for which you are looking.

10.  Does your rating change when an ipo prices say 40% below range or they float less/more shares?

Our rating is on the company’s business model, sometimes with a note about after-market expectations.  If the company is  losing money, like YELP, they are still losing money after a re-pricing.  However, the valuation metrics can change (price-to-earnings, price-to-sales).

When an IPO reprices on the downside sometimes the price-to-tangible book value stays the same. Then it doesn’t seem like a real discount, especially when there are minimal to no sales. For example CERE when it first dropped the price range to $16-$17 from $21 to $23.

11.  How can I print from IPOdesktop.com?  Use the Print this entry option at the top of each post and each page.How do I sign up?  here

Disclaimer:  Our work is based on SEC filings and what we’ve learned as analysts and financial journalists. It may contain errors.  You shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility.

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