A Mars Bar Year for the IPO Market

There was more talking than cooking in the IPO kitchen for the first two weeks of 2011.   We’ve seen new pronouncements about the IPO market from guys like Bill Gurley late in 2010 and more recently even Fred Wilson is coming around.  All we can say is that we’ve been very busy since we started IPO Candy in April of 2009.  The IPO market has been quite healthy for a year now.

Here is the full text from our Bi-Weekly Candygram Report released today.  All the data and tables are available in the full report.

For 2011 we did begin to see things get underway as there are 9 deals in active marketing now, including the much-anticipated Demand Media IPO.

There have been 10 new deals filed so far in 2011 with a few in our areas of interest like BCD Semiconductor (analog semis), InterXion (data center services), and Boingo Wireless (wireless services).  Another Chinese fashion company (Zuoan Fashion) filed and will be included in our “Lucky Candy” ecosystem.

Speaking of Lucky Candy, Monday the 17th we will see banking research coverage of both Youku.com and Dangdang, which are up 193% and 112% from their IPO prices, respectively.

Performance

The first two weeks of the year have been kind to the markets and our IPO Ecosystem. During this time period the average gain was 5% with the top 10 up 21% and the bottom 10 down 13%.

Looking back a bit farther, the average gains of 10% for the last month and 24% for the last 3 months is fueling speculation that we may be entering another “IPO era.” Keep your candy money in a safe place!

Top 5 through January 15
Company Ticker Gain Area
ReachLocal RLOC +31% SMB Online Marketing
DangDang DANG +25% Online Commerce
Meru Networks MERU +25% Wireless N/W Equip.
Amyris AMRS +20% Biofuels & Materials
Financial Engines FNGN +20% Port Mgmt Software

The losers were dominated by SemiLEDS which reported their first quarter as a public company and had a much more negative commentary than they did just a month ago.

Bottom 5 through January 15
Company Ticker Loss Area
SemiLEDS LEDS -39% LED Semiconductors
SMART Tech. SMT -17% Interactive White Brds
ZST Digital NW ZSTN -14% Cable EQ Supplier
RealPage RP -11% Online Rental Mgmt
Ming Yang MY -10% Wind Turbines

[See the IPO Candy Performance page for more details.]

Selected Company Morsels

SemiLEDS had a dramatic first quarterly report as a public company.  After a very strong IPO in what many see as the “era of the LED,” the company disappointed investors with weak guidance, talk of pricing pressure and expanding patent litigation with market-leader CREE.  The shares collapsed 40% and are now close to the original IPO price.  Without a good script, the management team didn’t sound very convincing.

Facebook did a deal with Goldman Sachs that included a big capital raise from new investors that uses a special-purpose vehicle to get around disclosure requirements. At the same time, the company has also said they believe they would be prepared for an IPO in the future.

IPO Candy Folio Update

The IPO Candy Folio continues to put in excellent performance.  It was up 6.79% in the last two weeks versus a gain of 3% for the Russell 2000.

We didn’t make any adjustments at the start of the year because it wasn’t clear we could make any improvements.   It’s tempting to shift more into cash here or even hedge but most of the names in our Folio are still reasonably priced or strong market leaders like OpenTable, LogMeIn and Ancestry.com.   For now it’s staying the course.

More information and disclosures regarding the IPO Candy Folio can be found at: http://ipocandy.com/invest.

The Pipeline

There are 9 deals in active marketing and the pipeline for 2011 is healthy and growing.  We will be looking closer at Demand Media, BCD Semicondutors, InterXion, Neilsen and Velti this week.

Coverage and the Calendar

The coverage calendar will be getting busy.  Besides Youku.com and DandDang on Monday, we expect to see BonaFilm, SemiLEDS, Sky-Mobi, iSoftStone, FleetCore and RigNet receive coverage from their investment bankers in the next two weeks.

Several stocks have exited or will be coming off lockup agreements soon, although the windows could be extended during the earnings reporting period.  These include SMART Technologies, RealD, Qlik Technologies, Camelot Information Systems, Ameresco, Green Dot and Envestnet.

Visit the Candygram tab for the PDF with the IPO Candy Ecosystem Overview, Performance and Pipeline tables. (Requires paid subscription.)

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