This is the text from the Candygram that went out on November 15th.
The IPO market has stayed busy but it has become more selective. The past two weeks have been good overall but some deals, like Complete Genomics, have struggled and five others were pulled. There may be a reduction of risk tolerance creeping in as we note that the flavor of the IPO calendar is shifting a bit to big and “safe” deals like GM, Booz Allen, Aeroflex and LPL Investment Holdings.
Of the eleven deals filed, four were China-based firms. The durability of the “China-play” names in the IPO market means in the next few weeks we will be adding an additional table to our bi-weekly Candygram to provide a look just at these China-based IPO names.
We will be looking more closely at Bitauto, Masergy Communications, Ambit Biosciences, and Tudou Holdings.
Overall, the IPO market continues to be fairly broad and deep but has moderated in terms of underlying strength. The approach of the year-end holidays may have something to do with it. Next week we might see a real separation, as only the sweet creamy deals get priced and trade well.
After a heady September and October, the overall performance median of the IPO Candy Ecosystem was dead flat. Beneath the surface, however, there were frothy gains likeBroadSoft (BSFT $16.81 +87%) and heavy drops like Pacific Biosciences (PACB $12.25 –27%). Other top performers included Tesla (TSLA $30 +37%), Fabrinet (FN $19 +35%),RealPage (RP $30 +31%) and Motricity (MOTR $29 +31%).
See the IPO Candy Performance page below for more details.
SELECTED COMPANY MORSELS
Tesla got a notable boost from a new investment in the company by Panasonic, a new Model “X” in development, and positive sentiment despite a typically weak quarterly report as a development-stage company.
SPS Commerce had a solid report and announced a secondary to support the expiration of the share lockup period. For them this is a smart move.
Sensata completed a major secondary (20 million shares at $24) and is well positioned in the “smarter planet” space.
TeleNav has done poorly but some recent product announcements include some interesting social networking features.
Meru Networks seems to be finding chinks in Cisco’s armor in the enterprise wireless space, and new product offerings look good.
IPO CANDY FOLIO UPDATE
For October, the IPO Candy Folio eked out a small 1.6% gain for the two weeks. We are making quite a few adjustments to the Folio today:
LOGM, 6% to 4%, take profits, insider selling
ACOM, 6% to 5%, take profits
TSLA, 5% to 4%, take profits
AONE, 5% to 4%, rebalancing
SWI, 4% to 3%, take profits, insider selling
SMT, 3% to 4%, lower price
MDMD, 3% to 4%, lower price
GNMK, 2% to 3%, lower price
PACB, 2%, Bioengineering
IPHI, 2%, Communication Semiconductors
GNOM, 2%, DNA Sequencing
FTNT, 2%, Cloud Security
MERU, 2%, Enterprise Wireless Networking
Our cash position declines from 13% to 6%.
Overall, these moves serve to broaden the Folio with more names and also adjust positions based on recent price moves.
More information and disclosures regarding the IPO Candy Folio can be found at:/invest.
FILINGS & THE PIPELINE
There are over a dozen deals actively marketing and scheduled for next week. The calendar has tipped toward more mature companies; however, there were several new smaller company filings of interest including Todou Holdings (online video in China) and Ambit Biosciences (cancer therapy).
Coverage and the Calendar
Most eyes will be on the GM IPO (link) and, to a lesser extent, Booz Allen and Aeroflex. We’ll also be watching LPL Investment Holdings, which may provide a window into how the IPO investment market may evolve.
The next two weeks should be relatively quiet in terms of new coverage and lockup expirations. Only NetSpend is slated for banker coverage (on November 28th). Two lockups, CBOE Holdings and Genmark Diagnostics, are scheduled to come off (on November 23rd).
[Attached please find our IPO Candy Ecosystem Overview, Performance and Pipeline tables.]
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Our next CANDYGRAM will be published on Wednesday December 1st.
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