Today we made a few changes to the IPO Candy Folio to close out the first month of the year. Two deals we like priced today – Shake Shack and Spark Therapeutics but the pricing and aftermarket reaction has been stunning. So we will have to wait on those and consider them when the hype subsides.
We didn’t remove any names but added the following and did an overall balancing to reset all positions to the target weightings:
BOX – This enterprise cloud player had a great IPO and spent the last four days declining back to a price level that make sense. It’s early in their shift to enterprise collaboration but they start from a position of strength. This is a name we cover so there is a BOX research page. We’re not going to a full allocation on BOX since it’s still a little expensive. Around lockup expiration it might get more attractive.
LENS – We wrote about this company which is a development stage maker of a micro lens that can be inserted into the eye to fix middle-age vision problems. The IPO was a disaster since the company decided to just put one middle tier bank (Jefferies) on the cover. They could of easily had three or four and a *much* better result. This concerns us vis a vis management but they may just be bad at capital markets (not unusual) but good at developing this new medical product. The market opportunity is enormous and this one is likely to be overlooked for some time.
NEWR – New Relic is another enterprise software infrastructure name that is take share from established providers with their comprehensive “software analytics” approach. Their execution has been strong and much may already be reflected in the shares. However we have seen firsthand that enterprise IT organizations are just getting started with NEWR and we are still at the early stages of this growth story. We published a research note on NEWR recently too and will add it to our coverage pages soon.
The markets are in a shaky seventh year of bullish performance and most are nervous about this year – but we’ll stick to winning franchises and managements which may be volatile in this kind of market but over the long term should win out.