IPO Candy June Folio Update

Whirly lollipop on orange background.

As we exit June and head into the summer we made a number of adjustments to our IPO Candy Folio. We’re also providing a link to a sheet where you can see the holdings if you’re interested. This isn’t a permanent solution but we’ll find an easier way for you to see what’s in it and get updates.

First the additions:

We added back Facebook (FB) due to sustained execution and two facts – they are owning mobile and also video in terms of engagement and increasingly content. It’s a big company and we don’t have any “edge” there but still feel it belongs.

Two new names – Glaukos (GKOS) is more promising for treating glaucoma than Presbia (LENS) which we are removing. Glaukos is in the early stages of a steep revenue ramp so coming up with an accurate IV isn’t easy but our initial view was the stock would be $34/share this year so upside remains. See our post on GKOS here: Investors are eyeballing Glaukos IPO.

Milacron (MCRN) is another manufacturing name. We did very well with Proto Labs (PRLB) and look for companies that combine innovation with US manufacturing. There are signs that new products and growth will be coming at the intersection of design and manufacturing and companies like Milacron will be important players in this growth.

Deletions:

Castlight (CSLT) – We bought this one for a bounce and made a little on it but feel that management execution doesn’t support owning it.

Coupons.com (COUP) – This one is still misunderstood and much better than RetailMeNot (SALE) but in the end the CPG companies are not in the best position to leverage the local/mobile/internet sales and marketing opportunity. In some ways names like FB have us covered here too.

InvenSense (INVN) – Sensor technologies are in high demand for a variety of reasons – mobile, IoT and VR but competition is fierce and it takes a long time to eek out margins.

Invitae (INVN) – This one has held steady as a play on increased use of gene-based (DNA) technologies but we’re not convinced that this is one we need to own.

LendingClub (LC) – One thing we hadn’t anticipated in our write up of LC: Everyone wants into LendingClub is the rise of “robo-advisors” into the market. We see these as taking a large share of the algorithm-driven investment market which adds to the risks for LC.

Presbia (LENS) – See above comment but in summary the market adoption of the “microlens” is hard or impossible for us to get a handle on. For those that know this one could be a big opportunity but it won’t be us.

SMART Tech (SMT) – We love the SMART Kapp product line and think this one can be a winner however manufacturing problems, lackluster management execution and “baggage” from the historical education market makes us weed it out.

TrueCar (TRUE) – We’ve followed TRUE since they were a private company (our parent company was a paid advisor to them at that time.) Although TrueCar as largely delivered on their vision to bring transparency and efficiency to the auto market it seems to have reached the limits of what they can do in the market. Other industry players – including big dealers – have responded. Unlike Zillow (Z) for homes it seems less likely for consumers to start with TrueCar but rather visit a dealer or a manufacturer site online. We’re not making a definitive call on whether their model will play out or not but the road looks a little foggy right now.

Verastem (VSTM) – Cancer treatment strategies have proliferated and while Verastem seemed uniquely qualified at the time, now it’s harder to say.

IPO Candy Portofolio

We’re planning to update the portfolio more frequently and also create at least one new one based on a monthly service we’ll be launching in August called “IPO Candy Broken IPOs” where we look more closely at some good deals that may have stumbled along their journey.

At least a handful of you have asked for the ability to view the IPO Candy Portfolio so here is a link to a Google Doc with the companies. More information on the portfolio along with the ability to invest in it can be found here.

It’s been a heck of a few years since the 2008/9 meltdown and the market has had a huge run.

Screenshot 2015-06-30 15.52.07

Leave a Comment