Re/Max Holdings (NYSE:RMAX) joined a number of highly visible companies who went public this fall. The underwriters are preparing there positive research reports on the company. See my previous article.
The company was founded in 1973 in Denver, Colorado, and since that time, has grown to include 92,000 real estate agents across the world.
Re/Max revolutionized the concept of real estate company ownership by offering franchises that provided the marketing that local brokers depend on for new customers. Each office is independently owned and operated, with a monthly and annual fee going to the holding company. This model has served the industry well, providing comprehensive training for brokers while allowing full autonomy in everyday operations.
Re/Max was instrumental in finding buyers for foreclosed and short sale homes throughout 2006 to 2012. According to the National Association of Realtors, prices of single-family homes has risen significantly over the last quarter. Sellers that have been waiting for prices to rise now feel more hopeful about putting properties on the market to trade up or trade down as their lifestyle needs have changed. Re/Max will be among the beneficiaries of this increased real estate market traffic.
The RMAX Public Offering
The Re/Max IPO offered 10 million shares at a price of $22 per share. The company will use the proceeds to reacquire regional franchise rights and repurchase ownership stakes from existing shareholders. The company announced that there would be no change to franchise fees, which could help the company retain its strong presence in the marketplace.
With Bank of America, Morgan Stanley, JP Morgan and Merrill Lynch underwriting the IPO, the stock had a successful launch. Shares sold for $22 per share, slightly above expectations and rose immediately. Investors are watching the strong numbers from the real estate sector and expect Re/Max to continue to provide opportunities for gains as long as interest rates remain at current levels.
With the quiet period ending this month for the underwriters of the Re/Max's IPO, investors can expect the customary uptick in price to occur. The end of the quiet period is traditionally a time where new IPO stocks see a price rise as the company resumes opportunities to release positive information to the public through their optomistic underwriters.
Aggressive investors will be looking for the stock price to move upwards as strong research reports from the tier one underwriters of this successful IPO hit Wall Street and the retail investors on Main Street.
Disclosure: I am long RMAX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.