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.
The following is our bi-weekly Candygram Report. 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.
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|
|ReachLocal||RLOC||+31%||SMB Online Marketing|
|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|
|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|
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 (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 (OPEN), LogMeIn (LOG) and Ancestry.com (ACOM). For now it’s staying the course.
More information and disclosures regarding the IPO Candy Folio can be found here.
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 (BONA), SemiLEDS (LEDS), Sky-Mobi (MOBI), iSoftStone (ISS), FleetCore (FLT) and RigNet (RNET) 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 (SMT), RealD (RLD), Qlik Technologies (QLIK), Camelot Information Systems (CIS), Ameresco (AMRC), Green Dot (GDOT) and Envestnet (ENV).