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HSBC's Latest Money Laundering Issues: Another Reason To Steer Clear In 2015
- HSBC has been struggling to bolster its anti-money laundering controls.
- Combined with stagnant results and a declining stock price, the news provides another reason to steer clear of HSBC in 2015; the stock does not appear to hold strong value.
- Other banking peers are on the rise, such as MS and WFC.
Think 'Inside The Box' For Box's Exciting IPO
- BOX, a provider of cloud-based storage and content collaboration technologies for mobile, plans to raise $186.8 million in its upcoming IPO on 1.23.2015.
- Lead Underwriters: Credit Suisse Securities, J.P. Morgan Securities, and Morgan Stanley.
- While BOX is still incurring losses, these are narrowing slightly, and revenues are increasing.
- GE will reportedly distribute BOX’s lead product to ~300,000 of its employees.
- As the only major IPO set for this week, we suggest investors strongly consider buying in.
IPO Lockup Expiration: HealthEquity Inc.
- January 27 concludes the 180-day lockup period for HQY; at this point, its pre-IPO shareholders, directors and executives will have the chance to sell their ~40.5 million shares.
- As just ~9 million shares were initially offered for sale, the event could effect a supply shock and significantly depress HQY's price, creating a short opportunity.
- Given HQY's early market success, insiders could be ready to take some early profits.
IPO Lockup Expiration: Catalent
- January 27 concludes the 180-day lockup period for Catalent. At this point, major pre-IPO shareholders will have a chance to sell their shares.
- The potential for a sudden increase in shares available in the open market may cause a significant decrease in the price of Catalent and open a short opportunity.
- Research has shown negative returns as large as (-5.8%) for IPO lockup expirations in the period of days (-11, 9) days surrounding the event day (0).
- Given Catalent's early market success, insiders could be ready to sell.
Flying Colors For Patriot National's IPO
- PN, provider of workers’ compensation brokerage and admin services for insurance companies, is set to IPO Friday.
- PN expects to raise $172.1 million, Lead underwriters are BMO Capital, SunTrust Robinson Humphrey and UBS.
- PN has grown in both revenue and net income since 2013.
- We suggest investors consider buying in.
IPO Lockup Expiration: Townsquare Media Inc.
- January 20, 2014 concludes the 180-day lockup period for TSQ. At this point, TSQ’s insiders will have a first opportunity to sell their ~8.5 million shares, previously restricted.
- Insiders include strong VC/PE partners, including Oaktree Capital. Research has shown greater price declines around the lockup expiration for firms with VC/PE backers.
- We see the event as a short opportunity. TSQ's major pre-IPO shareholders could be ready to take initial profits, following the solid early market performance and growing revenues.
IPO Lockup Expiration: Intersect ENT, Inc.
- January 20, 2015 concludes the 180-day lockup period on medical device company for ear, nose, and throat conditions, XENT.
- At this point, XENT’s major pre-iPO shareholders, including several VC backers, will have the chance to begin selling their ~17 million shares, restricted since the IPO.
- Given XENT’s early successes on the market, these insiders could be itching for profits; if even a portion decide to sell, XENT's share price could decline significantly.
- We see a very promising short opportunity on the horizon for traders of XENT.
IPO Quiet Period Expiration: Juno Therapeutics
- The 25-day quiet period on JUNO ends 1/13, allowing the firm's IPO underwriters to publish recommendations on 1/14.
- Underwriters include Goldman Sachs, J.P. Morgan, Morgan Stanley, and Leerink Partners; research has shown a correlation between underwriter quality and share price increases at the quiet period expiration.
- JUNO has had a solid start to trading; long-term, its impressive founders, management, and research team could develop it successfully.
- We see the current dip as a buying opportunity for this hot biotech firm in a very strong life sciences industry.
IPO Quiet Period Expiration: Hortonworks
- The SEC-mandated quiet period for Hortonworks expires January 6. On January 7, Hortwonworks' IPO underwriters, including Goldman Sachs, Credit Suisse, RBC and others, will be able to release research reports.
- The event will likely lead to at least a temporary increase in the price on Hortonworks shares.
- Hortonworks is the first Apache-Hadoop based company to go public. Apache-Hadoop is an open source big data platform.
- With growing revenues and a very strong client base, we see this event as a buying opportunity for a hot firm.
IPO Lockup Period Expiration: TubeMogul
- January 14, 2015, concludes the 180-day lockup period for TUBE; at this point, TUBE's major pre-IPO shareholders will be able to sell ~22 million previously restricted shares.
- With TUBE's IPO consisting of just ~6.3 million shares, the event could cause a supply shock and significantly decrease the price of TUBE stock.
- TUBE has posted very strong results, and its price has nearly tripled since its IPO; insiders could be itching for profits.
- We see the possibility for strong negative returns and a short opportunity at TUBE's lockup expiration.
IPO Quiet Period Expiration: James River Group Holdings
- JRVR's quiet period expires 1.6.2015. The IPO underwriters will be able to release research and recommendations on 1.7.2015.
- JRVR is a Bermuda-based insurance company specializing in reinsurance products for small and medium-sized businesses; underwriters include UBS, FBR, BMO, and Keefe Bruyette & Woods, and others.
- The company has posted strong revenues and stockholders' equity, and has fared well in early trading sessions.
- We see the quiet period expiration as an excellent opportunity to buy into this sunny firm.
IPO Quiet Period Expiration: Lending Club Corp.
- The 25-day quiet period on LC will come to an end on 1.20.2015, allowing the firm's IPO underwriters to publish (likely positive) analyses on 1.21.2015.
- LC is an online platform that connects borrowers and investors for peer-to-peer business or personal loans; underwriters include Goldman Sachs, Morgan Stanley, BMO Capital, Citigroup, Credit Suisse, and others.
- Recent research shows above-market returns in the (-5, +2) days surrounding a firm's quiet period expiration; underwriters usually have an incentive to publish positive recommendations on firms they recently underwrote.
IPO Quiet Period Expiration: Connecture Inc.
- The 25-day quiet period on underwriter analyses that began with the December 12, 2014 IPO of Connecture will end on January 6, 2015.
- At this point, Connecture's influential IPO underwriters, including J.P. Morgan, Morgan Stanley, Raymond James, Wells Fargo, and William Blair & Co., will likely release positive reports.
- The event could lead to at least a temporary rise in Connecture's price, as suggested by a body of research and our own studies.
- With gradual early market success and solid financial footing, we are optimistic on the firm's future prospects, particularly as the Affordable Care Act continues.
IPO Quiet Period Expiration: New Relic Inc.
- The 25-day quiet period on NEWR ends 1.6.2015, allowing its IPO underwriters to release analyses and recommendations on NEWR on 1.7.2015.
- NEWR is a provider of SaaS software analytics for application performance management and real user monitoring; underwriters include J.P. Morgan, Morgan Stanley, Allen & Co., JMP Securities and more.
- Despite net losses, investors don't seem to mind; NEWR stock has performed well. Revenues are up significantly.
- We see the upcoming quiet period expiration as new chance to buy into NEWR.
IPO Quiet Period Expiration: Metaldyne Performance Group Inc.
- The 40-day quiet period on MPG will come to an end 1.6.2015, allowing the firm's IPO underwriters to publish reports and recommendations on 1.7.2015.
- MPG is a producer of metal, precision-engineered products for engine, transmission, and driveline applications in vehicles; IPO underwriters include BofA Merrill Lynch, Deutsche Bank, Goldman Sachs, Credit Suisse, and others.
- Positive correlation has been found between the quality and reputation of a firm’s underwriters and above-market returns at the time of its quiet period expiration.
- With strong early trading sessions, impressive revenues, and a recovering vehicle industry, we suggest investors take advantage of the quiet period as a new buying opportunity for a growing firm.
New Findings For Above Market Returns In The IPO Quiet Period
- We continue to see IPO quiet period expirations as points around which to build profitable trading strategies.
- Our updated sample has increased from 118 companies (August 2014) to 258 companies.
- First option is holding an IPO (not a REIT or bank) in the day (-11, 0) window); the quiet period expiration is day 0, with (-11) being 11 days prior.
- The second is holding for days (-5, +2), excluding REITs, banks, and those companies, which have gained > 35% from pricing to day -6.
IPO Lockup Period Expiration: Globant
- January 14, 2015 concludes the 180-day lockup period on creative IT company Globant S.A.
- When the lockup period ends, Globant's pre-IPO shareholders will have the chance to sell their ~26 million shares (previously restricted); this may cause a significant decrease in Globant's share price.
- Recent research shows greatest negative returns (-5.8%) in the period of days (-11, 9) surrounding the event day (0).
- We suggest investors consider a short opportunity in the days surrounding the event.
IPO Lockup Period Expiration: Investar Holding Corp.
- The IPO lockup expiration for insiders’ restricted shares of ISTR is scheduled to expire on Dec. 29th.
- ISTR is a Baton Rouge, LA based community bank, which has shown stagnant market performance post-IPO despite strong fundamental growth.
- The event could open a short opportunity as directors, executives, and officers could be ready to dump some or all of their ~3.9 million shares.
New Momentum For Goldman's Investment Bank And Its Shareholders As 2015 Nears
- GS is making changes to their investment bank’s executive ranks in time for the New Year.
- This change comes on a foundation of solid results in 2014 - and well-timed for the New Year.
- Compared with its peers, the firm has dividend yield of 1.2, above the industry average and market cap of ~$84 billion (nearly fourteen times the industry average).
- With a history of 10+ quarters of beating analyst expectations for earnings, we are optimistic that Goldman's new executive lineup and strategy will play out well in 2015.
GE: A Promising Pick, Looking Ahead To 2015
- Despite the concern over GE's 11% exposure in oil and gas, many investors, including us, are still inspired.
- Continued re-focusing on core industrial businesses, and simultaneous shrinking of GE Capital, could provide GE with less risky returns as the global economy gradually recovers.
- GE is still a dominant player in the oil/gas sector, and healthy industrial revenues across all five core businesses should help the firm weather price volatility.
- We see the recent dip as a buying opportunity for those looking ahead to 2015.
Updated Research: Abnormal Negative Returns Around IPO Lockup Expiration - Shorting Opportunity
- IPO lockup expirations can offer company insiders (executives, directors, officers, PE/VC firms) a first chance to sell their shares. This often impacts at least a temporary decline in stock performance.
- Our latest findings show an increase in the greatest negative returns to (-5.8%) in the period of days (-11, 9) days surrounding the event day (0).
- The greatest negative returns occur for tech stocks that did not have a secondary and increased in price from their IPO pricing.
- Our initial sample included 241 companies whose IPO lockup expirations fell in 2013-June 2014. Our updated sample now includes 345 companies.
IPO Lockup Period Expiration: Michaels Companies
- The 180-day lockup period for MIK ends on December 24; at this point, major pre-IPO insiders will be able to sell their outstanding ~175 million shares on the open market.
- If some or all of these individuals and firms decide to sell, it could significantly depress MIK's stock price.
- Along with research from NYU, Harvard, and Duke Universities, our firm found the greatest decreases of (-5.5%) within the Day (-11, +9) window, surrounding the lockup expiration event (Day 0).
- Given MIK's solid early market performance, insiders could be ready to take initial profits; we suggest shareholders sell or short MIK ahead of the event for full gains.
Buy Virgin America As It Flies Into Christmas Quiet Period Expiration
- The IPO quiet period for VA is set to end December 24.
- On December 26, VA’s eight big name underwriters can release reports and recommendations on the firm.
- The event opens a buying opportunity as quiet period expiration often correlates with temporary stock price increases, particularly for those with several high-quality underwriters, like VA.
In A Quiet Week For IPOs, Bellicum Pharmaceuticals Stands Out
- The BLCM IPO is set to price Wednesday night, 12.17.2014; lead underwriters are Piper Jaffray, Citibank, and Jefferies.
- BLCM is focused on developing new types of cellular immunotherapies for various types of hematological cancers and solid tumors, as well as orphan inherited blood disorders.
- While the scientific and medical prospects for Bellicum’s CID platform of cancer treatment is exciting, the firm’s financial outlook is mixed and competitors are strong.
- Still, with many solid underwriters and PE supporters, as well as being in a quiet week, BLCM stands out.
Rice Midstream Partners IPO: Don't Look For The Deeper Well
- RMP filed for an IPO as the natural gas pipeline entity of Rice Energy; RMP is planning a ~$500 million raise.
- Underwriting syndicate led by Barclays, Wells Fargo, Citibank, Goldman Sachs, RBC Capital Markets.
- While parent company Rice Energy has shown growth, the stock is down considerably since June; a volatile oil industry is difficult for investors to navigate at present.
- RMP itself has shown significant and increasing net losses; we suggest investors hold off.
Hop On Board For OnDeck Capital's IPO
- Small business lending firm ONDK expects to raise $107 million in its upcoming IPO; Lead Underwriters: BofA Merrill Lynch, Deutsche Bank Securities, J.P. Morgan Securities, Jeffries LLC, and Morgan Stanley.
- While ONDK is still not profitable, net losses have decreased while revenues have more than doubled since 2013.
- We are encouraged by the recent IPO success of similar firm Lending Corp and suggest investors consider buying in.
- As the first of just four IPOs this week, ONDK could garner additional investor attention.
Adapting For The Adeptus Health Lockup Expiration
- December 22, 2014 concludes the 180-day lockup period for ADPT, at which point the firm’s major pre-IPO shareholders, will have the chance to sell ~15 million shares.
- The supply shock could create a temporary decrease and open a short opportunity.
- A strong early market performance, coupled with impressive revenue gains, could leave many insiders itching for profits.
- We suggest investors sell ADPT ahead of the event to take full advantage of likely declines.
Amazon-Backed Juno Therapeutics IPO Could Be Another Fierce Biotech Contender
Dec. 15, 2014 • 9 Comments
- JUNO expects to raise $150+ million in its upcoming IPO, set to price Thursday, 12.18; underwriters include Goldman Sachs, J.P. Morgan, Morgan Stanley, Leerink Partners.
- Seattle-based JUNO is a biopharmaceutical company, focused on using the body’s immune system to fight cancer.
- While recent clinical results are promising, it could be a while before JUNO's treatments are commercialized; however, JUNO boasts significant venture funding, including from Amazon CEO Jeff Bezos.
- We are also encouraged by the firm’s strong underwriters and see JUNO as one of the more promising biotech IPOs, in a strong 2014 market for such companies.
Credit Suisse Continues To Fall: Not A Buying Opportunity As Regulations Tighten
- CS is looking to scale back its prime brokerage unit due to underperformance; this follows publicity of bad loan practices, and tight Swiss capital requirements.
- While the firm noted a Q3 profit, investment banking income fell by one fifth, and CS’ core (strategic) operations continued to decline in revenue.
- CS stock has declined by ~16% YTD.
- We do not see the current dip as a buying opportunity.
New Buying Opportunity In Store For STORE Capital Investors
- On Dec. 29, STOR's 25-day quiet period will end 12.15; STOR's IPO underwriters, including Credit Suisse, Goldman Sachs, and Morgan Stanley LLC, will be allowed to issue reports.
- STOR could see a 2-6% price increase in the days surrounding the event, according to a range of studies.
- With modest gains and solid results, STOR is well poised in a growing sector for an additional boost.
- We suggest investors buy STOR ahead of the event for full gains.
ServiceMaster Serves Up A Short Play
- We see a short opportunity unfolding for SERV, in line with its upcoming lockup period expiration, set for 12.23.2014.
- Studies show declines often begin eleven days prior to the expiration day and continue for nine days afterward.
- We suggest investors sell SERV ahead of the event.
Paramount Group: Rising Higher As Quiet Period Expiration Approaches
- PGRE recently raised a $2.29 billion IPO, making it the largest REIT initial public offering ever.
- Powerful underwriters, including BofA Merrill Lynch, Morgan Stanley, Wells Fargo, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, RBC Capital Markets and UBS could boost the stock even higher.
- At PGRE's quiet period expiration, set for 12.15.2014, these underwriters will be able to release (likely positive) research and analyses on the firm for the first time.
- A combination of this impending good news, PGRE's solid market performance and impressive portfolio, all suggest at least a short-term price appreciation.
- We suggest that investors consider buying PGRE ahead of the event for full gains.