IPO Watch: Battered, Beaten and Pulped in 2008 (Except Visa)

If there’s one sector that’s been battered, beaten, and pulped this year, it has  been the IPO market. In fact, things are so bad that—despite the successful Visa (V) IPO—in all of Q2, there were no venture-backed offerings at all. With very good reason: Risk.

You see, IPOs thrive in bull markets. They need institutional investors willing to take risks… and they need giddy private investors with cash burning a hole in their collective pockets, eager and willing to throw cash at every cockamamie scheme the investment bankers bestow on the market.

These days, there’s neither. Investment bankers (those who still have a job) have been scorched by their enormous miscalculations involving subprime mortgage schemes. Institutions that used to bankroll initial public offerings are teetering at the brink of bankruptcy or throwing  what’s left of their good money after crude oil and gold.

And retail investors?  With some indexes down over 50% in a year, most are hanging onto their portfolios by their nails, waiting for a rebound to sell… not to plow money in new, untested ventures.

No wonder then that most of the 2008 IPO listings have “TBA” — to be announced — as their status. Companies will be biding their time until the markets pick up again. And if I’m right about this, and owners have an iota of brains left, they’ll be keeping out of this market for months… if not years.

Of course, hope springs eternal. There are some companies whose underwriters continue to misjudge the market. Las week, they threw Energy Recovery, Inc. (ERII) to the wolves, pricing the deal at $8.50. On its first day of trading, the stock listlessly spilled up to $10.25. Yesterday, it ended at $9.83. Look at this sad-sack stock chart: Where are the fireworks?

click to enlarge

Now, mind you, this is probably not a bad company. Founded in the early 1990s, Energy Recovery sure has the right name to appeal to investors. The company develops systems that capture and recycle up to 98% of the energy from desalination.

Sure, there have been a number of IPOs this year that did alright:

• Visa, Inc. (V) up 42%
• Heritage-Crystal Clean, LLC (HCCI) up 36%
• Asia Time Corporation (TYM) up 31%
• IPC The Hospitalist Company, Inc. (IPCM) up 24%
• RiskMetrics Group, Inc. (RMG) up 11%

Now, those were the BEST returns at the end of the quarter, courtesy to MSN Money.

The worst are really nothing to write home about:

• Bioheart, Inc. (BHRT) down -24%
• ArcSight, Inc. (ARST) down -23%
• Williams Pipleline Partners L.P. (WMZ)  down -13%
• MAKO Surgical Corp. (MAKO) down -10%
• ATA Inc. (ATAI) down -7%
• CardioNet, Inc. (BEAT) down -2%

And for 5 companies that showed first-day gains, there are seven that lost or barely broke even.

The bloom’s off the IPO rose. And the market won’t revive until the banking crisis is over. Which could be a year or two from now. In the mean time, there are better opportunities to make money, with far better odds for success.

Disclosure: None

Comments

[syndicat]

How about Intrepid Potash (IPI), a big winner?

Some financial IPOs were disasters: AGNC, FSC. FSC came at $15 and is now under $10, all in the last 30 days.

[buyforeclosures]

Visa is getting pummeled today and I am, Buying like it is a year end sale. Got some at 74.50 and waiting with a loaded trigger for even better pricing. EOY 2009 I look like a genius

[Voogle]

Yes, man, I also get more V at 78 yesterday.

[Jake Blues]

The writing is on the wall for Visa. This is a great long term holding. It will be even better when Joe Investor figures out it's not tied into the financial sector.

[ronjsq]

I m Financial Analyst at Major Wall St Firm. Usually i dont provide free services, but due to current sentiment of the market, i think it as a moral responsibility to help you all out. Buy VISA(V). Also Buy Energy Stocks like Chesapeake Energy(CHK). This will be a good hedge. Buy Natural Gas stocks like SouthWestern Energy(SWN). A great stock to make good huge profit is Sirius Satellite Radio(SIRI). Fcc is soon likely to approve its merger with XM.Sirius is extremely undervalued stock right now. As soon as the merger is approved, it will skyrocket to $10 a stock . Healthcare is doing great and will soar,so buy Merck(MRK), Pfizer(PFE) etc. Microsoft(MSFT) is a great buy at this price as well.Buy these stocks on Monday or Tuesday - VISA(V), Sirius(SIRI), Chesapeake Energy(CHK), Southwestern Energy(SWN), Merck(MRK), Pfizer(PFE), Microsoft(MSFT).

[User 172125]

After a break from the site I'll be providing valuable insight and commentary.

I couldn't stay away for long.

I missed you guys.

Jon

[mrbill for V]

VWINNER do us all a favor and don't provide us with you valuable insight
what's that? last chance to buy V in the 70's a month ago? How about in the 60's this month. and now we have RONJSQ with his expert advice and it's free.

[HT5]

Didn't VWINNER say that Visa would NEVER NEVER NEVER go under $75.00 in our lifetime!! He knows nothing!! VWINNER should use his time to take care of his own blog and his little band of followers: "Rah, Rah, Go Visa Go!!" VWINNER go back to your own blog where they idle and worship you.