As the share market rebound continues, the number of initial public offerings (IPOs) and capital raisings are on the rise too.
There are the big names, such as Channel Nine and freelancer.com, but over the past 12 months, the Switzer Super Report has had a look at some of the lesser-known ones as well. Given freelancer.com lists tomorrow, it’s a good time to look at our track record of IPO calls
The big names
Last week [1] Paul Rickard shared his view on the Channel Nine IPO and whether or not it was worth buying. The Switzer Super Report view is as follows:
“Avoid. It is not a buy for yield, the growth story rings a little hollow, and given the pricing premium, there is no compelling case for it over Seven West. And that’s without worrying about all that stock held (or more realistically, not held), in escrow.”
Freelancer.com lists tomorrow but the offer closed earlier this month with over 600 investors, including Joel Sng, who was also one of the initial investors in Facebook and Twitter. This stock was pretty hard to get a hold of in the offer and we said just under a month ago [2] that there would be significant buying interest come tomorrow.
The health club
Then there were the two companies in the health sector – iSelect and Virtus.
In May [3], we said that the market was going to love iSelect “because of the scaling-back of broker and fund manager applications, but once listed, the stock has to be valued appropriately.”
And the market did love it for a while, but then it got into a bit of trouble with the Australian Securities and Investments Commission (ASIC), after failing it meet its full-year revenue forecast. It has since been cleared but the share price is yet to recover.
iSelect share chart
We also said in May that if you did manage to get some of the limited stock on offer that “it’s probably best to sell into the initial strength and then let the professional investors sift through the working capital cycle and assess what it is really worth”. Advice we hope you have followed.
As for the other health offering – IVF business Virtus Health [4] – it is now trading well above its listing price of $5.68 and is in the $8.50 range. So we were right when we said that, although the market is usually pretty wary of unique investments like this one, Virtus was different because it is a product not subject to discretionary spending.
“Demand for it is driven by one of the most basic, but strongest, human needs. In effect, Virtus sells hope.”
Vistus Health share chart
The trouble maker
In June [5], we reported the IPO of Domus US Multifamily Real Estate Fund was in deep water.
“Bell Potter and Ord Minnett are clearly having trouble selling the stock. Given this weak appetite for Domus, investors who are interested in Domus US Multifamily Real Estate Fund can afford to wait to see (a) whether the IPO goes ahead, and (b) if so, the size of the discount at which they can buy the stock in the after-market.”
That stock hasn’t yet made it to market almost six months later.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
Also in the Switzer Super Report:
- Charlie Aitken: East Coast recovery rolls on for JB Hi-Fi, Bendigo and CSR [6]
- Penny Pryor: Buy, Sell, Hold – what the brokers say [7]
- Ron Bewley: Why I’m changing my sector allocation [8]
- Tony Negline: Don’t let inflation be a distraction [9]
- Paul Rickard: NAB’s new hybrid security [10]
- Tony Negline: Set your kids up financially… for life – Part 1 [11]
- Question of the week: What’s in a short? [12]