It’s been quiet around here since the At Home IPO. The overall IPO market in 2016 has been weak. If companies want to go public in 2016, they need to get with it.
Some readers have contacted me over the past few weeks asking about opportunities. Unfortunately, the fact that the IPO market is so thin makes the investable IPO market even more anemic.
That said, the overall IPO market has picked up in September. This week alone, we’ve already seen two 60%+ one-day pops from Novan (NOVN) and The Trade Desk (TTD). Unfortunately, neither of these were available on the most accessible IPO platforms (Loyal3 and Motif Investing).
But the positive reception of those stocks, e.l.f Cosmetics (ELF) today, and Everbridge (EVBG) last week could encourage other companies to debut before the end of the year.
Lack of Opportunities this Year
2014 and 2015 were both fairly healthy IPO market years. 2014 saw 274 IPO pricings. 2015 saw 170 pricings.
But so far in 2016, we’ve seen just 67 as of 09/22/2016 (see this chart at Renaissance Capital for an updated count).
But looking back at the two previous years, we only had five Loyal3 IPOs available to all investors in 2014, and four in 2015.
|In 2014||In 2015|
|Globant||Blue Buffalo Pet|
|Dave & Buster’s||First Data Corp|
These lists don’t include limited access IPOs (customers or employees only) or follow-ons. So there was a lot more noise those years. Remember Square?
But 2016 has been nearly silent aside from At Home. See a complete history of Loyal3 IPOs here.
And we’ve seen nothing yet from Motif Investing. It’s been almost a year since their announced IPO access partnership with J.P. Morgan.
So being that only 67 IPOs have occurred so far this year, it’s no surprise the number of Loyal3 IPOs has suffered.
On the bright side, this lack of opportunities in 2016 is pointing to a strong 4th quarter, and, more likely, a very robust 2017.
Busy Working For You
I didn’t start Access IPOs to bombard you with frequent blog posts for the sake of a consistent writing schedule. I only publish when there’s something valuable to write about. Since the past month-and-a-half was so lackluster, I stayed quite.
But that doesn’t mean I’m not doing anything!
In fact, I’m working harder to find IPO opportunities now more than ever before. And working smarter too.
You may have noticed a new tab on the top menu. To help with identifying new IPO opportunities for ordinary investors, I’ve added a page called the Recent IPO S-1 Filings page, or the S-1 Feed for short.
The S-1 is the Securities and Exchange Commission’s (SEC) form that aspiring public companies are required to file. This is the first formal step in the IPO process.
Once the S-1 is filed, the companies can go through the subsequent steps of preparing for their IPO. The S-1 is followed by numerous amendments filed as S-1/A forms. The amended forms fill in the blanks that were left out in the initial S-1, adding details, more underwriters, terms and conditions, and additional information about the upcoming IPOs.
The S-1 is where we can look for clues about upcoming opportunities.
The SEC provides an RSS feed to which I’ve subscribed and put into an easy-to-use format that posts to the S-1 Feed page in real-time. I find it much easier to visit my page than to dig around the SEC website.
For the past weeks, I’ve been meticulously looking through S-1’s to find clues about opportunities. Unfortunately, I’m not seeing many encouraging signs.
But that doesn’t mean the pipeline is empty. This space can move fast. Some IPOs we’ve seen in the past didn’t have clues in the S-1 before becoming available to regular investors. Some Loyal3 IPO opportunities have popped up out of the blue.
And we haven’t yet seen an IPO from Motif Investing, even with the J.P. Morgan arrangement. So I’m not sure what clues we’ll find in the S-1 for those. We know J.P. Morgan must be the lead underwriter, and perhaps the sole lead underwriter.
Just today, e.l.f. Cosmetics (ELF) entered the public markets. The IPO priced at $17 and opened at $24, up over 40%. Nice opening!
J.P. Morgan is listed as the lead underwriter. But we never saw an email invitation from Motif Investing. This has been the case for a few IPOs this year. So just because J.P. Morgan is a lead, doesn’t open IPO access to Motif customers. Perhaps it’s because Morgan Stanley may be a co-lead underwriter or has some influence. Or there simply aren’t enough shares to offer customers (i.e. small-time investors are not the priority).
I was on the ELF email list and received no invitation from them.
I’m working on trying to figure out what kind of J.P. Morgan IPO deals will be available to Motif Investing customers. 11 months after the announcement, a lot of investors are curious.
If you have any insight, please contact me so I can share with our community.
We do anticipate that when there finally is an IPO opportunity at Motif Investing, all customers should get a fair shot at participation.
The lack of overall IPO volume hasn’t helped either.
Fidelity has offered some IPO access to eligible customers. My accounts there are not big enough, but I do receive email alerts. I often share these on my Twitter feed.
In addition to the S-1 Feed, I’m always following the latest IPO news. In an earlier post, I pointed out some top research tools for IPO investing which includes some news sites and Twitter feeds. When I’m not active on this site blogging, I still tweet out relevant new items that readers may be interested in.
Make sure to follow my Twitter handle for the latest. My latest tweets are also in the right-hand column of most pages on this site.
If you take a look at the S-1 Feed, you’ll see quite a few IPOs in the pipeline. Some of these are known as “blank check” or special-purpose acquisition companies (SPACs). The SEC describes them this way:
A blank check company is a development stage company that has no specific business plan or purpose or has indicated its business plan is to engage in a merger or acquisition with an unidentified company or companies, other entity, or person. These companies typically involve speculative investments and often fall within the SEC’s definition of “penny stocks” or are considered “microcap stocks.”
So we’re not interested in those.
Another large group of stocks in the IPO pipeline are biotech companies. These don’t really fit our interest either.
The opportunities we’re looking for as ordinary IPO investors involve established customer-centric companies that would benefit from having their customers as shareholders, or, benefit from the exposure of broad-access IPO.
Happenings in the Pipeline
Few companies I’ve seen in the S-1 Feed as of late fit this description. YETI remains my top pick for an upcoming opportunity. Their S-1 was filed July st. Two other companies were mentioned in my recent radar post.
Nutanix (NTNX) is a long-shot possibility for a Motif Investing IPO. J.P. Morgan is not a lead underwriter. But the S-1 does have a Directed Share Program clause in the S-1 that we like to see, and J.P. Morgan is mentioned within. But nothing about an affiliate or individual investors.
In other news, the Honest Company, previously one of our favorite possible opportunities, is now in talks with Unilever about a takeover. However, at a disappointing valuation. Maybe that deal will fall through and they’ll IPO or another consumer products behemoth will swoop in.
Snapchat is a big name tech company that’s been identified in the business media as potentially filing their S-1 before the end of the year. A successful IPO for them could warm up with the IPO market in early 2017. Some warmth is something all IPO investors need. No news on the chosen Snapchat underwriter yet.
Even though it’s been quiet on this website, that doesn’t mean it’s dormant. I haven’t identified any obvious opportunities as of late. But one could be right around the corner. They tend to sneak up on us. I’m looking everywhere for clues. Hopefully, I’ll be able to identify the next accessible IPO and alert you in time to participate (alerts are exclusive to email subscribers; subscribe here).
Your help is always appreciated too. Please check out the S-1 Feed to see if I’ve missed anything. If you see any relevant articles in the news, please tweet them to me or send an email via my contact page. Reader participation has been a huge help in the past. So thanks for the support.
Photo Courtesy of Pixabay CC0 Public Domain
Disclosure: The author does not own shares in any companies mentioned in this article.