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NEW YORK (
TheStreet) -- It's time for investors to get real about IPO's after
Groupon(GRPN - Get Report) launched its
shares into the market.
The fact is the majority of IPOs have significantly underperformed the markets in the last year, with only a few keeping the momentum.
For those dabbling in IPOs, it's clearly always been a stock picker's game. Even so, the game may be changing in the favor of companies like Groupon.
Every time a company lists on stock exchanges and pops in its first day of trading, it's hard to escape the excitement. For example, Groupon sold nearly 5% of the company and its first day of trading sent shares to $26.11 -- more than 30% above its $20 a share offer price.
But while the
S&P 500 is up nearly 2% and
Dow Jones Industrial Average is up nearly 4% in the last year, the 193 total IPO issues done in that time have fallen an average of 9.3% according to data compiled by
Some of those IPOs like
LinkedIn(LNKD - Get Report), which has nearly doubled, and
Dunkin' Brands(DNKN - Get Report) are providing outsized gains, while others like
Renen(RENN - Get Report),
Vanguard Health(VHS) and
Freescale Semiconductor (FSL - Get Report) are down at least 30%.
In the last year, the five biggest IPOs came from private equity portfolios [excluding the U.S. Treasury's sale of <b>General Motors</b> <span class=" TICKERFLAT">(<a href="/quote/GM.html">GM</a> - <a href="http://secure2.thestreet.com/cap/prm.do?OID=028198&ticker=GM">Get Report</a><a class=" arrow" href="/quote/GM.html"><span class=" tickerChange" id="story_GM"></span></a>)</span> stock] between January and May and at sizes over $1 billion.
Recent months show, private equity's billion dollar share sales are over for now and even share sales half that size like
Dunkin' Brands (DNKN - Get Report) July offering are rare in today's market. While there are still giant companies in
private equity coffers
, this summer and fall signal that it's companies like Groupon, LinkedIn and
Zynga going public for the first time ever, which are driving the still slow IPO market.
For investors looking at upcoming stock issues, it may mean that the market's turn from a private equity focus is a chance to start over.
KKR(KKR - Get Report), one of the world's largest private equity firms reported its
largest quarterly loss ever
-- an earnings announcement that followed
. Falling public market values of recently IPO'ed companies like
HCA(HCA - Get Report),
Kinder Morgan(KMI - Get Report), Freescale and
Kosmos Energy(KOS) were a hit to private equity earnings, even as firms drew in investor money and increased fee earnings in the quarter. KKR wrote the value of its overall investments by 8.5%, led by recently IPO'ed companies like HCA and
NXP Semiconductors (NXP) summer-to-fall stock declines.