Updated from 10:39 a.m. EST
John Hancock Financial Services
posted modest gains in its first hours of trading Thursday, indicating that investor enthusiasm for new issues may well be confined to Internet-related companies.
The company's shares were up 7/8, or 5%, at 17 7/8 at midday. (The stock finished Thursday up 5/8, or 4%, at 17 5/8.)
Hancock, the 15th-largest life insurer in the U.S., raised $1.734 billion in its initial public offering of 102 million shares through
Morgan Stanley Dean Witter
, the lead underwriter for the transaction.
The offering is far bigger any previous IPO so far this year, but fell short of the huge public
United Parcel Service
, which raised $5.47 billion in November.
The IPO marks Hancock's transition to a publicly held company rather than a policyholder-owned business. Under the deal, policyholders received 229.7 million shares. The reorganization is part of Hancock's transformation from a conventional insurance company to a major asset manager and financial services provider.
John Hancock initially was hoping to sell the shares for $25 each, according to its filing with the
Securities and Exchange Commission
, but settled for a price of $17 because of the weakness in financial stocks from rising interest rates. Had that market shown greater strength in January, Hancock would have pulled in around $2.55 billion.
The tepid reception for Hancock's stock mirrored investors' reaction to its mutual fund group through 1999. The Hancock family of funds failed to gain market share against others like
In fact, John Hancock funds have seen a net outflow of $2.4 billion from January to November of 1999, according to Financial Research of Boston, a mutual fund research group.
But Hancock's problem is deeper than market share. Hancock's stock funds, which account for about a third of the company's funds, underperformed the average domestic stock fund as calculated by
Lipper Analytical Services
Further, many of Hancock's biggest funds have invested heavily in the stocks of financial institutions.
The largest fund in the group, with about $3.35 billion in total assets, is
Hancock Regional Bank B fund, which is a collection of slumping financial stocks. The fund has lost 16% over the last 12 months from the last public reporting period and dropped in rank within its category, according to Morningstar, a company that tracks mutual fund performance.
The sixth largest in the family,
Hancock Financial Industry A, fell 1% over the same period.