When the quiet period expires, the stock is likely to rise as analysts at the firms that underwrite the IPO issue bullish research reports on the stock. They're likely to be bullish because the company has strong fundamentals and management, and its IPO saw solid demand.
Keane Group is an oil-service company with a specific focus on complex, technically difficult projects. These include horizontal and vertical fracturing, logging and engineered solutions, and wireline perforation.
Company management is seasoned. Chairman and CEO James C. Stewart has served in his positions since March 2011. Stewart previously was president and CEO of a privately held international drilling company and held various positions at Weatherford International and Schlumberger.
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Mr. M. Paul DeBonis, Jr. has been COO of Keane Group since May 2011. He has held senior positions at Big Country Energy Services, Pure Energy Services and Schlumberger.
Keane Group shares were priced at $19, at the high end of their expected range of $17 to $19. The deal's size was also increased. The stock closed its first day of trading at $21.65, reached a high of $22.93 on Feb. 2 and was recently changing hands at $21.13.
Expect bullish reports starting Feb. 15 from the deal's underwriters, who include Bank of America Merrill Lynch, Citigroup, J.P. Morgan and Morgan Stanley.
Our firm has found that shares of companies typically outperform the market during the period surrounding the expiration of their quiet periods. This period goes from five days before the expiration to two days after it.
Investors interested in this short-term play should scoop up shares during the next few trading sessions, hold through the release of research reports from Keane Group's underwriters and then sell shares during the Feb. 15 and Feb. 16 trading sessions.
This article is commentary by an independent contributor. At the time of publication, the author held shares of FRAC.