The bull market for new issues keeps charging.
According to Dealogic, the dollar value of U.S. equity offerings -- IPOs and follow-ons -- rose by more than 80% in January vs. the same month last year. The total number of deals was also up sharply, from 31 transactions in January 2005 to 51 last month.
Historically, January is a slow month in the equity offering business, after bankers rush to complete deals at the end of the previous year. Activity generally picks up about six weeks after the new year begins, according to David Menlow, president of the IPO Financial Network, a firm that researches new stock offerings.
This year, however, was different. "This is certainly outside of the bell curve," said Menlow, pointing out that the end of last year was fairly slow compared with previous years, and that might be one reason for this movement.
With the amount of cash and capital in the markets right now, it's not surprising that equity activity remains robust even through a usually slow period. And after numerous quarters of economic growth, the equity activity has finally caught up.
"It takes time before positive growth attracts new equity issuances," says Marc Pado, chief market strategist at Cantor Fitzgerald. "There is liquidity, and the economic environment has been steady and higher, so it creates an attractive opportunity to tap the markets."
But Pado cautions that bursts of equity activity can mean that companies may be feeling the end of an economic growth cycle and see this as a now-or-never chance to tap the market.
"This increased equity offering activity can indicate that we are long in the tooth of the economic cycle," says Pado.
The most active sector in January was health care, which raked up $1.2 billion for 11 offerings during the month. Real estate equity offerings were the highest in terms of total volume, posting $1.7 billion for six deals.
, not surprisingly, was the top performer during the month, up over 111% from its IPO offer price. The three other best-performing IPOs, however, came after the Chipotle issuance.
H&E Equipment Services
is up over 29%,
has jumped almost 17%, and
( MAIL) is up over 15%.
While it is too early to make any bets in the investment banking department,
gets the award for leading Wall Street in total U.S. equity offerings in January, with eight deals bringing in $2.1 billion.
comes in second place, with eight deals and $1.7 billion.