Caution continues to be the name of the IPO game, as evidenced by this week's stock offerings.
New issues for the week include auto insurer
( DRCT), which began trading on Tuesday, real estate investment trust
, government services provider
and regional bank
Texas Capital Bancshares
Each of the firms -- which represent some of the steadier industries in a still-shaky economy -- was recently profitable, according to
Securities and Exchange Commission
Three years after the collapse of the stock market bubble, investors remain very reluctant to take on IPOs with risk attached to them. "You are getting deals from insurers and reinsurers. They are good for safety," said Jeffrey Hirschkorn, a senior analyst at
Direct General's IPO follows a well-received offering from auto insurer
Infinity Property & Casualty
On Monday, Direct General sold 6.93 million shares at the top of its proposed range of $19 to $21 a share to raise $145.6 million. The stock was lately higher $2.96, or 14.1%, to $24 on its first day.
Notably, Keefe, Bruyette & Woods, a New York bank focused on the financial services sector, was the lead manager on the deal. "You are seeing a diversification in underwriters," said Hirschkorn. "People are looking to regional investment banks for security."
Washington-based Ferris, Baker Watts is the banker for Gladstone Commercial, which hopes to sell 5.5 million shares at $15 apiece, according to SEC filings. Gladstone is the third REIT to IPO this year, after
American Financial Realty Trust
( AFR) and
Georgia bank SunTrust Robinson Humphrey is planning to take Providence Service public. Providence is expecting to sell 4.3 million shares for between $10 and $12 a share.
Lehman Brothers will manage Texas Capital's offering of an estimated six million shares for between $10 and $12 a share. In October, the bank postponed its deal, citing unfavorable market conditions.
More recently, auto parts maker
JL French Automotive Casting
withdrew its IPO on Monday, blaming market conditions. The news followed recent decisions by
to be acquired rather than go public.
While IPO activity has picked up lately -- there have not been four IPOs in one week since last November, according to Thomson Financial -- enthusiasm for deals continues to be tempered.
"We are in a market where investors are still trying to find their way back to sanity," said Hirschkorn.