It's a busy week in the secondaries market, with 14 issues slated to price. On each, I've indicated my opinion based on a scale used on the ipoPros Web site. These opinions are based on the relative price strength of the issues from the time the offerings were filed with the Securities and Exchange Commission.
This scale is ranked best-to-worst:
- LOOKS GOOD -- This is the highest rating I assign to any follow-on deal. I expect these deals to produce a significant premium bid.
- LOOKS SHOT (i.e. it has a shot at performing well) -- The LOOKS-SHOT rating is a coin toss, usually decided by where the deal is priced relative to its previous close. Pricing at the previous closing price is likely to lessen any chance of a premium, while a significant discount tends to help a stock's chances of delivering a profit.
- LOOKS FLAT -- A LOOKS-FLAT rating is given to those deals where I feel a premium bid is unlikely, but downside to the stock's price is minimal. These deals are suitable candidates for what I call "payback" trades and "favors."
- LOOKS WEAK -- A LOOKS-WEAK rating is assigned to those follow-on deals where the stock's price has lost some ground and shows signs of getting worse. I feel that these deals carry a measure of risk, but if priced correctly, may work.
- LOOKS RISKY --This is the lowest rating I assign to any follow-on deal, and is usually given to those deals whose stock price has dropped significantly since the financing was announced. These deals bring with them unwarranted market risk.
Ben Holmes is the founder of ipoPros.com, a Boulder, Colo.-based research boutique (now a wholly-owned subsidiary of TheStreet.com) specializing in the analysis of equity syndicate offerings. This column is not meant as investment advice; it is instead meant to provide insight into the methods of new and secondary offerings. Neither Holmes nor his firm has entered indications of interest in any of the companies discussed in this column. Holmes' This Week in IPOs column appears Sundays, This Week's Secondaries appears Tuesdays, Upcoming Lockup Expirations appears Wednesdays and The Quiet Period appears on Fridays. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Holmes appreciates your feedback at