NEW YORK ( Real Money) -- You can't stop the froth, even in the midst of a new Cold War between Russia and the West. You can't stop it even as major stocks seem to be rolling over left and right. You can't stop it even when the established stocks in a group are getting crushed but initial public offerings in the same sector come along and roar.
Take last Friday. Castlight Health (CSLT) came public to tremendous fanfare, soaring 140% the first day. Why? Because this is a company that offers a software-as-a-service cloud-based solution for health care benefits. Whoop-de-do. Have you seen how badly Salesforce.com (CRM), Workday (WDAY), Veeva (VEEV) and Concur Technologies (CNQR) shares have been trading after excellent quarters? These companies are the cream of the crop, and they have been fabulous shorts for two weeks now -- and we like Castlight?
I suspect this week will be more of the same when several other names come public: Paylocity, a cloud-based payroll-and-human-capital company; Q2 Holdings, a cloud-based community-banking play; Amber Road, a global trade cloud-based company; and Globoforce, a cloud-based social-recognition software business. (Ticker symbols will be "PTCY," "QTWO," "AMBR" and "THNX," respectively).
These are all versions of what could easily be described as existing companies. In fact, Paylocity sounds like Workday-meets-Cornerstone OnDemand (CSOD). As for Q2 Holdings, Salesforce.com has a community-banking initiative -- check its site. Cloud-based social recognition and global trade businesses? I am sure Globoforce and Amber Road have something proprietary, but I have to ask: "Do you really need to come public now?" What's the darned hurry? The answer, of course, is that the public market is divorced right now from the soon-to-be public IPOs, and that is always a bad sign.
It's the same thing with biotech. Upcoming IPOs for Akebia Therapeutics, an antianemia therapy company and for Versartis, a growth-hormone play, presumably will dazzle (under respective tickers "AKBA" and "VSAR") -- even as Celgene (CELG), Gilead (GILD), Isis (ISIS), Jazz (JAZZ) and Seattle Genetics (SGEN) are becoming unglued.
Now, I happen to like the incumbents. I am not making a judgment about those. I think the incumbents that I have mentioned here in the cloud and biotech spaces will come back. Many are fine companies.