Facebook Inc (NASDAQ:FB)’s monster IPO fed investor frenzy in May by increasing the size of its offering by almost 25 percent, adding about 84 million shares to the issue.
The issue has been an unmitigated disaster for investors, currently trading at $20.87 against the issue price of $38. Worse has been the impact on subsequent IPOs of other companies as they meet with investor indifference to their offerings.
Acacia Capital Partners' Peter Kinney declared in his first-quarter letter to investors that he is still concerned about the state of the global economy and the "yet unknown consequences" of the pandemic. Q1 2021 hedge fund letters, conferences and more However, despite this cautious mindset, the managing partner and his team are still finding attractive Read More
While Facebook Inc (NASDAQ:FB) bumped up its issue size, recent IPOs have had to scale down the size and/or the pricing of the offering to make the issue attractive and raise funds. Many had to put off their offerings. The onset of the so-called dry spell in IPO that hits August onwards has also not helped matters. To sum it up, the IPO market is witnessing poor pricing, smaller sizes, pulled deals and delayed offerings.
Yet smaller sizes, and smaller tickets may be helping investors get a better return on their investments.
A case in point is Globus Medical Inc (NYSE:GMED), which had earlier planned to issue 11.8 million shares in August at a price of $16-$18 a share. It finally issued only 8.33 million shares at a price of $12 a share on August 2. Though the company scooped lesser funds, investors are still seeing money on the stock. Post-issue the stock rose to over $14.50 and is currently at $13.30, still resulting in 11 percent return to investors.
In another case, that of Outback Steakhouse operator Bloomin’ Brands Inc.’s (BLMN), which sold 16 million shares, 5 million less than expected, at a price of $11, much below its expected $13 to $15 range. The amount raised by the company at $176 million was lower than 44 percent compared to its original plans. But investors were laughing to the bank as the shares, post issue, are doing well at around $12.11.