Four IPOs get mixed response from choosy investors
BANGALORE (Reuters) - Four IPOs were received with varying levels of interest on their market debut, signaling that investors were being very selective of where they want to put their money.
IPO investors are trending toward offerings that have been priced above their expected range and largely ignoring those that did not, according to some analysts.
"The IPO market sees two different types of investors," said Josef Schuster, founder of IPO investment firm IPOX Schuster LLC.
"First, the older, institutional investor that looks at the balance sheet and growth prospects of the company. Second, there is participation from indiscriminate traders who just want to fill up the books and end up jacking the stock."
Specialty tea retailer Teavana Holdings Inc TEA.N priced its IPO above the anticipated range and saw its stock surging on Thursday, while those of aerospace equipment supplier Wesco Aircraft Holdings (WAIR.N), which is backed by private equity firm Carlyle, fell as the pricing was below its plans.
Chefs' Warehouse Holdings (CHEF.O), a distributor of specialty food products, priced its IPO within its expected price band. Its shares traded up -- albeit not at the same premium levels as Teavana. Horizon Pharma Inc (HZNP.O) made a quiet debut after pricing lower than expected.
"If there is a lot of momentum, there's talk on the television about these stocks opening well, then investors are paying attention," David Menlow, president of IPOfinancial.com, said.
"It's herd mentality. A lot of people are looking over their shoulders to see what everybody else is doing."
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Wesco Aircraft, like Dunkin' Brands, also counts Caryle as a key investor, but this fact failed to spark enough investor interest.
Most recently, investors bet heavily that popular coffee-and-breakfast chain Dunkin' Brands Group Inc (DNKN.O) will outpace rivals such as Starbucks Corp (SBUX.O).
Dunkin' Brands' highly anticipated IPO was priced above range, and it saw the stock soaring on the first day of trading on Wednesday.
"Dunkin' has left a very good taste in the mouth of IPO investors," Schuster said.
Last week, Apollo Residential Mortgage (AMTG.N), which is backed by private equity firm Apollo Global Management (APO.N), also had a poor run on its first day of trading.
"The stars are also aligning" for companies catering to niche clientele like Teavana and Chefs' Warehouse, with investors flocking to them, analysts said.
"There's plenty of expansion opportunities for Teavana, a chunk of their business is online and it's just about how they execute it," Schuster said.
Teavana's shares closed at $27.80, while those of Chefs' Warehouse closed at $17.50.
Wesco Aircraft stock ended the day flat at $14.92.
Horizon Pharma's shares closed at $9.15.
(Reporting by Brenton Cordeiro and Tanya Agrawal; Editing by Gopakumar Warrier and Sriraj Kalluvila)
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