The Hottest and Coldest Times for IPOs

When should you relax, and when should you be on red alert?

   

Every Monday, the IPO Playbook has a regular feature that covers all the upcoming IPOs for the week. However, while there has been plenty to write about for most of the year thanks to hot offerings like Twitter (TWTR) and Voxeljet (VJET), the past two weeks have been bone-dry.

Has the market just gone completely sour?

Far from it. Instead, the IPO market is just the victim of good, old-fashioned seasonality. Just like many other areas of the market, the IPO market has its occasional ebbs and flows, oftentimes on a fairly regular schedule.

If you happen to like looking for the hottest new offerings, here’s a quick guide covering when you can safely clock out, as well as when you should have an extra-watchful eye on the IPO sites:

Major Holidays

This is a no-brainer. If hordes of investors are away enjoying family time rather than trading, why issue shares to the public? Who would buy? So last week’s Thanksgiving holiday week was bare for good reason.

However, investors should note that major holidays usually come complete with two weeks’ worth of IPO drought. The reason? It’s not just IPOs that get pushed back. Roadshows — when a company makes presentations to institutional investors like mutual funds and hedge funds — also get nudged down the calendar as well.

IPOs aren’t completely off-limits, obviously. One or two occasionally get done around the holidays, though they tend to be deals that already have been delayed, and where roadshows have already been finished.

Summer Doldrums

The IPO market also tends to go dead by the time August rolls around. Again, you can thank Wall Street’s affinity for R&R. Many top portfolio managers tend to take vacations in late summer, and Europe becomes a ghost town, too. Typically, the IPO market doesn’t get back into gear until about the second week of September, and again, companies will need to conduct roadshows.

Like around the holidays, summer sees the occasional deal, but it usually has to be a top-notch one to keep enough investors away from the beach. For example, Google (GOOG) was a summer birth, going public on Aug. 19, 2004.

Christmas

Once we hit the third week of December, IPO nuts can just sit back and relax. Nothing much happens with new offerings — everyone is drinking eggnog, visiting family and friends, and buying gifts.

At that point, you probably won’t see any “upcoming IPO” stories from me until the second or third week in January.

Hot Times

Busier times for the IPO market tend to be more irregular.

The IPO market entices investors who crave risk and want to land the next Apple (AAPL) or Chipotle (CMG). So it tends to be the case that when investors are generally giddy, the IPO market catches fire.

A good sign to watch for is robust gains in the Nasdaq, which is peppered with growth stocks. In 2013, the Nasdaq is up a sizzling 34%, and wouldn’t you know it — this has been a pretty buzzy year for IPOs, and tech offerings in specific.

However, if the market suffers a correction, the IPO market can dry up pretty quickly. That’s why IPO investors often talk about the so-called “window,” which is the time when the market is in bull mode. While Wall Street is in the “window,” investment bankers will try to spin out as many deals as possible.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/hottest-coldest-times-ipos/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.