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IPOs Get Shaky

Three IPOs priced last night, but investors are showing caution


The IPO market went gangbusters during the first quarter, with big gainers from deals like Millennial Media (NYSE:MM), Annie’s (NASDAQ:BNNY) and Yelp (NASDAQ:YELP). But this week, investors have gotten a bit jittery.

However, there was one standout deal: Forum Energy (NYSE:FET). The company priced its deal at $20, which was at the top of its $18 to $20 range. The stock is up 11% in today’s trading.

Forum Energy manufactures high-end capital equipment and tools for the oil and natural gas industries. The company has benefited from the boom in shale exploration as well as the continued strength in oil prices. Last year, revenues spiked by 51% to $1.1 billion.

Unfortunately, today’s other deals were fairly lackluster. One was MRC Global (NYSE:MRC), which is the world’s largest distributor of pipes, vales and fittings for the energy industry. The IPO was priced at the $21, which was at the low end of the $21 to $23 range. The stock is currently unchanged.

Oaktree Capital Group (NYSE:OAK) fared even worse. The company priced its IPO at $43, which was at the low end of the $43 to $46 range. The stock is now down 3.5% in today’s trading.

Oaktree is a top fixed-income asset manager, with a focus on distressed debt. The firm has $75 billion under management.

Aleris also had trouble and has postponed its IPO. The company is a manufacturer of aluminum products, but it looks like investors are dubious about Aleris’s growth prospects. This is the case even though Alcoa (NYSE:AA) reported a strong quarter and provided an upbeat outlook for the industry.

Finally, BrightSource Energy canceled its offering. The company develops solar thermal technologies for utilities.

Such alternative energy companies have had a rough time over the past year. A big concern is that the U.S. government will substantially roll back subsidies because of the Solyndra bankruptcy and the focus on deficit reduction.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”“All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.

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