In the last year or so, individual investors have taken great pains to involve themselves in the initial public offerings for various emerging publicly traded companies. This is due largely to the success of many companies in the initial day of trading. Most of the companies that have launched IPOs in the last year have gained more than 10% in their opener, and individual investors (day traders) are increasingly lured into the frenzy of opening day trades. In fact, I'm sure that the IPO market would be considered hot at the current time, while the actual stock market at large would have a much more dismal outlook by most investors. But just like anything else, the IPO market's popularity ebbs and flows with investor sentiment in a similarly cyclic fashion; some years are filled with hot IPOs like 2005, while other years show relatively no interest in the initial offerings for companies.

For those companies looking to gather much needed financial resources from public offerings, it almost goes without saying that timing is everything. However, more than ever, the out come of a company's IPO is often more dependent on public sentiment than another other period of its traded history. As another cliché goes: you never can make a second first impression. Now while investor sentiment for a particular company may be as hard to peg as its price in the future, we as investors need not worry entirely on the specifics of the sentiment but moreso the generalizations that can be deduced.

Simply all we need to figure out is this: Will the IPO boom or bust? This topic will focus on new IPOs as they come, giving different perspectives on whether or not a particular IPO will be a good opening-day play or one in which it will be best to sit on the sidelines and watch. _________________________________________________________________________________________________

I know we're not supposed to take recommendations from those with supposed "inside" tips, nor are we to listen to the so-called experts in the market...but here's an IPO that is worth interest: NeuStar. from

NeuStar provides the North American communication industry with what it calls "essential clearinghouse services." The company manages nearly all telephone area codes and numbers. Each day, it routes millions of calls among competing service providers. All communications service providers, including major companies such as Verizon Communications (VZ), Sprint (FON), AT&T (T ) and Cingular Wireless, use NeuStar's clearinghouse to route their calls. NeuStar also provides services to Internet and cable companies that offer voice-over-Internet Protocol (VoIP)services.

NeuStar's customers tap into the company's clearinghouse databases through standard connections that don't favor one customer over another by routing calls more quickly. NeuStar says it has the capacity to handle future growth in the burgeoning wireless sector and emerging voice-over-Internet services. International Data, a market research firm in Framingham, Mass., says the number of wireless customers is expected to increase to 174 million in 2007 from 67 million in 2004, a compound annual growth rate of about 37%. International Data expects voice-over-Internet services to grow to 17.7 million customers in 2007 from 1.1 million in 2004, a compound annual growth rate of about 155%.

Paradoxically, consolidation of the telecommunications industry creates increased demand for NeuStar's clearinghouse services because the combined companies must integrate their networks and route their calls efficiently while serving new customers. NeuStar's dominant position in the industry could be its potential weakness. The company warns that its seven contracts with North American Portability Management, an industry group representing all telecommunications service providers in the U.S. to provide telephone number portability and clearinghouse services, are not exclusive and could be terminated or sharply modified.

Termination would suggest an unimaginable catastrophic collapse of NeuStar's services, and rewriting the contracts against the company's interests isn't likely in the immediate future because it dominates the sector--no, wait: it is the sector--and it would be difficult for a company starting from scratch to provide comparable services. NeuStar must constantly upgrade its equipment and software to meet the demands of a constantly changing industry, especially in the emerging Internet phone call sector. This won't be cheap. In the past, the company has relied on outside financing and cash flow to fund operations, expansion and capital expenditures. It's impossible to estimate the cost or even availability of future capital, a routine risk for a burgeoning company.

NeuStar was incorporated in 1998 to acquire the Communications Industry Services group from Lockheed Martin (LMT). NeuStar has no direct competitors but won its contracts bidding against major companies that could enter the field, including Accenture (ACN), Computer Sciences Corp. (CSC), Hewlett-Packard (HPQ), IBM (IBM), Intrado (TRDO), Nortel Networks (NT), Perot Systems (PER) and VeriSign (VRSN).

For the year ended Dec. 31, NeuStar reported net income of $45.4 million on revenue of $165 million, compared with net income of $24 million on revenue of $111.7 million in 2003. Revenue and income growth remain strong. For the three months ended March 31, the company reported net income of $14.6 million on revenue of $57.8 million. Sterling, Va.-based NeuStar plans to offer 25 million shares at $18 to $20 each through underwriters led by Morgan Stanley (MWD), Credit Suisse First Boston and J.P. Morgan.

NeuStar's proposed New York Stock Exchange Symbol is NSR. The deal is expected to be priced the week of June 27. All shares are offered by current shareholders, and the company will receive nothing from the net proceeds raised in the IPO. The company's backers include MidOcean Capital Partners, ABS Capital Partners, Melbourne IT Limited and Warburg Pincus, which will hold about 32% of the company's stock if the over-allotment option is fully exercised. NeuStar will be a strong IPO. The company is similar to VeriSign in that it provides vital services in a growing field without getting sliced up by the cutthroat competition among its customers. VeriSign's domain name, digital certificate and payment services provide the identity, authentication and transaction framework needed to support secure e-commerce.

VeriSign went public on Jan. 29, 1998, at $14 per share. The stock opened at $20.50 and closed the first day at $25.50. The stock recently fetched $32.91. NeuStar will be a winner. It will launch in a sobered-up IPO market, so don't look for a wild opening--just a strong first day and steady gains ahead. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

[Neustar] Doesn't look bad at all. not bad at all. I'll have to do some more research on it...but not bad at all.

Here's a follow-up report on some of last year's IPOs from Morningstar.com ________________________________________________________________________________________________

Year-Old IPOs That Deserve a Second Look

We found a few interesting ideas among 2004's new issues.

by Doug Lovett | 09-30-05 | 06:00 AM, for

Regular readers know that we like to find stocks of good companies at reasonable prices. Investors may associate initial public offerings (IPOs) with sky-high valuations, particularly among high-profile debuts in their first weeks of trading. We thought we'd check in on some IPO companies after the initial buzz subsided to see if we could find any attractive stocks.

During 2004, the IPO market came back to life with just over 200 new offerings after three tough years with less than 100 new offerings per year (200 per year is considered "average"). Of course, IPO issuance reached a fever pitch during the late 1990s and 2000, with almost 500 new offerings in 1999 alone. So far, 2005 is coming in a bit below normal, but it is still respectable, with roughly 130 companies going public so far. Searching among the companies that became public during 2004 to find companies in our wheelhouse--moaty businesses trading at favorable valuations--we found several narrow-moat businesses and a lot of no-moaters, but, alas, no wide-moat firms. There are no 5-star opportunities on the list, either, but there are several 4-star stocks worthy of mention. The narrow-moat companies that look good to us as of Sept. 29:

Archipelago (AX)

Risk rating: Above Average
Recent price % above/below our fair value estimate: -31%

From the Analyst Report: "Markets have long been good businesses. Since at least medieval times, for-profit marketplaces have offered safety to merchants and buyers, providing theft protection and a court to resolve disputes. The merger of electronic stock exchange Archipelago and the 213-year-old nonprofit New York Stock Exchange will create NYSE Group, a modern for-profit market with a narrow moat."

Assured Guaranty (AGO)

Risk rating: Above Average
Recent price % above/below our fair value estimate: -21%

From the Analyst Report: "Assured Guaranty earns a nice living insuring the repayment of debt issued by governments and selected asset-backed securities issued in the capital markets. The firm benefits from slowly compounding entry barriers that yield a narrow economic moat, a business model that will benefit from continuing credit growth, and a dominant position offering relatively scarce AAA rated financial guaranty reinsurance."

Kinetic Concepts (KCI)

Risk rating: Average
Recent price % above/below our fair value estimate: -19%

From the Analyst Report: "We see KCI's VAC patents, which do not start expiring until 2013, as the foundation of the firm's moat. Barring any legal rulings against KCI, we expect the firm to dominate with VAC for the foreseeable future. KCI also continues to innovate by adding features and devices, such as VAC Instill, to automatically deliver topical solutions without disturbing the dressing. These new features and devices add layers of strength to KCI's patent portfolio and competitive position."

Blue Nile (NILE)

Risk rating: Average
Recent price % above/below our fair value estimate: -18%

From the Analyst Report: "Blue Nile provides quality-seeking, value-conscious consumers with an option to purchase fine jewelry online. This purveyor of gems, known for its customized engagement rings, is shaking up the diamond industry with its exclusive agreements to sell select diamond manufacturers' stones online. While the online diamond jewelry market is nascent, we think Blue Nile has developed an extremely solid position and will continue to expand its share."

Educate (EEEE)

Risk rating: Average
Recent price % above/below our fair value estimate: -17%

From the Analyst Report: "We like Educate's prospects over the next five years. There are still more than 700 franchised territories that the company could eventually acquire--it owned just 144 as of June--and Educate thinks there is a possibility for 1,000 more territories in North America. Monetizing the well-known but still small Hooked on Phonics brand could provide another lucrative income stream in the coming years."

Good Firms at High Prices

Another interesting subset of 2004 IPOs is made up of companies with narrow moats that trade at rich valuations. We also like the following companies, but they're priced too high to buy right now:

Greenhill & Company (GHL)

Risk rating: Above Average
Recent price % above/below our fair value estimate: 69%

From the Analyst Report: "Greenhill & Co. is a boutique investment bank founded less than a decade ago by legendary investment banker Robert F. Greenhill. In this reputation-driven business, the former president of Morgan Stanley MWD and former chairman and CEO of Smith Barney C has himself been the source of a narrow moat, drawing both clients and well-respected senior bankers (managing directors) to the firm. However, the cyclicality of investment banking and the importance of a few key employees create an above-average-risk business."

Navteq (NVT)

Risk rating: Average
Recent price % above/below our fair value estimate: 57%

From the Analyst Report: "When someone uses navigation equipment in a car, on a personal navigation device, or on the Internet, chances are that NAVTEQ is providing the map data. We like this narrow-moat company and believe it will be a clear winner as the navigational market continues its rapid growth."

Google (GOOG)

Risk rating: Average
Recent price % above/below our fair value estimate: 43%

From the Analyst Report: "People now say that they 'google' instead of search for information. Google has managed this success despite spending less than 8% of its 2004 revenue on sales and marketing, building the brand almost solely by word of mouth. The use of search engines is free and, we believe, habit-forming. We think users are unlikely to switch without some substantial functional improvement."
________________________________________________________________________________________________

I've personally taken a look at Blue Nile (NILE) on the technical charts and it is currently holding over its 40- and 80-day EMAs on the yearly chart. Also, in a shorter chart, it looks as if the MACD and the EMAs are setting up to cross right above a support price around $32/share. If anyone would like to look at these charts in detail, I'll post in a separate topic. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

The worst part--if there is a bad part--about investing other than coughing up cash to make the trades (i mean, shouldn't they be free? ) is the so-called due dilligence, which consists of hours upon hours of research. For some, this research consists of calculated numbers and meticulously drawn pattern analysis and study of statistical probabilities. For the rest, there are tons of articles from so-called experts, up and coming analysist, newscasters, and reporters from big-name financial institutions prepared daily (hourly) to reinvigorate the spirit of speculation on which companies and sectors are the "next big thing."

Occasionally, on The Forum, I like to test the validity of this fundamental information; to see how well the so-called experts' advice matches up with. Through this type of (back)testing, we can come to a particular degree of confidence in the information presented by said experts. After all, seeing is believing and you definitely should not believe everything you read, even if it does come from ole Bish.

In the first article on IPOs, Forbes.com highlighted NeuStar as a strong IPO and a stock with continued growth after its opening.


This is a pretty confident call on the success for NeuStar. So of course, we have to take a look at the charts.



As called by Forbes.com, Neustar did appreciate nicely after it's IPO. In fact, if you were to (by some grace of an angelic broker) get in at the opening price of $22.00/share, you could have gained as much as 71% as the price rocketed to a high of $37.73/share in May 2006.

Now while the price has retraced signficantly since then (closed at $30.45/share on 6/9/06), NeuStar (NSR) actually looks to still show signs of strong buy potential. Currently, the price is just below the significant 61.8% Fibonacci level ($31.08/share) of the move from a relative low of $27.00/share at the end of March to the aforesaid high price in May. Should this level hold, NeuStar can look to make gains to $41.83/share and continued gains to $44.36/share.

So in essence, this was a good call by Forbes.com. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Now that we've taken a second look at NeuStar (NSR), an IPO touted by the analysts at Forbes.com, we now turn our attention to the bevy of yearling IPOs listed by Morningstar.com.


Assured Guaranty Ltd. (AGO) had just completed its 4th wave of the impulse cycle by the time we posted the article recommendation from Morningstar. At this point, it was up more than $4/share over its initial offering price. Yet, unbeknownst to us at the time, the price would complete the 5th wave with a high of $27.41/share, which was another +28% higher than in October 2005. With the 5th wave finished, we are now in the corrective phase (emphasized by the negative MACD), which should see an increase to near $26/share before a continued descent to around $20-21 range.

From that range, I would recommend re-evaluating the feasibility of entering AGO. But as for Morningstar, this was generally a good call with a maximum potential profit of +28% from the introduction of the article.



Next we have Kinetic Concepts, Inc. (KCI). They had a strong IPO year, rising some $38.67/share from its initial price. This would have resulted in an incredible 97.4% return from bottom to top in its first year. However, by the time of this article, KCI was trading considerably lower, around $52.50/share. Furthermore, the technicals were showing an increasing downtrend, which was confirmed as the price correction drew it to a low of $33 not too long after this article was posted.

Depending on your eagerness to make a play on this stock, this could have been a really good discount, or a really bad one. To be objective, we will consider that one would have been able to make a play almost immediately after the announcement, so therefore this was a bad call for Morningstar.com.



Educate Inc. (EEEE) had an average IPO with a year of comparatively smaller gains than other stocks discussed here. In fact, by the time of the posting, EEEE was starting a major correction in price which would ultimately go as low as $7.25/share. This is the only IPO yearling discussed in this topic with such a history and it goes without saying that this is a particularly bad call for Morningstar.com.


Blue Nile, Inc. (NILE) had a monstrous IPO, gaining some $21.50 within the next month of market play. This would have been a 103.42% gain in theory and even half of this theoretical yield within a month's time would have been an outstanding gain.

Nevertheless, NILE has been rather volatile since its profitable open and by the time of the article posting, it was set to run up another 37%. Any investors quick enough to put their orders in would have had a great chance to reap the rewards of Mornignstar's outlook. In that regard, this stock is a good call, despite the fact that as of right now it is trading at a 6% discount to the price in October.

The following two IPOs were considered to be overvalued by the time of the Morningstar article in October 2005.


Greenhill & Co., Inc. (GHL) has enjoyed steady gains since its inception in May 2004. In fact, after a decent IPO the price climbed considerably, gaining almost $27/share by October 2005. Morningstar rated GHL as overvalued and didn't consider it a good buy given its sumptuous gains since its opening. However, GHL gained another $35/share. Investing from inception, one could have theoretically gained an incredible +316%! From the time of the article's post, an investor could have gained roughly +89%.

To date, GHL is still up considerably (+38.45%) since October 2005. So for Morningstar to say that GHL was actually overpriced and not worth the buy was a bad call.


NavTeq Corp. (NVT) opened with a tremendously successful IPO, moving up more than $24/share, or roughly 101%. Not bad for 5 months, eh? However, since that point, NVT has been rather volatile and actually appreciated +22% before falling to a -10% discount from the October 2005 price.

For the nimble traders, this may have been a bad call on behalf of Morningstar. However, for those with a more long-term perspective, this was definitely a good call.

Overall, this was a mixed bag of recommendations from Morningstar.com. For the most part, the IPOs were generally successful, most of them exceedindly successful in a very short-term range. However, some were largely successful in the years to come like Greenhill & Co., Ltd. (GHL) and of course Google, Inc. (GOOG) (which we chose to omit in our analysis). .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Soros-Backed Replidyne Registers For IPO

Chris Noon,
04.06.06, 5:42 PM ET

LONDON - Replidyne, a biopharmaceutical company backed by Perseus-Soros BioPharmaceutical-- a fund controlled by billionaire financier George Soros--has registered for an initial public offering of up to $100 million in common stock, according to a filing with the U.S. Securities & Exchange Commission. The Louisville, Colo.-based company, which focuses on discovering, developing, in-licensing and commercializing anti-infective products, is seeking a NASDAQ listing under the symbol "RDYN."

Its lead product, Orapem, is an orally administered, becta-lactam antibiotic. Net proceeds from the IPO will fund clinical trials and other research and development activities, payments to licensors, and activities in preparation for the potential commercial launch of Orapem. Details about the number of shares to be offered and an estimated price range weren't disclosed in Wednesday's filing, though the $100 million valuation for the IPO was estimated solely for calculating the registration fee, the filing said. It is quite common that the eventual terms of the offering differ substantially from the valuation in the first registration.

Merrill Lynch (MER) and Morgan Stanley (MWD) were listed as joint book-running managers for the offering and Cowen and Pacific Growth Equities are to act as co-managers. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Robert Walberg, for

With oil prices above $70 a barrel and the U.S. determined to reduce its dependency on foreign oil, it's no surprise that the once-boring ethanol industry is now seriously sexy to investors. Here's why: Even with the recent market correction, these stocks are up big this year. Archer Daniels Midland (ADM) and Pacific Ethanol (PEIX) boast year-to-date gains of 68% and 137%, respectively. If you missed out on investing in either of these winners, don't fret. There are three new ethanol plays scheduled to go public over the next several weeks: VeraSun Energy, Hawkeye Holdings and Aventine Renewable Energy Holdings. VeraSun is first. Its initial public offering is set for the week of June 12, with the company offering 17.3 million shares priced in the $18-to-$20 range. This is likely to be a hot issue, so by the time the broader public gets a shot, the price will likely be much higher.

VeraSun: What will growth cost?

That's not to say those pricier shares won't be worth a look for long-term investors. VeraSun is the second-largest producer of ethanol in the country -- behind only Archer Daniels – and is a profitable, fast-growing enterprise. For the year ended March 31, the company generated net income of $11 million on a little more than $300 million in revenue. Using proceeds from the IPO, VeraSun plans to more than double its ethanol production from its current level of 230 million gallons a year -- about 5% of the total U.S. production -- to 560 million gallons by the end of 2008's first quarter. There are a few worries, though.

First, going from two plants at present to five plants by 2008 will be expensive, so investors can expect additional stock offerings that may depress the stock price. And as with many IPOs, a big question is whether management is trying to build a lasting business or to simply ramp up production, deliver rapid top-line growth and then exit rich. Then there's this: Aventine Renewable Energy buys virtually all of the Ethanol VeraSun produces. Recognizing the potential conflict of interest that creates, especially as Aventine starts to increase its own production of ethanol, VeraSun has informed Aventine that the distribution deal will end in March 2007. Can VeraSun find other distributors for its product? How much will that cost? While these concerns aren't likely to weigh on the IPO, or the stock's short-term performance, they do represent long-term hurdles.

Aventine: Replacing a big supplier

Like Pacific Ethanol, Aventine derives most of its revenues from marketing and distributing ethanol. Pacific's stock has performed extremely well, so there's a good chance Aventine's offering will be a hot one. The company recently announced plans to offer 7.75 million shares at a range of $37 to $41 per share. But this should raise eyebrows: Insiders are selling 1.4 million shares on the offering, or about 18% of the total shares. Aventine currently produces less than 150 million gallons of ethanol a year on its own. Revenues from ethanol production last year totaled a modest $120 million, or about 20% of the company's total sales.

As noted above, the company will be losing one of its key partners in less than a year, so its marketing revenues are at risk, as well. Could management replace the lost VeraSun business? Sure, but considering that VeraSun is the No. 2 producer of ethanol, it's unlikely they will be able to replace that supply by partnering with smaller producers. Aventine does plan to bolster its internal ethanol production with part of its IPO proceeds. But investors again need to ask how successful the current management team will be with managing growth and with adjusting the mix of its business.

Does pork experience matter?

Hawkeye Holdings hasn't yet indicated when it will go public and under what terms. But we do know that the company had $99 million in revenue and generated $14 million in net income in the year ended March 31. Hawkeye currently has one plant in operation in Iowa Falls with a capacity to produces 80 million gallons a year, well below VeraSun's production. Hawkeye plans to bring a plant in Fairbank, Iowa online soon that is expected to produce 100 million gallons a year. Almost the entire Hawkeye management team used to work for a company called Heartland Pork.

I have no idea how similar the pork processing business is to ethanol production, but it sure would have been nice to see a management group with broader experience. Of all the upcoming deals, this is the most suspect. It's not just the company's themselves that make these IPOs risky. Other variables include corn prices, the boom in production capacity and growing competition. Nevertheless, as long as oil prices and demand for alternative energy sources remain high, ethanol-related stocks are likely to outperform the market. My pick of this litter? VeraSun. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Some recent offerings have stumbled and some have soared,
so investors need to review the new debuts with caution.
Here are some of our picks

from

It's not exactly 1999 redux, but companies are still lining up to test the waters of the initial public offering market even amid choppy weather for major equity indexes (see BusinessWeek.com, 6/14/06, "IPOs Keep Rolling On"). Despite the difficulties involved, some outfits have even made dramatic entrances. The latest example: the June 28 debut of J. Crew (JCG). The apparel retailer closed its first day of trading at $25.55, up more than 25% from its $20 pricing, which was at the high end of the company's forecasted range. But while investors may be mad for the purveyor of preppy gear like chinos and cotton sweaters, they may not react as strongly to other upcoming offerings, especially as the broader equity markets continue to wobble (see BusinessWeek.com, 6/14/06, "A Summer Slump for Stocks").

In a market environment where big Wall Street firms can bring the likes of Vonage (VG) to the starting gate with a straight face, investors have to be selective. Given the current climate, Reena Aggarwal, a professor of finance at Georgetown University, says that in addition to traditional factors like strong financials, "brand recognition is more valuable than normal." That probably helped J. Crew's debut. It's a position also supported by MasterCard's (MA) strong performance since its late May offering. What lies ahead?

There are some big deals on the horizon, but not all of them will be as well received as J. Crew. With that in mind, Five for the Money takes a look at stocks in the IPO pipeline that could beat the odds. (Be sure to check back next week for our look at five IPOs investors should avoid.) As always, investors should exercise caution when considering these fledglings. The early bird doesn't always catch the worm.

1. Hawkeye Renewables

With plenty of interest in renewable fuels, ethanol producer Hawkeye Renewables could show a nice pop during its upcoming offering. Earlier this month, peer VeraSun Energy (VSE) showed an impressive first-day gain, closing above $30 after initially pricing at $23. It has subsequently fallen but remains above the offering price. And on June 28, another ethanol group, Aventine Renewable Energy, raised the estimated range of its imminent IPO to $40-$43, from $37-$41, according to IPOhome.com. Not bad for a largely experimental industry in a tricky stock market.

There's no shortage of controversy surrounding ethanol investing (see BusinessWeek.com, 6/12/06, "Should You Bet on Ethanol?"), but there's no denying investor interest in the group. Georgetown's Aggarwal says it's a good time for ethanol and "companies involved in alternate solutions to the gas issue." Hawkeye is the third-largest ethanol producer in the U.S. after VeraSun and agro-giant Archer Daniels Midland (ADM). Like its rivals, it has benefited from increased demand for ethanol and the concurrent price spikes. In 2005 it earned a net income of $8.6 million on revenues of $89.1 million. In the first quarter of 2006 its net income was $6.8 million on revenues of $27.8 million.

2. Stanley

No relation to the hand-tool giant, Stanley is an info-tech services company with a deep-pocketed customer, the U.S. Government. Its services include systems integration, designed to increase the interoperability of different business systems, and business process outsourcing. According to the group's Securities & Exchange Commission filing, at the end of May it had 200 active contracts with 38 federal agencies, though most of Stanley's revenues come from the Defense Dept. The company, which was founded in 1966, believes its ties to the government will continue to prove beneficial. For the year ended Mar. 31, the profitable company pulled down $284.8 million in revenues, up only slightly from 2005 but 59% more than 2004. It sees ample opportunities to grow as defense spending and government outsourcing increase.

3. Osiris Therapeutics

Biotech IPOs combine two of the riskiest investment types out there. The problem is that they must advance their products through a long, expensive, and unpredictable approval process before they start making serious money. However, when they succeed, big gains are often in store. And investors with a taste for risk might do well to bet on Osiris. Somewhat unusual for a small biotech going public, Osiris already markets a product, Osteocel, a stem cell-based treatment used to regenerate bone tissue. The company is also developing three new drug candidates. The most advanced of these is Prochymal, which is beginning a late-stage clinical trial to treat steroid-refractory graft-versus-host disease, an immune disorder that affects bone-marrow transplant patients.

4. GMARKET

Bidding on Wall Street could also be fierce for the South Korean online marketplace GMARKET. Tom Taulli, an adjunct professor at the University of Southern California who has written on IPOs, says the company has "some pizzazz to it because it's an e-commerce play in an emerging market." Korea is also a worldwide leader in terms of broadband Internet use. The country's love of e-commerce is reflected in GMARKET's numbers. Revenue blasted up from 3.7 billion Korean won in 2003, to 70.3 billion won (about $72 million) in 2005, when it had a net income of $5.2 million. The company also has some formidable backers.

Shortly after GMARKET filed to trade on the Nasdaq, Internet powerhouse Yahoo (YHOO) said it had agreed to buy about 10% of the company. And Goldman Sachs International (GS) is the lead underwriter for the offering.

5. Go Daddy

With its wacky corporate title and buzz-building advertising campaigns, Internet domain-name registrar and Web hosting company Go Daddy sounds a bit like a concern that would go public in 1999 and close its first day of trading worth as much as General Motors (GM), only to go out of business when the bubble burst. (Yes, this was the outfit that ran the tacky ad involving an underdressed model in front of a Congressional panel a couple of Super Bowls ago.)

But Go Daddy, founded in 1997, has outlasted its Web-bubble peers, and its IPO might be worth a shot for those with a tolerance for risk. The company has demonstrated an impressive ability to boost revenue. It pulled in $139.8 million in 2005, up from $73 million in 2004 and $39.2 million in 2003. And it boasts 2.9 million customers. Even so, this outfit might not be a suitable father figure for many investors. It still hasn't turned a profit—and its filing doesn't specify a date for when it will. Now that sounds a bit like 1999. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

In part two of our look at upcoming deals,
we find five outfits that may stumble out of the gate. Buyer beware!

By Alex Halperin,

The lazy days of summer are not usually a great time for companies looking to go public. And the current uncertainty that seems to grip the markets—even when they're climbing—means that this year could be worse than most. Last week, Five for the Money looked at initial public offerings that might be able to brave the tough conditions (see BusinessWeek.com, 6/28/06, "Five IPOs That Are Worth a Look"). This week, it's the unhappy flip side: companies whose public debuts could meet with a rough reception on Wall Street.

The companies on our list are not widely recognized brands. And amid the current instability, some market watchers say initial offerings from known entities will have greater appeal to investors. Successful offerings from J. Crew (JCG) and MasterCard (MA) appear to have borne this out, though it's worth pointing out that Vonage (VG), an exemplar of all that can go wrong in an IPO, is also a well-known consumer name.

More important, each company on the list has specific characteristics, such as no available products, big-name competitors, or a history of red ink, that can make investors jumpy even in calmer times. These five offerings present one other very tricky challenge to investors: pricing. While companies aiming to maximize IPO proceeds hope to price their deals at the high end of expectations, they may settle for a markdown in their eagerness to make it to market. A price drop can sometimes present opportunities for investors, especially those with a high tolerance for risk, but it is often interpreted as a sign of weakness by market players.

"Many people call it a buyer's market," says Suzanne Skipper, managing director of equity capital markets at investment firm Merriman Curhan Ford & Co.

Of course, at the right price any of these might be worth the chance. Even so, with so few IPOs rocketing up on their first trading day, investors might do well to stay on the sidelines as these five candidates come to market.

1. First Solar

Just try to find a hotter topic than alternative energy. Unfortunately for First Solar, buzz is not the only ingredient to a successful IPO. The company manufactures solar modules based on a so-called thin-film semiconductor technology. The process, it says, is far cheaper than existing crystalline silicon and could eventually enable it to compete with fossil-fuel-generated energy. It looks like a phenomenal opportunity, but will its Credit Suisse and Morgan Stanley-led offering wow the market? First Solar is beginning to deliver numbers. It reported sales of $48.1 million in 2005, up from $13.5 million in 2004, and reduced its net loss from $16.8 million to $6.6 million. It expects its net losses to increase this year as it looks to expand.

If other recent alt-energy IPOs are any guide, First Solar may not be received with open arms. The recent pricings of two profitable ethanol companies were mixed despite soaring demand and sharply higher per-gallon prices for the corn-derived fuel. In their offerings, VeraSun Energy (VSE) jumped on its first trading day while Aventine Renewable Energy (AVR) priced at the top of its range but is now trading below the offering price. In recent months the markets have also been lukewarm on solar outfits such as Evergreen Solar (ESLR) and SunPower (SPWR).

2. Amicus Therapeutics

When appraising small biotech outfits, investors like to see an enormous potential market and a drug pipeline with a strong chance of reaching it. By that standard, Amicus Therapeutics, which is developing drugs to treat certain human genetic diseases, might be going to the IPO well a bit early.

The company's lead product, a treatment for Fabry disease, a disorder in which the body cannot properly break down lipids, is in a midstage clinical trial, a process that will likely last several more years. Its proposed therapies for Gaucher disease and Pompe disease, both of which are also enzyme deficiencies, are less advanced in their development. The company says its therapies are designed to improve the functioning of the proteins in cells instead of the enzyme-replacement therapies now used in treatment. Amicus has backing from big-name venture capital firms such as New Enterprise Associates. And the lead underwriters are Morgan Stanley and Goldman Sachs. Even so, investors might want to sit tight while the pipeline progresses.

3. Bidz.com

Though this online jewelry auctioneer has improved its numbers of late, there are indications that investors are dubious. Last week the company delayed its planned offering of about 6.2 million shares at $8 to $10 each. It has revised the terms of the deal to 3 million shares to price between $7 and $8, less than half the initial offering. ThinkEquity Partners and Pacific Growth are the lead underwriters. While Bidz.com has a decent following—in 2005, it says, about 200,000 customers bought through its auctions—it faces daunting competition from industry giant eBay (EBAY) and a number of second-tier players.

However, the company has been profitable since 2004, boosting revenue from $47.7 million in 2003 to $90.6 million in 2005. Tom Taulli, an author who has studied IPOs and is an adjunct professor at the University of Southern California, says Bidz.com is a "small company [that] has a small niche." And the recent delay of the offering is another strike against it. "For these smaller Internet companies, investors are focusing more on the negative than the positive," he says.

4. BioVex Group

BioVex Group, a small biotech company that is developing cancer therapies, illustrates some other hazards of investing in young therapeutics companies. The company's lead product uses an "oncolytic virus technology" that is designed to destroy tumors while avoiding healthy tissue. The company says that in clinical trials the treatment has shown that, in treating some cancers, it "destroyed" tumors without the side effects associated with chemotherapy and radiation treatments. However, it is still in midstage trials for melanoma and other cancers, with several years before the possibility of it becoming commercially available. And in trying to address cancer, BioVex is likely to encounter more competition than a company like Amicus, which is striving to dominate a much smaller niche.

The company, which is being led to market by Janney Montgomery Scott and Stifel Nicolaus, is also developing a vaccine for genital herpes, but it has not yet begun the long clinical-trials process. At this point, BioVex has no product revenues—it has received funds from "potential collaborative partners." One other thing that might make an investor think twice: According to BioVex's SEC filing, the company's "independent accountants have expressed substantial doubt about our ability to continue as a going concern."

5. Artes Medical

As appearance-conscious baby boomers grow older, the potential for products that rejuvenate their fading looks seems enormous. Artes Medical is trying for a slice of the pie with a treatment to smooth facial wrinkles. However, given the company's current financial situation, investors might want to hold off on judging Artes, at least until its signature product appears. Artes has developed ArteFill, a substance made partly of calfhide-derived collagen, that is designed to fill in the face to prevent sagging and wrinkles.

Designed as a permanent solution to wrinkles, the company believes it is superior to existing treatments like Allergan's (AGN) Botox, which paralyzes away wrinkles but must be reinjected periodically. The company expects to receive product approval this year. But it is not a proven outfit. As of the end of March, it had an accumulated deficit of about $61.1 million and its development-stage net losses increased from $6.1 million in 2003 to $22.2 million in 2005.

Of course, a safe, effective product that makes older people look younger could make that $61 million look like a mere wrinkle. With its hopes riding on an offering led by Cowen & Co. and Lazard, for Artes, the trick will be reaching maturity while it hawks its own version of the fountain of youth. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Five for the Money By Alex Halperin, for

OCTOBER 5, 2006

Sarbanes who? The burdens of being a publicly held company in the post-Enron era are well known, but with U.S. equity markets showing strength—as witnessed by the record highs reached by the Dow Jones industrial average—lots of outfits are still diving into the public pool. Certainly not all the recent offerings have been great successes (the Vonage (VON) debacle is still recent enough to send a chill down investors' spines) but the market has seen, of late, some impressive debuts.

The tech hardware company Riverbed Technology (RVBD) and cosmetics outfit Bare Escentuals (BARE) both posted handsome gains in their first day of public. These strong performances have investors prowling for the next big deal.

But among the dozens of names in the IPO hopper, which ones should investors be checking out? This week, Five for the Money takes a look at some of the more attractive IPO prospects on the horizon with a focus on companies that could deliver results long after they start trading. Even with the markets booming, IPOs remain some of the riskier deals out there. As ever, investors should do their homework and be aware of the potential pitfalls.

1. eHealth

Through its Web site, eHealth markets health insurance from a broad spectrum of providers. The company focuses on plans for families, individuals, and small businesses, a sector that could soar, given the growing ranks of people who lack insurance or pursue independent career paths where a corporate-sponsored plan simply isn't an option. On the Mountain View (Calif.)-based company's site, customers can browse health plans from different insurers to find one that best suits their needs and budget.

The company's revenues have increased from $9.3 million in 2001 to $41.8 million in 2005 as the net loss shrank from $19.8 million to $0.4 million. For the six months ending in June the company's results bounded into the black, as it reported net income of $2.7 million on revenue of more than $27 million. The company's commissions from insurers generally continue for as long as a policy is active. Tom Taulli, founder of InvestorOffering.com and an author who has written on IPOs, sees eHealth as a growth story.

Since insurance prices are heavily regulated, eHealth faces virtually "no price competition" and he says its business relationships and technology leave it well positioned in this expanding market. The company expects the offer to price between $10 and $12 per share in a deal led by Morgan Stanley (MS) and Merrill Lynch (MER).

2. AeroVironment

"Drone" is usually considered a pejorative term, but not at Monrovia (Calif.)-based AeroVironment. The company designs and sells small unmanned aircraft for use in military reconnaissance and civilian operations like monitoring wild fires. With craft capable of using infrared and electro-optical scanners, the company believes it is well positioned to benefit from the Defense Dept.'s push to transform the military into a more agile force. Paul Bard, of IPOHome.com, says the company stands to benefit from an extended war in Iraq. And with the defense industry's acquisitive nature, AeroVironment may be a company "that some of the big guys would be keeping an eye on."

The company filed for an IPO in late September and plans to use the proceeds of the Goldman Sachs–led deal for purposes including research and development as well as "opportunistic" acquisitions. Already it has ramped up, boosting revenues from $47.7 million for the year ended April, 2004, to $139.4 million for 2006. During that period, net income increased from $2.2 million to $11.4 million.

3. Animal Health International

Westlake (Tex.)-based Animal Health says it is the largest U.S. distributor of animal health-care products. It sells upwards of 35,000 products running the gamut from pharmaceuticals to sanitizers. Including supplies for farm animals and pets, the company says the market for animal health products has climbed from $4.8 billion in 2003 to $5.3 billion in 2005. With more than 62,000 customers ranging from retailers to veterinarians, the company could capitalize on further sector expansion.

Animal Health plans to use proceeds from the JPMorgan (JPM)-led offering to pay off debt and perhaps make some acquisitions. For the year ending June, 2006, the company reported sales of $571.1 million, up more than 26% since 2003. As with AeroVironment, estimated terms for the deal are not yet available. But at the right price it could be a strong proposition.

4. Acme Packet

No it's not part of a dastardly scheme cooked up by Wile E. Coyote. Burlington (Mass.)-based Acme Packet's Net to Net product line helps traffic between different Internet protocol networks flow more smoothly to ensure quality performance in real-time communications, like voice. It's an area with room to grow, as an increasing amount of telephone traffic travels over the Internet instead of through traditional land lines. The company's customers include Korea Telecom (KTC) and Brasil Telecom (BRP).

IPOHome's Paul Bard says that as the company is growing, "the numbers are pretty impressive." For the six months ending in June the company reported net income of $11.3 million on revenues of $38.1 million. For calendar year 2005 it had a net loss of $35,000 on revenues of $36.1 million. With lead underwriters Goldman Sachs (GS) and Credit Suisse (CSGKF), Acme anticipates pricing the shares between $6.50 and $7.50. Bard sees parallels in Acme with tech outfit Riverbed's recent offering.

That company, which makes devices to accelerate data transmission across wide area networks, or WANs, saw shares rise about 57% on their first trading day, Sept. 21. And the stock has marked up further gains even though Riverbed isn't profitable.

5. SAIC

This is the biggest and best-known name in the bunch. With revenues of almost $7.8 billion for the year ended Jan. 31, SAIC is not your typical IPO. The San Diego–based outfit offers an array of engineering, scientific, and logistic products and services, primarily to the U.S. Government. With product groups including transport and software, its clients include the Defense Dept. and other agencies.

Led by Morgan Stanley and Bear Stearns (BSC), the company expects shares to price between $13 and $15. Because the company is already well established, InvestorOffering's Taulli sees the company as more of a long-term play than a chance for quick cash (see BusinessWeek.com, 8/17/06, "Stocks to Sock Away"). Despite the headlines that accompany big debuts, he doesn't see a "barn burner." So investors shouldn't fret if they can't get in on day 1. "These types of businesses will be needed for a long time. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

Liz Moyer, for
01.04.07, 6:00 AM ET

Junk bonds weren't the only hot item on Wall Street in 2006. Stock underwriting also hit records, with some $762.5 billion of equity issued last year, far and away more than 2005, when $599 billion was issued, and up from the $627 billion issued in the go-go year of 2000. As is the case with junk bonds and mergers and acquisitions, private equity money is helping to fuel the frenzy in stock underwriting, and there's no reason to expect 2007 to be any different.

"Valuations are high, and private equity funds are looking for exits," says Daniel Bursky, a partner in the capital markets practice at Fried Frank Harris Shriver & Jacobson. "Private equity is one of the drivers of the capital markets today."

Last year was the highest yearly total on record for stock underwriting, according to Dealogic, but here's the catch: The numbers are global. Closer to home, stock issuance in the United States was considerably lower than the peak of just a few years ago. Last year, $177 billion of stock was issued in the U.S., up from $162 billion in 2005 but down from the $360 billion underwritten at the peak of 2000. The lower U.S. volume has been a bone of contention for the major U.S. exchanges that are competing for listings with their British counterpart, the London Stock Exchange, and its alternative investment marketplace for smaller companies.

Nasdaq (NDAQ) and NYSE Group (NYX)'s Big Board combined last year had 201 initial public offering listings, valued at $46.4 billion, according to Dealogic. London Stock Exchange and its AIM marketplace together had 285 listings valued at $55 billion. London alone had 48 IPOs worth $40 billion. At stake is bragging rights over which exchange is the global go-to spot for companies seeking equity investors, and recent history supports the theory that foreign markets are beating U.S. exchanges to the punch. LSE recently rejected yet another takeover offer from Nasdaq, a sign that foreign exchanges feel confident enough that they can go it alone.

NYSE, for its part, is on the verge of completing its acquisition of Paris-based Euronext, an all-electronic competitor to London Stock Exchange. This year promises to be at least as active as last year in the IPO arena, though it's not yet clear whether the U.S. market will see a substantial increase in activity. Massive leveraged buyouts in the past few years--public companies being taken private by groups of private equity investors--will eventually result in more IPO activity as those investors look for a way to cash out and take their companies back into the public arena.

In total, 40 U.S. IPOs last year were led by private equity groups, including four of the 10 biggest. Hertz Global Holdings (HTZ) had its $1.3 billion IPO in November. The rental car company had been taken private in late 2005 by Clayton, Dubilier & Rice, Carlyle Group and Merrill Lynch's (MER) private equity division. Also in November, Spirit AeroSystems Holdings (SPR) debuted in a $1.4 billion issue. The company was taken public by Canadian private equity firm Onex. Drug company Warner Chilcott (WCRX) debuted in a $1.3 billion offering in September, cashing out Bain Capital, DLJ Merchant Banking, JPMorgan Partners and Thomas H. Lee Partners.

And Exco Resources (XCO), a natural resources company that had a management-led buyout in 2003 with the help of T. Boone Pickens, Greenhill Capital and Ares Management, debuted as a newly public company in February. December was the busiest month for initial public offerings since 1999, according to Renaissance Capital. Investor interest is growing, Renaissance Capital says, perhaps attracted by the average 26% annual return of this year's IPOs, about half of the increase coming after the first day of trading.

Of the other high-profile U.S. deals last year, MasterCard's (MA) $2.4 billion offering was the largest. It has more than doubled since its debut in May. Almost as impressive in terms of gains was the November debut of NYMEX Holdings (NMX), the world's largest energy exchange, which shot up more than 100%. Another major financial institution, NYSE Group, debuted in March and was up 45% for the year.

But 2007 should see more private equity-led transactions, Renaissance Capital says. "Buyouts have increased in frequency in 2006, and since the private-to-public turnaround is increasingly short, we expect to see many more of these leveraged offerings," the research firm noted in its annual review and outlook. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Steve Gelsi,
Last Update: 2:24 PM ET Jun 8, 2007

NEW YORK (MarketWatch) - Limelight Networks rallied and Yingli Green debuted as the latest solar deal from China as the IPOs marked the end of a mini-flurry of technology-flavored debuts this week. The IPOs are following on the heels of a 50% opening pop from Infinera (INFN) on Thursday, even as the overall market swooned. Starent Networks (STAR ) also rose 20% in its first day of trades. Infera's performance landed at No. 6 in year-to-date gains in the U.S. IPO market.

FCStone Group Inc. (FCSX ) leads 2007's crop of initial public offerings in the U.S. with a year-to-date gain of 89% as of Thursday's close. It's followed by a 78% gain from Aruba Networks (ARUN) , a 77% rise for Acorn International (ATV) , a 63% increase by Targa Resources Partners LP (NGLS) , a 57% jump by JA Solar Holdings (JAS) and a rise of 51.6% from Infera Corp. [s: infn], which held its IPO on Thursday.

Despite interest rate and other jitters in the market, investor appetite for IPOs remains healthy amid a 6.4% year-to-date gain of the Dow Jones Industrial Average ($DJ) and a 5.2% rise so far this year by the Nasdaq ($COMPQ). A total of 126 initial public offerings have debuted so far in the U.S., raising combined proceeds of $23.7 billion as of Thursday's close, according to Dealogic. In the year-ago period, 102 IPOs raised $21 billion. The average first-day gain fell to 6.8%, from 8.2% in the year-ago period.

Limelight rallies in debut

Limelight Networks (LLNW) priced 16 million shares at $15, well above its $10-$12 range, for its stock market debut on Friday. The stock opened at $23 and fell to $21.81 for a gain of 45% over its offering price. The tech firm raised $240 million by offering 16 million shares with underwriter Goldman Sachs. Renaissance Capital lauded the firm for its role in supporting rich media content Web sites like YouTube and MySpace.

Wall Street has taken a shine to networking stocks in the IPO market, with shares of Riverbed Technology (RVBD) , Aruba Networks (ARUN) and others posting strong gains.

Yingli Green falls from discounted price

Yingli Green Energy (YGE) priced 29 million American depositary receipts at $11, raising $319 million in its initial public offering. The stock opened at $10.80 and fell to $10.58 in the open market. The China-based solar panel company priced its IPO at the low end of its $11-$13 range. It's the latest in a series of Chinese solar IPOs including JA Solar (JASO) , LDK Solar (LDK) , China Sunergy (CSUN) , Solarfun Holdings (SOLF) and Suntech Power (STP).

Michael Carboy, managing director of Signal Hill, said Wall Street has been receptive to sun power in the face of strong product demand, but he noted he's also noticed some "sloppiness in the market for undifferentiated solar plays." Carboy said his top pick remains SunPower Corp. (SPWR) for its strong management, and unique position in the installation market.

Einstein Noah IPO prices below range

Einstein Noah Restaurant Group (BAGL) priced 5 million shares at $18, below its $19-$21 range, for its stock market debut. The deal opened at $18.05 and edged down to $18. The Golden, Colo. operator of Einstein Bros. Bagels and other food businesses raised $90 million by offering 5 million shares with underwriters Morgan Stanley and Cowen and Company.

FBR Capital Markets IPO gains

FBR Capital Markets Co. (FBCM) priced 12 million shares at $17 a share, raising $211 million in its IPO. The stock opened at $18 and rose to $18.15. The capital markets carve-out from Friedman Billings Ramsey (FBR) priced in the middle of its $16-$18 price range for its stock market debut on the Nasdaq.

Steve Gelsi is a reporter for MarketWatch in New York. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By David Weidner,
Last update: 12:01 a.m. EDT Aug. 5, 2008

NEW YORK (MarketWatch) -- Look out, Brangelina. Wall Street has its own set of twins.

After a year marked by stunning losses and $380 billion in write-downs, it's easy to overlook the health of Wall Street's most profitable businesses -- advising on mergers and underwriting initial public offerings. Those categories combined for $48 billion in revenue for the world's financial firms last year, according to Dealogic.

Investors and the market participants have been focused on more immediate concerns -- like which firm will be the next Merrill Lynch & Co. (MER) . The home of the "Thundering Herd" trampled the industry July 29 by selling $30 billion in assets for 22 cents on the dollar. See full story.

The surprise sell-off has most people following the industry more worried about whether Citigroup Inc. (C) could write off another $8 billion than about longer-term concerns such as whether Citi or Merrill had a role in the $35.9 billion acquisition of Union Fenosa SA (ES:018138071) by Spain's Gas Natural SA (ES:011687031) .

Neither firm did. But we all know more banks are going to declare write-downs before the year is out.

There is less certainty about the future of investment banking. Can the big financial institutions suffering these blows to the balance sheet create any value to offset them?

Meager M&A

The answer appears to be no, based on research and on the comments of executives and deal makers. Save for a few exceptions, investment banks won't see much of a lift from companies seeking to raise cash in the public markets or companies looking to build through buyouts.

Sure, it seems there have been a lot of deals to talk about. Microsoft Corp.'s (MSFT) pursuit of Yahoo Inc. (YHOO) has been a soap opera. Bristol-Myers Squibb Co.'s (BMY) $4.3 billion bid for of ImClone Systems Inc. (IMCL) and the aforementioned Spanish energy deal have helped keep M&A in the headlines.

Those are the exceptions. Global M&A volume thus far in 2008 is down 28% from the same period last year, and in recent months the number of deals has diminished, according to Dealogic.

One reason for the deal dearth: The private-equity firms that helped fuel last year's M&A boom are now at odds with the banks about credit terms. Bain Capital and Thomas H. Lee Partners completed the $17.9 billion acquisition of Clear Channel Communications Inc. on July 29, but the deal took two years and a reduction in price to get financed.

IPO drought

Yet the M&A market appears positively ablaze when compared with the market for initial public offerings. Forget the touted IPO coming from Kohlberg Kravis Roberts & Co. This market has been flat-out dead.

Seventy IPOs valued at an aggregate $12.3 billion were pulled in the first half of the year. Volume is down close to 50% in terms of both deals and dollars in 2008 compared with the same period last year.

The only thing keeping the equity-offering markets going are the secondary issuances by financial firms that need to replenish balance sheets. Those deals account for 38% of the equity capital market issuance this year, according to Dealogic.

There were only three IPOs on the U.S. markets last month. It was the slowest month in five years for IPOs.
Those IPOs that did venture into the market's volatile waters have flamed out. The much-anticipated offering by GT Solar International (SOLR) is trading at about half its first-day high.

On the other hand, the reception for IPOs hasn't been so bad. Of the last 100 IPOs, 31 stocks are up, and the average decline has been only 4.46%, according to IPOScoop.com. The firm with the biggest IPO of the year, New World Resources (UK:NWR) , is up 13.2%.

How it hurts

Investors should be aware of these markets as they consider wading back into brokerage stocks. They should also weigh which firms depend most heavily on these fee-based businesses.

Last year, UBS AG (UBS) booked $1.7 billion in revenue through the underwriting of equity offerings. Goldman Sachs Group Inc. (GS) was paid an estimated $1.91 billion in fees for its M&A advice, according to Dealogic.

Without a steady flow of fees from M&A and IPOs, it's going to be harder for investment banks to recover, regardless of the state of their balance sheets.
It's not pretty, but these twins won't be ugly forever.

After all, it's not as if they're named "Knox Leon and Vivienne Marcheline."

David Weidner covers Wall Street for MarketWatch. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Laura Mandaro for

Last update: 9:16 p.m. EST Feb. 10, 2009

SAN FRANCISCO (MarketWatch) -- After a long dry spell, the stock market once again is about to drink from the well of initial public offerings, with a $680 million debut from the maker of Enfamil infant-formula headlining four deals on tap this week.

In keeping with the skittish tone of stocks, the largest and oldest name among the crop is generating the most buzz, as Mead Johnson Nutrition Co., a spin-off of Bristol-Myers Squibb Co. (BMY) , priced its offering Tuesday evening at $24 a share, and is expected to begin trading on Wednesday.

"Institutions that do the bulk of the IPO deals and receive allocations are interested in high- quality companies that have excellent financials and experienced management," said Scott Sweet, principal researcher at advisory firm IPOBoutique.com in Tampa, Fla.

"They are reluctant to do start-up IPOs," he said.

Mead Johnson said in a statement that it increased its IPO to 30 million shares from an initial size of 25 million. The shares are expected to begin trading Wednesday on the New York Stock Exchange, under the ticker symbol "MJN."

Mead Johnson said it expects to use the roughly $680 million in proceeds to "repay intercompany obligations."

Citi (C) , Morgan Stanley (MS) , Banc of America Securities LLC (BAC) , Credit Suisse (CS) and J.P. Morgan (JPM) are acting as joint book-running managers for the IPO, Mead Johnson said.

Mead Johnson will be the first initial U.S. stock offering since November, when Grand Canyon Education (LOPE) broke the last drought with a $144.5 million offering, according to Dealogic.

It will also rank as the largest U.S. market debut since April, when American Water Works (AWK) came out for $1.4 billion.

Bristol-Myers Squibb is expected to retain a majority stake in the Evansville, Ind., company, which has been selling baby formula and other nutritional products since 1905. It recorded $2.6 billion in sales last year and competes with Abbott Laboratories' (ABT) Similac brand.

"The numbers plus its association with Bristol Myers make it a fairly easy sale," said IPOBoutique's Sweet, who had predicted that heavy demand for shares would prompt underwriters to expand the size of the deal.

The four deals coming to market this week are expected to raise more than $940 million in combined new capital even as the major stock indexes remain mired in bear territory. But the offerings highlight the fact that some companies, particularly more mature names, are starting to test investors' appetite to turn their cash hoards into new debt and stocks.

"The ones that are sitting in the pipeline tend to be a bit larger companies on average," said Jackie Kelley, America's IPO leader for Ernst & Young. "That's what we're thinking leads us to a stronger IPO market."

The week's other initial offerings include Madison Square Capital Inc., a newly established real estate investment trust that plans to raise an estimated $200 million; vehicle-armor maker O'Gara Group, with a $144 million deal; and renewable energy firm Changing World Technologies Inc., which hopes to raise about $36 million.

Since the Grand Canyon offering, plenty of companies have aspired to tap the stock market for capital. But with the major indexes headed south, many pulled those plans or let them languish.

The number of companies remaining in the IPO pipeline dropped to 57 by year-end, or a 30% decrease from the end of the third quarter, according to Ernst & Young. But the average deal size rose to $272.7 million in the fourth quarter from $231.4 million in the third quarter.

The tough climate hasn't prevented start-ups, the traditional candidates for initial public offerings, from attempting offerings.

In a sign some entrepreneurs see riches rising from the ashes of the U.S. financial system, Madison Square Capital, whose offering is expected to price Wednesday, intends to invest on a leveraged basis in mortgage-backed securities guaranteed by a U.S. government agency or issued by Fannie Mae or Freddie Mac.

The gap between these securities' yields and Treasurys has fallen in the past month as the Federal Reserve has bought this debt to drive down interest rates. But these spreads are still three times as high as they were at the start of the credit crunch.

"We believe that the current market disruptions in the U.S. housing industry, residential mortgage sector and overall credit markets have created an exceptional opportunity for us to implement our business plan as a new company," said the company in an SEC filing.

Online restaurant reservation service OpenTable in late January filed plans to offer $40 million in new shares to the public.

But market volatility has caused some companies to withdraw or pare their capital raising plans.

Late last week, independent oil refiner Big West Oil Partners, L.P canceled its IPO plans, citing current market conditions. Traditional energy companies are reeling as oil prices sink below $40 a barrel.

O'Gara, which is expected to go public Wednesday, has cut the price on the shares it plans to sell to a range of $15 to $16 a share from $17 to $19 previously, according to IPOBoutique.com. .........................
Nemo liber est qui corpori servit. 
-- Seneca the Younger, Epistoloe Ad Lucilium (XCII)

IPOs are definitely something that the market participants haven't been exactly "excited" about in the midst of the credit crunch.

In fact, since I started trading options, I don't think I've seen or heard much about any IPOs.  While I'm sure that there were some going on, it was nothing like 2005 and 2006, where the market expected dozens per week at one point.  The posting in this very topic thread is evidence enough of the magnitude of drought in the IPO market.

I do think that options are a pretty decent way to play into an IPO though.  The last applicable situation would have been the Visa (V) launch in March 2008. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Matt Andrejczak for
Aug 20, 2009, 5:47 p.m. EST

SAN FRANCISCO (MarketWatch) -- Dollar General, which runs 8,577 discount stores in 35 U.S. states, filed plans late Thursday with securities regulators to sell up to $750 million of stock in an initial public offering. Citi (C) and Goldman Sachs (GS ) are among the lead underwriters for the IPO. Goodlettsville, Tenn.-based Dollar General is owned by private-equity giant Kohlberg Kravis Roberts & Co., which paid $7.2 billion for the retailer in July 2007. Dollar General sells a broad array of merchandise at stores averaging 7,000 square feet in size. An IPO date has not been set. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

The next eagerly anticipated IPO will be from A123.  This company represents the leading edge in battery technology.  Read about them (ticker: aone) here:

A123 Systems Files for IPO seeking Up to $175 million

Well well...welcome back stranger!

It's good to see some new (old) names popping back up every now and again.


I've honestly never heard of these guys before.  And although 8 might be "lucky" in Mandarin, I think they picked an ostensibly horrible time for an IPO.  Of course, with their big shareholders, they might just get what they need though.
.........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Bill Buhr for
| 08-28-09 | 01:22 PM

This report is made available compliments of Morningstar IPO Research Services.

While the IPO market has not produced an offering since the middle of August, a significant spin-off transaction will finally close early next week. Once again, the deal will come from the health-care sector, which has now produced three of the last four IPOs. Cardinal Health will spin off CareFusion, its medical products business, giving shareholders 0.5 shares of the new company for every share they hold. Morningstar equity analyst Matt Coffina is slightly concerned about a few short-term hurdles facing the company, and concludes the firm does not possess an advantage over competitors. At the same time, he thinks the company's problems are short-lived. He values CareFusion at $22 per share, and gives us his full take on the company's prospects in his thesis below:

"Despite near-term headwinds from constrained hospital capital spending, we think CareFusion will produce relatively stable, mid-single-digit growth over the long run as an increasing share of global gross domestic product is devoted to health-care expenditures. The spin-off from  Cardinal Health (CAH) could increase management's focus and better align its incentives, although we think any benefits will be offset by the increased costs of operating as a stand-alone company. We are doubtful that the company has a sustainable competitive advantage given its commodity-like products and low barriers to entry.

CareFusion chose an inopportune time to launch as an independent company. In the past year, the company has had to contend with an extremely challenging hospital capital spending environment, adverse currency movements, and recalls (and a shipping hold) on its Alaris infusion pumps, all of which contributed to very poor performance in the second half of fiscal 2009 (CareFusion's fiscal year end s in June). While CareFusion saw 10% revenue growth and 14% operating income growth in the fiscal first half compared to the prior year, second half revenue and operating income were down 12% and 40%, respectively, with the worst performance occurring in the fourth quarter.

We think CareFusion's problems are temporary. In response to the Alaris product defects, the company has increased its investments in quality control systems. Currency head winds are unlikely to persist indefinitely. Most importantly, as the economy improves, hospitals should see increased admissions of privately insured patients, lower bad debt expense and charity care, and improved access to financing, allowing for a rebound in hospital capital spending.

Long-run trends appear to be clearly in CareFusion's favor. A growing share of the economic pie is being directed to health care, and CareFusion also stands to benefit from an increased focus on patient safety, especially as managed care organizations and government payors attempt to institute reimbursement policies that reward quality of care and refuse to pay for the costs of preventable medical errors. Many of CareFusion's products are intended to enhance patient safety by automating health-care tasks.

On the other hand, we don't think CareFusion has a sustainable competitive advantage. Most of the company's products--such as medication dispensing cabinets, ventilators, and surgical instruments--appear to be easily copied by either established competitors or new entrants. Opportunities for innovation are limited, and customers are likely to become increasingly sensitive to costs over time as efforts are made to slow health-care spending growth. Although CareFusion may derive some advantages from the integration of its products with hospital information systems, from its established brand names, or from its customer relationships, we don't think these factors are enough to give the company an economic moat."

Matt values CareFusion at $22 per share, a roughly 20% premium to the shares currently trading on a limited, when-issued basis at around $18.50. When-issued is essentially a conditional transaction where the shares involved have been authorized but not yet issued. He describes the reasoning behind his valuation below:

"We assume 7% compound annual revenue growth over the next five years, with a particularly strong year in fiscal 2011 when we expect hospital capital spending to rebound, and 6% long-run growth. Excluding restructuring charges, we expect operating margins to decline from 14% in fiscal 2009 to 11.5% in fiscal 2010 as the company incurs new administrative costs as an independent company and as CareFusion continues to struggle with a weak capital spending environment for hospitals. We expect the operating margin to average 12.6% over the next five years. We considered two scenarios in addition to our base case. In our bull case, we assum ed a stronger rebound in hospital capital spending in 2011, 8% long-run growth, and better cost control. Using 9% compound annual revenue growth and 13.5% average operating margins over the next five years would lead us to a fair value estimate of $26. In our bear case, we assumed another down year for revenue in 2010, no rebound in hospital capital spending in 2011, 4% long-run growth, and operating margins averaging 10.8% over the next five years. Those assumptions would give us a fair value estimate of $16. We estimate CareFusion's cost of equity at 11%." .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Wallace Witkowski for
Jan. 29, 2010, 5:02 p.m. EST

SAN FRANCISCO (MarketWatch) -- Tesla Motors, a maker of high-performance electric cars, will launch an initial public offering, according to documents filed with the Securities and Exchange Commission Friday. The filing said the company seeks to raise as much as $100 million. Tesla said that it has sold 937 of its Tesla Roadster models to customers in 18 countries. Goldman Sachs, Morgan Stanley, J.P. Morgan and Deutsche Bank were listed as underwriters. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Alistair Barr for
March 31, 2010, 7:22 p.m. EDT

SAN FRANCISCO (MarketWatch) -- Primerica Inc.'s (PRI ) initial public offering priced above the anticipated range late Wednesday, raising at least $321 million for current owner Citigroup Inc. (C ) , according to a person familiar with the situation. Citigroup was planning to sell 18 million Primerica shares at between $12 and $14 each. The bank is now selling 21.4 million Primerica shares at $15 each in the IPO, the person said on condition of anonymity. The underwriters have the option to buy another 3.2 million Primerica shares. If they do that, Citigroup will end up owning 39% of the insurer after the IPO closes. Primerica shares are due to start trading Thursday.
.........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Matt Andrejczak, for
June 29, 2010, 4:58 p.m. EDT

SAN FRANCISCO (MarketWatch) -- Tesla Motors shares shot nearly 41% higher Tuesday in their first day of trade, an enthusiastic reception for the Silicon Valley electric car marker in sharp contrast to steep declines elsewhere in the equities market.

The stock opened at $19 a share, 12% above the $17 offer price. After briefly pulling back to $17.54, it staged a full-blown rally that carried it briefly to $25 a share.

Tesla (TSLA ) shares closed at $23.89, an advance of $6.89, or 40.5%, in a session that saw the Dow Jones Industrial Average (DJIA) fall more than 268 points to 9,870.

Tesla IPO prices above estimatesShares of Tesla Motors open higher after the initial public offering priced above expectations. With a relatively small dealer network and a high price point for its electric cars, should investors be concerned about the company's business model? VentureWire's Scott Austin joins Simon Constable and Lauren Goode on the Digits show to discuss.

Tesla, the first American car maker to go public in half a century, priced the deal one dollar above the initial offer price of $14 to $16 a share.

The maker of the Roadster sports car raised $202 million from the sale of 11.88 million shares. Insiders, including 38-year-old Chief Executive Elon Musk, collectively sold an additional 1.4 million shares in the deal.

Musk reaped an IPO payday of $15.3 million based on the 900,212 shares he sold, according to a regulatory filing.

Tesla on Monday boosted the share offering by 20% to 13.3 million shares due to strong demand. The company's selling shareholders granted the deal underwriters a 30-day option to buy an additional 1.995 million common shares to cover any overallotments. In all, the IPO could be worth $260 million.

For some, Tesla's IPO harkens back to Silicon Valley's Internet bubble in the late 1990s, when retail investors snapped up shares in brand-new tech companies with no track record of making any money.

Scott Sweet, senior managing partner of IPO Boutique, which profited Tuesday from flipping Tesla shares in opening trades, believes the stock faces an uphill battle.

He pointed to last September's IPO of A123 Systems Inc., a maker of lithium-ion batteries for hybrid vehicles. A123 /quotes/comstock/15*!aone/quotes/nls/aone (AONE 9.26, +0.07, +0.76%) shares spiked on their first day of trading, but the stock has now fallen 27% from its $13.50 offer price.

"There are enough problems with the financials," Sweet said of Tesla. "The euphoria will likely fade soon given the cost of this vehicle in the recessionary environment. There is a very limited market for Tesla's cars."

Tesla Model S.

Tesla has yet to earn a dime since it was founded by Musk and Chief Technical Officer J.B. Straubel in 2003. The company has lost almost $300 million since inception, and does not expect to make a quarterly profit until at least 2012.

"The investment is a risk for investors, but some risks pay off," said Edmunds.com Chief Executive Jeremy Anwyl. "Even if this doesn't turn out well for investors, it's good for the country that Tesla has gotten so much attention for its innovative efforts."

Tesla is hoping to tap growing interest from consumers and governments for hybrid and electric vehicles in an era of high oil prices and concerns about the impact of gas-fueled cars on the environment. The U.S. government wants to put 1 million electric cars on the road by 2015 and offers consumer tax credits of up to $7,500 per alternative-fuel vehicle. Read MarketWatch First Take on Tesla's believers.

Tesla's top-end Roadster, which sells for more than $100,000, has attracted attention from Hollywood's "A-list" stars, among other movers and shakers, and the U.S. Energy Department has backed it with a $465 million loan. But the company is pinning hopes of future profits on sales of a mass-market Model S sedan.

The Model S carries a price tag of $50,000, after a federal tax credit. So far, 2,200 would-be buyers have plunked down a $5,000 refundable deposit for the five-passenger car.

Volume production of the Model S is slated to begin in 2012 at a recently shuttered Northern California auto plant it bought from Toyota Motor Corp. (TM ) for $42 million.

Tesla is selling $50 million in shares to Toyota immediately after the IPO as part of a broader partnership with the Japanese auto maker.

Based in Palo Alto, Calif., Tesla has 646 employees. It plans to expand its network of 12 retail showrooms in the United States and Europe to 50 worldwide to accommodate its rollout of the Model S. On Thursday, Tesla will open a showroom in Copenhagen.

Tesla's Musk has had success in the past with startups.

The executive founded Tesla after helping launch PayPal, an electronic-payment system acquired by eBay Inc. (EBAY ) in 2002, and Zip2 Corp., a provider of Internet-enterprise software that was acquired by Compaq in 1999.

Musk, according to a company filing with the Securities and Exchange Commission, intends to emerge from the IPO with a 28% stake in Tesla.

Matt Andrejczak is a reporter for MarketWatch in San Francisco.
.........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand

By Shawn Langlois,
Aug. 18, 2010, 4:26 p.m. EDT

SAN FRANCISCO (MarketWatch) -- General Motors Co. filed Wednesday for a long-awaited public offering that will take its place among the biggest IPOs in history, and set the stage for the U.S. government to exit the car business.

The company did not specify the amount of shares or a price range, but did say the offering will include common and preferred stock. GM also said there will be 500 million shares outstanding following the offering.

The stock will be listed on the New York and Toronto stock exchanges and will be traded under the symbol "GM," the same one used before its bankruptcy.

GM said it won't be paying a dividend on the common shares.

The company is reportedly looking to raise up to $16 billion, with the U.S. Treasury selling some of its holdings.

For taxpayers to fully get their money back, the public offering likely has to bring in about $70 billion.

The Treasury said following the filing that it has agreed to be named as a selling shareholder of the common stock

The department also said it will retain the right, at all times, to decide whether and a what level to participate in the offering.

The Obama administration spent about $60 billion, in addition to the billions paid by the prior administration, to bail out GM and rival Chrysler last year as both were careening toward their demise. Ford Motor Co. /quotes/comstock/13*!f/quotes/nls/f (F 12.20, +0.04, +0.33%) avoided the lifeline.

The Treasury currently holds a 61% stake in GM as well as $2.1 billion of Series A preferred stock after having invested about $50 billion to keep it afloat. The Detroit giant repaid almost $7 billion in loans this year.

The proposed offering will not include the Treasury's preferred shares.

David Silver, an auto-industry analyst at WStreet.com, said he expects the offering to fetch up to $18 billion with another $5 billion possible from the preferred shares.

He estimated that up to $10 billion would be coming from the government's holdings.

"There seems to be a high demand for GM stock from hedge funds and large institutions, but retail investors don't want to touch the stock," Silver added.

The IPO filing follows closely on the heels of GM's biggest quarterly profit since 2004. The automaker said last week that it earned $1.3 billion, or $2.55 a share, on revenue of $33.2 billion. See full story.

The second-quarter profit marked back-to-back quarters in the black for the first time since 2004 -- a big step forward in the company's efforts at convincing investors it's worth a look after living off a government bailout.

GM emerged from Chapter 11 in July of last year, after speeding through the five weeks of bankruptcy that helped the company fix its balance sheet and focus on its portfolio of core brands: Buick, Cadillac, Chevrolet and GMC.

The paperwork comes as GM prepares for life under its fourth chief executive in less than a year and a half. Daniel Akerson is taking over for Ed Whitacre, who will remain chairman, as of Sept. 1. In December, Akerson will also take the chairman's role.

A successful IPO for GM would lend support to President Barack Obama's stance that the auto-industry bailouts were a success as he prepares for key election races.

"There is no doubt in my mind that we will see the administration patting itself on the back, congratulating itself, telling the public that the investment into the automakers was a good idea," WStreet.com's Silver said.

Shawn Langlois is a reporter for MarketWatch in San Francisco. .........................

"A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment. A trader does not expect to be paid for his defaults, only for his achievements. He does not switch to others the burden of his failures, and he does not mortgage his life into bondage to the failures of others." - Ayn Rand