While a few high-profile IPOs like Seaworld Entertainment (SEAS) and Norwegian Cruise Lines (NCLH) have caught the investing public's attention this year, the real action has been in secondary offerings. Why? Low interest rates and a stock market that's up 14 percent this year has made this one of the best markets in years to float stock...and debt.
Year to date, there's been 302 secondaries with a value of $81.9 billion, according to DealLogic. That's the highest number of secondaries year-to-date since 1998, and the highest dollar value since 2009.
The secondary charge has been led by Real Estate and Property companies, which have raised roughly one-quarter of the total amount. That makes sense: real estate is one of the bright spots of the U.S. economy...real estate companies are raising stock to fix up their balance sheets and to raise cash for acquisitions. Companies that have floated secondaries include Realogy (RLGY), which owns the Century 21 and Coldwell Banker real estate franchise.
Other sectors with heavy secondary offerings include Oil & Gas (12 percent of the total), Utility & Energy (9.9 percent), and Healthcare (8.8 percent).
Even retailers like Michael Kors (KORS) have gotten into the act, with at $1.5 billion secondary in February.
This is not just a stock market phenomenon: with rates at historic lows, both high-grade and junk bond issuance has also soared, led by Apple's (AAPL) $17 billion offering.
The business of announcing secondaries can be tricky, since putting additional stock on the market can sometimes depress the share price. But with a steadily rising stock market, there are few cases where new stock has pushed prices down. In some cases, it can help.
Case in point: Restoration Hardware (RH), which priced a secondary May 15th at $50; the stock had been $40 on the 10th, when they updated their guidance; it popped again when the secondary was announced on the 13th.