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Market frothiness in 'inning seven': IPO analyst

Renaissance Capital's Kathleen Smith puts us near the closing innings of another IPO bubble.

The market may not yet exhibit the same behavior of the years directly before the last dotcom bust, but it's close, Smith told CNBC's "Squawk Box." We're in "inning seven," she said.

"We see signs of a bubble but not nearly what we saw in 1999 or 2000," Smith said.

As Wall Street prepared for another big initial public offering—this time from the makers of addictive mobile game "Candy Crush"—Smith said large institutions and hedge funds make up most of the investors in the IPO market. She advised smaller investors not to rush into companies such as King Digital Entertainment, the video game maker that opened for trading Wednesday morning on the NYSE.

Read MoreCandy Crush IPO—Sorry, no crush here: Ron Insana

"Those are special investors getting those calls," Smith said. "Most investors are not participating much in the IPO market. ... Investors should not be running in to buy these. They should watch them trade. They should make these a small part of their portfolio, and participate that way."

Post-IPO trading, however, has become increasingly lucrative. Smith's firm runs an exchange-traded fund made up of newly public companies, called the Renaissance IPO ETF, which has been beating the S&P 50S&P 500 Index. She told investors to keep in mind that the IPO market was largely closed before 2013.

Read MoreIs the IPO market in a bubble? What to look for...

"We are at points in the market that are definitely frothy," Smith told CNBC, adding: "Investors have been outperforming the overall market in post-IPO trading, and that's why we have such an exuberant market right now."

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