This year, according to Thomson, IPO’s brought public by private equity have returned just 23% to date. Meanwhile, those without the private assistance have returned 27% on average.
Daniel Primack, Editor At Large for Thomson Financial and Editor of the PEhub.com blog joins the guys for this conversation from Boston.
First, says Dylan. What are the good characteristics of a private equity IPO?
There are 3, replies Primack.
1. Long holding period – (the best performing IPO’s were companies held 5 years or more)
2 Holding on to stock – (the private equity firm shouldn’t be selling out via the IPO, nor too much in control)
3 Fundamental improvement – (don’t be too concerned that the private equity firm isn’t a rock star )
What names sponsored by private equity are likely to be sold to the public soon, asks Dylan.
The next one will be from the private equity group Heartland Industrial Partners.
Eric Bolling tells investors who are interested in private equity IPO’s to stick with companies that have a proven track record such as General Atlantic. “When they bring a company public, they do it for a reason.”
Primack says the single most successful buy-out backed IPO on a percentage basis since 2006 is a company called Koppers (KOP) backed by Saratoga Partners.
Jeff Macke likes Burger King (BKC) which came out of the private equity pipeline.
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Trader disclosure: On May 16, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders
Macke Owns (SWY); Strazzini Owns (T), (YHOO), (NWS.A) (IBM); Bolling Owns (NMX), (XOM) Bolling Owns Gold, Silver, Coffee, Sugar; CNBC Is A Service Of NBC Universal And Dow Jones