GO
Loading...

IPOs? Trade the Investment Bankers Instead

Three initial public offerings expected to price tomorrow will put the number of venture capital-backed IPOs on track to be the most since at least 2001, according to Dealogic.

Already, 10 of the 34 IPOs priced this year have been VC-backed and almost a third of the 105 deals in the six-month backlog are backed by venture capital.

“Dump anything while you can,” said Pip Coburn, founder of Coburn Ventures and a former UBS technology analyst who got bearish near the height of the Nasdaq boom in 2000. “VCs are so looking for exits as their business is very tough to manage currently.”

SPS Commerce Inc., a web-based business software firm, Alimera Sciences, a biotechnology firm focused on eye ailments, and Codexis Inc., an environmentally-friendly chemical company, are expected to price tomorrow after the bell.

The Technology SPDR ETF is up 46 percent from 12 months ago, but is off its high this year following disappointing earnings results from Google last week and IBM Monday. Apple reports after the bell today. The iShares Nasdaq Biotechnology is up 45 percent from a year ago, but has flat-lined since reachings its highest since 2001 last month.

“The window is open and it’s a race to get out,” said Colin Gillis, a BGC Partners technology analyst who was one of the few bearish on Google before its report. “We expect there could be pricing pressure on the smaller deals as investors still remain very concerned on liquidity. Historically, investors were more willing to take a position that might take a few weeks to unwind – now investors buying deals want to get out in a couple days.”

Alimera is expected to raise $96 million and Codexis will garner $84 million, according to Dealogic. SPS Commerce is expected to raise $40 million.

Regardless, the one winner from this activity could be the investment banks. Morgan Stanley, which reports earnings Wednesday, has raised $822 million through 11 deals so far this year, leading all competitors.

“I am not trading any of the IPOs, but I would trade the investment bankers because the spigot is wide open again,” said Jon Najarian, co-founder of OptionMonster.com and TradeMonster.com. “The venture capital firms are bringing the paper out because they can and they’ve held this stuff for most of the past two years and need a liquidity event.”

For the best market insight, catch 'Fast Money' each night at 5pm ET on CNBC.

______________________________________________________
Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com.

Trader disclosure: On April 20, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Scaramucci Owns (AAPL), Skybridge Owns (AAPL); Scaramucci Owns (BAC), Skybridge Owns (BAC); Scaramucci Owns (C), Skybridge Owns (C); Scaramucci Owns (GE), Skybridge Owns (GE); Scaramucci Owns (GS), Skybridge Owns (GS); Scaramucci Owns (IBM), Skybridge Owns (IBM); Scaramucci Is Long U.S. Dollar, Skybridge Is Long U.S. Dollar; Najarian Owns (BP); Najarian Owns (C) Calls; Najarian Owns (GOOG) Calls; Najarian Owns (JNPR) Calls; Najarian Owns (LVS) Call Spread; Najarian Owns (MCD) Calls; Najarian Owns (YHOO) Call Spread; Terranova Owns (C) May Calls; Terranova Owns (XCO), (SWN), (TER), (HES), (AXP), (MOS), (YHOO); Terranova Is Short (BRE); Terranova Is Short (LCC); Nations Owns (MSFT); Najarian Owns (C) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (MCD) Calls; Najarian Owns (GOOG) Calls; Najarian Owns (ALL) Calls; Najarian Owns (CLF) Call Spread; Najarian Owns (TCK); Najarian Owns (MRVL); Edwards Owns (VXX); Cortes Is Short S&P 500 Futures; Cortes Is Short (LVS); Cortes Is Short (WYNN)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)

For Patty Edwards
Edwards Owns (AAPL) For Clients
Edwards Owns (BAC) For Clients
Edwards Owns (GE) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (IBM) For Clients
Edwards Owns (INTC) For Clients
Edwards Owns (JNJ) For Clients
Edwards Owns (JPM) For Clients
Edwards Owns (KO) For Clients
Edwards Owns (MCD) For Clients
Edwards Owns (MS) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (RIMM) For Clients
Edwards Owns (RIG) For Clients
Edwards Owns (TOT) For Clients
Edwards Owns (UNH) For Clients
Edwards Owns (WFC) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (PGM) For Clients
Edwards Owns (GLD) For Clients
Edwards Owns (VXX)

For Yair Reiner
Oppenheimer & Co. Is A Market Maker In (AAPL)

GE Is The Parent Company Of CNBC

Symbol
Price
 
Change
%Change
SPDR TEC SEL
---