McNamee: Cautious IPO market a 'healthy sign'

Ferrari likely to price tomorrow

Sixty-seven IPOs have been postponed or completely withdrawn this year. That's more than in any full year since 2012.

Some might say this indicates the IPO market is in chaos, but Elevation Partners co-founder Roger McNamee told CNBC he sees the recent activity as a healthy sign.

"Because by definition, [IPOs] are new, so investors have less information, they have less experience with companies," he said on Monday's "Squawk Alley." "You want to see for health of the market, the IPO market be cautious… . So I think this is a very healthy sign about the public market in general that it is being very selective."

Roger McNamee
David A. Grogan | CNBC

As Ferrari looks to go public Wednesday, McNamee said it will do better in this environment than Albertson's — one of this year's postponed IPOs.

"With all due respect to [Albertson's], it's a retread. It has been public and private and public and private, and, you know, it's in a very, very tough business that's extremely cyclical, where Ferrari sells the top one-tenth of 1 percent of the wealth spectrum and those are the people who are doing best in this economy," said McNamee.

But what about smaller companies looking to go public that might not have the name recognition or wealthy buyers like Ferrari?

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McNamee says it's not something investors should worry about.

"I think that the public market does make mistakes. It does take companies and then change its mind. And sometimes it does that erroneously," he said. "Obviously it's a negative for the people trying to bring things public but that's not our problem. Our problem is what do we do as investors to protect ourselves."

Just last week, David Solomon of Goldman Sachs told CNBC's "Squawk Alley" that private companies often try to go public to bring in more primary capital. This, he said, is to "reduce debt or rearrange their capital structure… ."

According to McNamee, this practice suggests that "all is not well on the private side."

Some companies are capitalized with market rate debt, McNamee said, which could be "very, very bad" if the Fed decides to raise rates later this year or early next year. Others, he said have valuations that look like public companies which, in fact, the public market would not pay.

"As I said, if you're a public market investor [you] are far more engaged in the public market than they are in LBO's or venture capital," he said. "You don't want to see people creating things that are bologna and then selling them to public investors."