Annie’s Foods IPO: The Surprise of 2012!

Annies Mac and Cheese
Annies Mac and Cheese

Annie’s Foods the surprise IPO of the year! What happened?

Price talk on Friday was $14-$16, upped to $16-$18 Monday, priced at $19 Tuesday night, shares open at $31.11! Organic foods!

There are several explanations making the rounds of trading desks:

1) there's only 5 million shares floated; the strategy of keeping the shares low has been successful for other IPOs;

2) lemmings. No excitement here at all — until Monday, when the underwriters upped the price to $16-$18. Interest begets more interest. "Great company, great brand and very good takeout target," one IPO trader wrote to me. "Valuation is high but investors are looking for growth and willing to pay up for it."

3) IPO market is heating up. It's not just Annie's, the IPO guys are arguing. Today, Vocera Communications priced above expectations at $16 (opened at $24!) and that is in the field of hospital communications — hardly cloud computing.

There's also strong interest in Cafe Press, an e-commerce platform (think customized t-shirts), which is supposed to price tonight; and Merrimack Pharmaceuticals is also getting interest.

Of course, you can make exactly the opposite argument: the IPO market is definitely getting frothy.

By the way, I already hear the chatter about Annie's: they left too much money on the table, selling at $19. Did they sell too cheaply? I doubt it. It was priced at a valuation that was probably healthy: I can assure you nobody was arguing it was a $30 stock.

By the way, insiders own this stock at $5.27.

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