IPOs Disappoint, What Does It Mean?

Oaktree Capital Management
Source: Oaktreecapital.com
Oaktree Capital Management

Ugh! I wanted to be optimistic on initial public offerings, but it just ain't there — this week. Here's the facts:

a) only three of five IPOs priced; one (Aleris) was postponed, and another (BrightSource Energy), was outright withdrawn; and

2) of the three that priced, two priced at the low end of the price talk. Of the three that opened, two opened below the initial pricing.

So MRC Global priced at $21 (low end), opened at $20.50 and Oaktree Capital priced at $43 (low end) and opened at $41.

The only winner is Forum Energy Technologies, pricing at $20, the high end of price talk with more shares added, opening at $22.50.

What does this mean? It is a disappointment, but be careful about extrapolating to the entire IPO market: This week there was a crop of IPOs that didn't appeal to many people. That's about it.

BrightSource Energy? They are trying to develop utility-scale power-generating plants that run on solar. The problem: It's very difficult to store solar energy...so they are literally boiling water to generate steam that generates electricity.

That's right. They're essentially using solar energy to power a boiler.

Bottom line: Worthy work, but green energy has lost much of its luster.

Next week is, well, a new week: Luggage company Tumi is going public, along with Splunk (software for large-scale data analysis in an enterprise), Infoblox (automated network controls and next-generation data centers — cloud computing!), and Proofpoint (data protection — very hot).

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