This note was originally published November 26, 2013 at 13:23 in Macro
With animal spirits kindled and speculative appetites wetted in 2013 alongside bullish price momentum and higher all-time highs in equities, the domestic IPO market has been resurgent.
Together with the positive price action, the macro backdrop has been favorable for shares coming to market as volatility spikes have been transient, equity fund flows have been positive and persistent and the trend in consumer and CEO confidence (pre-Gov’t shutdown) has been decidedly positive YTD.
In the summary table below we highlight the deal and performance metrics for the 2013 class of U.S. IPO’s. Both transaction volume and proceeds have accelerated in the YTD as deal pricing has been solid with positive, subsequent absolute and market adjusted performance for the preponderance of new issues.
Strong returns for household names, FB and TWTR, which are currently +18% and +50% above offer, respectively, have helped invigorate retail involvement and will likely continue to support individual interest in the (still) pregnant pipeline of forthcoming VC and PE backed offloads.
Our GLL team expects the next high profile IPO, Hilton hotels, to price before year end and will be doing a pre-IPO blackbook and conference call in the next couple weeks to detail their investment view on the offering. Please contact sales@hedgeye.com if you are interested in that call.
At present, the environment remains favorable for extending the positive acceleration in new equity issuance and broader corporate activity/M&A, but speculative appetite (& confidence) anchors on last price.
From a price signaling perspective, the TREND lines that matter are 1718 Support on the SPX and 14.29 Resistance on the VIX.
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Christian B. Drake
Associate