Time to put IPOs on your radar

Photo by Yodel Anecdotal/Yahoo! Inc.


You know the financial markets must be on the mend when analysts start mentioning IPOs with a straight face.

IPOs – initial public offerings – mean that entrepreneurs and underwriters are confident that shares in a newly public company will get an appropriately lucrative reception from investors. They were all the buzz five or 10 years ago, when companies from every sector were slapping dot.com onto their corporate signatures and tossing their shares into the ring.

Some, like 1-800-Flowers.com, wilted. Others, like Google – which opened at $85 and today trades around $490 – made hundreds of instant millionaires.

As liquidity dried up, so did the flood of offerings. But this year, a few tentative IPO attempts are happening here and there, like the tiny green shoots of perennial flowers that brave the chill of early spring.

Brush up your IPO-watching skills now and you’ll be ready when the next crop ripens.

Here’s a very basic primer from About.com’s stock market channel; it explains the hows and whys of initial public offerings.

To keep tabs on IPO activity, you want to keep an eye out for registration statements, the prospectus documents required by the Securities and Exchange Commission when new securities are issued. You may hear the term “red herring” bandied about; it refers to the earliest version of the prospectus, which doesn’t reflect the projected initial share price and some other key data. Like false clues in a murder mystery, it keeps investors on their toes.

Here’s the SEC rundown on registration statements. They’re public and readily available through the EDGAR system.

Unfortunately, SEC media relations says there’s not yet a way to set up an RSS feed or e-mail alert solely for IPO documents, but if you’re serious about covering new offerings, it only takes a few clicks a day to keep abreast of developments. At the SEC home page www.sec.gov click on “filings & forms,” then “search for company filings” and finally “most recent filings.” In the Form Type field of the little grey menu box, enter “S-1.” That will bring up a list of registration statements submitted over the past day or so.

Yahoo! has a rudimentary IPO look-ahead at its economic calendar. A better source is Hoover’s Inc., the firm that tracks private companies – it offers great stats and news on its IPO Central channel.

Consulting firm Renaissance Capital LLC welcomes media inquiries and offers a plethora of year-to-date statistics, news and other helpful information at its Web press room.

Even if your territory is not yet fertile ground for IPOs, you’ll want to evaluate those companies that are ripe for the plucking. (Bioscience and for-profit education are my bets.) Talk with regional economists, economic development groups, industry analysts and venture capital firms about which sectors may start producing when underwriting cash loosens up.

Come back to Your Daily Tipsheet each morning for advice on where to find sources, background and creative ways to make financial news and trends relevant to your audience.