2009 IPOs Top the Market by 25.4 Percentage Points

IPO market is very thin because companies that aren’t top notch know they’ll get slammed,” says Amy Calistri, editor of StreetAuthority’s Stock of the Month, adding “In this environment, companies that aren’t the cream of the crop are wise to find capital elsewhere or just sit on their hands.”

The IPO market has gained some speed in 2009. In each of January, February and March, only one company risked an IPO. April and May each saw three company IPOs, and June saw five. Two years ago, there were 34 IPOs in June, although last year’s number fell to just four.

Top performers in 2009 include Changyou.com (Nasdaq: CYOU), a Chinese online game developer that is up +149.0% since it first began trading on April, 3, and Bridgepoint Education (NYSE: BPI), a post-secondary online and campus-based education company that has gained +50.5% since its IPO on April 16. 

Name Since Equity Return S&P Return
Hibernia Bancorp (OTC: HIBE) January 30th +35.0% +2.8%
Mead Nutrition (NYSE: MJN) February 12th +35.5% +7.6%
Nivs Technology (NYSE: NIV) March 16th -12.0% +15.5%
Changyou ADR (Nasdaq: CYOU) April 3rd +149.0% +7.7%
Rosetta Stone (NYSE: RST) April 12th +49.9% +4.9%
Bridgepoint (NYSE: BPI) April 16th +50.5% +6.8%
DigitalGlobe Inc. (NYSE: DGI) May 15th -4.9% +1.7%
SolarWinds Inc. (NYSE: SWI) May 22nd +22.6% -0.5%
OpenTable Inc. (Nasdaq: OPEN) May 22nd +47.2% -0.5%
Gov. Properties Trust (NYSE: GOV) June 4th +1.5% -3.5%
Cypress Investments (NYSE: CYS) June 15th +8.6% -4.9%
Chemspec Intl (NYSE: CPC) June 24th -4.3% +0.4%
Medidata (Nasdaq: MDSO) June 26th +16.1% -2.3%

Because today’s environment is so challenging, only the most successful companies are choosing to go public — firms that are extremely strong and that need fresh capital now to continue to grow. All of the marginal players are waiting on the sidelines for stock market conditions to improve. “It’s a lot like if you raised the price of college to a million bucks, made the only passing grade an ‘A’, and only made loans to students with 800 or better credit ratings,” says Calistri. “You’re going to see a lot of “A” students and very few flunkies.”

Among this year’s losers: NIVS IntelliMedia Technology Group (NYSE: NIV), a Chinese audio and video consumer products company, saw its shares drop -12.0% since its IPO on March 16, and DigitalGlobe (NYSE DGI), a satellite image provider, has dropped -4.9% since its first day of trading on May 15.

“We’ve already seen a little uptick in IPO action, but investment banks are still only playing their best cards,” said Calistri. “I don’t expect this situation to change much in the second half of the year.”

Investors will likely continue to post solid profits by getting in early on IPOs. Looking ahead, recent IPO filings include Colony Financial, ZST Digital Networks, CreXus Investment Corp., Western Asset Mortgage Capital Corporation, Starwood Property Trust, and Lihua International. All were filed in June; none have yet been priced.