Historically, the new-issues traffic tends to drop off from August to September. Dating back to 1970, the August IPO calendar produced 1,004 deals and the September IPO calendar followed with 806 deals, according to available reports.
Nine deals were priced during August this year.
September has already priced one deal during its first week, and the Street is looking at eight more this week. The September IPO calendar has been filling up.
Consider this: On Monday morning, Sept. 11, the new-issues calendar showed two deals scheduled for the week of Sept. 25. A week later, by Sept. 18, the calendar had grown to nine deals for the week of Sept. 25.
Should all the dreams of the investment bankers and the issuers come true, it would bring September 2006’s total to 18 new offerings. That would be double August’s output.
Of course, 18 pricings certainly isn’t a record September. Surprisingly, the busiest September did not materialize during the “insanity dot-com” era of 1999 and 2000. You have to go back 23 years to 1983, when 62 IPOs were priced in the month.
Reading the Tea Leaves of Autumn
Now back to the present.
If 18 IPOs do get priced, it would still fall below an “average” September. That would be 22.4 deals. But here’s the good news.
Should the bankers hit the jackpot and everything gets priced as planned, it would make this September the busiest one since 2000 when 25 IPOs were priced.
After the collapse of the market in the early 2000s, the IPO traffic really didn’t start picking up until after July 2003. For example, from July through December 2003, 74 of the year’s 84 IPOs were priced.
In 2004, 100 of the year’s 248 IPOs were priced from September through December. These figures include unit offerings consisting of common stock and warrants.
In 2005, 76 of the year’s 236 IPOs were priced from September through December.
As of Aug. 31, 2005, 160 IPOs had been priced. That was more than this year’s output of 133 IPOs priced by Aug. 31, 2006.
But the outlook is favorable for the rest of this year.
Here’s what the leaves look like in autumn’s tea cup:
The Nasdaq Composite Index closed on Friday, Sept. 15, at 2,235.59, up 1.37 percent for the year and up 10.3 percent from its July 21 closing low for 2006 of 2,020.38.
There are 191 IPOs in the pipeline waiting to be priced. Six more were added this past week, including two that were added just on Friday afternoon. At the beginning of 2006, there were 135 IPOs in the pipeline.
Even though 2006’s IPO traffic has been trailing 2005’s volume through Aug. 31, with 133 IPO pricings versus 160 IPO pricings, there’s the possibility that this fall’s IPO traffic could make 2006 a better year than 2005.
Happiness is a healthy IPO calendar.