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A Deal of Interest Gets Pulled
The Hot IPO Trader
Friday, July 28, 2006
By Louis Basenese
Email – #60
** A Deal of Interest Gets Pulled
In addition to spending time at the Agora Wealth Symposium in Vancouver, B.C. this past week, I’ve been closely monitoring the IPO market. And I was ready to recommend we participate in the upcoming CHG Healthcare deal. That is until the underwriters postponed the deal due to “market conditions.”
In the end, their decision is understandable considering the gyrations of the markets in the past few weeks. In fact, the recent volatility was enough to stop us out of VeraSun Energy (NYSE: VSE) prematurely on Friday.
What I liked about CHG was its proven track record that spans 27 years and its focus on high growth areas in the temporary healthcare staffing space. Its highly leveraged balance sheet raises some concerns, but I would be willing to overlook this given the company’s high growth potential.
Rest assured, I’ll keep monitoring the situation and will likely recommend the IPO once it’s rescheduled.
The only other IPO I was vaguely impressed with was Alien Technology – a provider of the new and increasingly popular RFID technology. However, the company’s inability to turn a profit is too reminiscent of the dot-com days when countless IPOs with no earnings failed miserably in the aftermarket. That’s why I’m recommending we pass on this deal.
And although these might not seem like positive turns of events, the postponement and the decision to pass on Alien actually illustrates a key component of our investment strategy that I’ve been stressing to attendees in Vancouver all week – and that is the need for patience.
Remember, being successful in the IPO market requires waiting for the best deals (not rushing to invest in any deal). With that being said, there are four IPOs slated for next week. And, of course, I’m still working on my research of the highly anticipated Hertz and NYMEX debuts.
Expect your next alert and potentially a new recommendation early next week.
Enjoy the weekend,
Louis Basenese
Stock
Current Price
Comments
VeraSun Energy NYSE: VSE)
Sell
Stock hit trailing stop.
MasterCard (NYSE: MA)
$46.52
Buy. Sell stop is $40.
Market Watch
NASDAQ
1431.50
+5.40
SP 500
756.55
+5.81
DJIA
7223.98
+53.92
As Of 1:22AM 3/14/2009
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