The Fretting Among Wall Street Gurus Has Begun

Saturday, April 2, 2016
By Paul Martin

by Wolf Richter
April 1, 2016

Something has to give.

A stock market that has rallied sharply to ludicrous valuations is normally accompanied by a booming IPO market. They’re like twins. The S&P 500 jumped 13.5% in seven weeks – to bring it back up to flat year-to-date, a lofty perch, though down a smidgen from its all-time high in May 2015. But year-to-date, the IPO market is in the worst shape since 2009.

Something has to give.

“Either the IPO market is going to pick up, or the stock market is going to pull back, but it’s hard to envision both conditions peacefully coexisting,” Jack Ablin, chief investment officer at BMO Private Bank told the Wall Street Journal.

In the US, only 8 IPOs made it through the window in the first quarter, according to Renaissance Capital’s Quarterly IPO Review, dated March 31. They were all early-stage medical device or biotech companies. Two from China. Not a single one has a product or revenues.

Also three blank-check companies made it out the gate, with the idea of buying up assets as they become available, but Renaissance Capital did not include them in the above tally. The Wall Street Journal pegged the total number of IPOs at 9, including the three blank check companies but excluding the two China-based outfits, which are already publicly traded elsewhere.

This was the lowest number of IPOs since 2009. And the total amount raised – $1.2 billion for all of them – was the smallest in 20 years. Another 9 IPOs got postponed at the last minute, and one was withdrawn altogether. No Tech IPOs at all.

The Rest…HERE

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