February was an active month for IPOs.
Newly public companies, as a group, tend to outperform the broader market over the first 15 years or so of trading.
That’s good news for growth investors who worry that they missed the public offering, and believe it’s too late to get in early.
Nothing could be further from the truth. In fact, after the initial offering, it’s very common for new issues to rally fast, then pull into a correction.
The correction may last weeks or even months. For investors hoping to grab some shares, waiting for the stock to emerge from that post-IPO correction is a smart strategy.
As a group, ETFs didn’t fare so well in February
The Renaissance IPO ETF (IPO) finished the month 1.87% lower, the first downside month since October.
The Renaissance IPO ETF (IPO) finished February down 1.87%.
Top fund holdings are: Uber Technologies (UBER), Zoom Video Communications (ZM), CrowdStrike Holdings CRWD +3.5% (CRWD), Pinterest (PINS) and Peloton Interactive PTON +4.6% (PTON).
Of that group, Peloton was the only one ending the month lower, down 17.56%, to $120.47.
Uber eked out a positive return, finishing February with a gain of 1.61%, to $51.75. After solid gains in the first two weeks of the month, it slid in the second half. The week ended February 26, Uber slid 11.37%.
Newly public companies still on their initial uptrend include:
Pharvaris (PHVS): The Switzerland-based pharmaceutical company specializes in discovery and development of treatments for hereditary angioedema, a disorder causing severe swelling in various parts of the body, including face, intestinal tract, airways and extremities.
The stock went public on February 5. It pulled back the following week, but ended its first month at $37.99, a gain of 90% over its IPO price of $20.
Terns Pharmaceuticals (TERN): The clinical-stage biotech focuses on therapies for non-alcoholic steatohepatitis as well as other chronic liver diseases.
The stock was priced at $17, but began trading at $16.95. Despite that disappointment, the stock quickly rallied and finished the month at $22.65.
Atotech (ATC): The specialty chemicals company a supplier to various industries, including consumer electronics, communications, automotive, machinery and household appliances.
The Germany-based company went public at $17 per share on February 4. It finished the month of February at $20.29.
Prominent pricings for March include cryptocurrency exchange Coinbase Global, health insurer Oscar Health, gaming platform Roblox and natural gas explorer and producer Vine Energy.
I am a financial planner, asset manager, financial writer and investing coach. I’m best known as the author of retirement guide, “Don’t Let Your Money Kick The Bucket