Although Christmas will force the market to take a breather from the rapid number of new floats and listings that have been occurring in the past few months, unless the market takes a serious turn for the worse there are likely many more companies waiting in the wings for an opportunity to list in early 2014.
For individual investors keeping on top of the multitude of initial public offerings (IPO) and other listings is a difficult task, not to mention the hurdles to jump over before actually receiving an allocation. For investors who are yet to take a look at some of the recent listings, in a number of cases their 'lateness to the party' has been to their benefit, given that a number of the high profile IPOs and listings are trading below their initial price.
While the IPOs grab much of the market's attention, the greater opportunities may lie in the shares of Orora (ASX: ORA) and Recall Holdings (ASX: REC). Orora was recently demerged from packaging giant Amcor (ASX: AMC) and Recall was demerged from pooling solutions provider Brambles (ASX: BXB). Both companies have been 'set free' by their respective parent company due to the belief that independently they will operate better.
While only time will tell if the demerger is a benefit (and then only hypothetically), in the nearer term investors may get the opportunity to pick-up these two companies at enticing prices due to forced selling. Many institutional fund managers can be obliged to sell their holdings of a demerged company for a number of reasons and this can create a buying opportunity for savvy individual investors.
In comparison, the IPO of Pact Group (ASX: PGH) – which is being compared to Orora as both businesses operate in the packaging space – is an example of the potential benefit of 'being late to the party'. Investors who received an allocation in the float paid $3.80 per share but after three days of trading those same shares can now be purchased on-market for $3.30.
Foolish takeaway
Many analysts appear unenthused by the listing prices of Recall, Orora or Pact Group, however at the right price each company could offer compelling value. Just as the tortoise eventually beats the hare, investors may find that adding these stocks to their watch list rather than their portfolio is the best course of action for now.
