The festive season has provided a brief respite for investors from the frenetic pace of initial public offerings (IPOs) that occurred in the lead up to Christmas. The brief lull is expected to be short-lived however with expectations that a number of other major floats are in the pipeline and gearing up for listing in the next few months.
For investors who participated in the IPO action during the later stage of 2013 the results have been mixed with some floats providing unbelievable gains while others are still trading below their issue price.
Topping the list for highest gains so far is online recruitment services firm Freelancer (ASX: FLN). The IPO stock issue price was 50 cents and with the shares currently trading at $1.35, shareholders are sitting on a gain of 170%.
Also performing well has been Veda Group's (ASX: VED) shares, which were priced at $1.25 in the IPO but are currently selling for $1.85, providing shareholders with a return of 48%.
Meanwhile the much talked about IPO of Dick Smith (ASX: DSH) had a rocky start which took the stock below its issue price of $2.20, the share price has since recovered to $2.27, so shareholders are sitting on a small gain.
Transport firm McAleese (ASX: MCS) is a similar story to Dick Smith in that the stock has spent much of its (short) listed life trading below its float price of $1.47. Currently the stock is trading at $1.54.
Nine Entertainment Co (ASX: NEC) shares were sold to IPO investors at $2.05. It hasn't been a pleasant start for IPO shareholders who remain underwater on the issue price with the shares currently trading at $1.98.
For many investors, Pact Group (ASX: PGH) would appear to be one of the least impressive of the recent major IPOs. The share price is currently hovering around $3.30. After the shares floated in mid-December at $3.80, placing IPO shareholders on a paper loss of more than 13%.
Foolish takeaway
As the above shows, the saying 'buyer beware' holds very true for investors in companies undergoing an initial public offering. While the excitement of profits such as those provided by Freelancer is enticing, the performance of many other highly regarded and analysed firms has been much less impressive and should sound a warning bell for investors considering the upcoming wave of offerings.
