When the chairman of the Fed speaks, everybody listens. And last Thursday, Federal Reserve Chairman Alan Greenspan spoke in a congressional meeting. Once again, he talked about increasing short-term interest rates. Since June 1999, the Federal Reserve Board has increased rates four times. Lurking in the background is oil near $30 a barrel, the highest price in nine years.
There was an immediate reaction to Mr. Greenspan's comments, and the stock market took some body blows as prices spiraled lower. The big exception: the IPO market. Today's new-issue market is so hot, it's like people bellying up to the bar and dancing to the music of a wild, drunken party as the Titanic stock market quietly slips beneath the icy waves.
In a rare move, an IPO started trading on Monday. It was Diversa, a genomic bioengineering firm that was priced at $24 a share by Bear Stearns.
The IPO opened at $52, traded as high as $79.38, and closed at $75 a share, sliding up 212.5 percent and into the No. 54 spot in the Redherring.com IPO Hall of Fame, a list of companies whose share prices increased more than 100 percent from offer price in their first day of trading.
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That set the tone of the IPO market for the balance of the week. Diversa sold to a Thursday high of $129 a share before closing Friday at $103.88, up 332.8 percent for the week. It was the top performer of the week's graduating class of IPOs.
The week ended with two other moonshots, on Friday. One was the Goldman Sachs offering of Gigamedia, a Taiwanese provider of broadband ISP services. The IPO soared 225.9 percent and into the No. 48 spot in our Hall of Fame when its price closed at $88 a share, up from its initial offering price of $27.
The other space traveler, also a Goldman Sachs deal, was the highly touted Inforte, a B2B provider of consulting and systems integration services. Its shares were priced at $32, opened at $82, zoomed to a high of $100.13 a share, then closed at $72.94. That's up 127.9 percent, putting it in the No. 131 spot in our IPO Hall of Fame.
In all, 16 IPOs came public during the Valentine week of February 14, and Wall Street raised $1.4 billion in the new-issues market. Ten deals were priced above their initial filing ranges, four within range, and two IPOs were reduced in size. Additionally, seven new members entered the Redherring.com IPO Hall of Fame with opening-day gains of 100 percent or better.
By the time the stock markets closed on Friday, 14 of the week's offerings finished above their offering prices and two were below. The average opened premium per IPO was 90.6 percent, and at week's end, each offering was up on average to 110.1 percent.
Against the backdrop of last Friday's sharp stock market decline, the IPO market continued to dance among the stars -- and the oil tankers.
For a complete listing of upcoming deals, see our IPO calendar.
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