Initial public offerings that performed best this year turned up some surprises.
Nine companies that made their debuts on U.S. markets saw the value of their shares more than double, and they were not all technology-based upstarts. Rail-car maker, FreightCar America Inc., for example, made the list.
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One of the most talked-about, high-profile companies was the Chinese Web search engine Baidu.com Inc., gaining 171 percent since its IPO, Reuters reported. Adams Respiratory Therapeutics Inc., which makes over-the-counter drugs, performed second-best, with its shares rising 168.5 percent since its July IPO, according to data from Dealogic.
Other top performers that saw their stock prices double: electronic payment technology provider VeriFone Holdings Inc., apparel retailer Citi Trends Inc., and medical device maker China Medical Technologies.
"The nice thing is you did not have to buy at the IPO price to make money on those companies," said Tom Taulli, an IPO analyst and founder of DealflowSearch.com. "Even if they did go up 10 or 15 percent on the first day you would have made a nice, tidy profit, which is not easy. It wasn't easy this year to make a nice, tidy profit."
One trend among the most successful IPOs is that they used the proceeds to pay for expanding the companies. The average U.S. IPO this year raised $169.7 million, according to Dealogic, which is 8.4 percent less than the same period last year.
Investors have been reluctant to put capital behind new, untested companies, instead opting for more mature businesses with solid track records, Reuters reported.
"While the (IPO) window was a bit more closed, we all who are good at company building ... went back and were building companies," said Jon Chait, a principal in Pod Holding Inc., a Boston-based private equity firm. "We're not building things to hypothetical growth plans, we're measuring them on execution, we're measuring them to profitability and cash flow accretion."
IPO volume for 2005 is about the same as last year, but the average deal size has been smaller, according to PricewaterhouseCoopers' U.S. IPO Watch, quarterly survey of all IPOs listed on U.S. exchanges.
"We continue to see a broadening of IPO activity across industry sectors, with fewer blockbuster deals," said Scott Gehsmann, North American Leader of PricewaterhouseCoopers' Global Capital Markets Group. "This broadening of market activity is encouraging as the market heads into the fourth quarter, typically the most active of the year."