Let’s face it: on the surface, the latest statistics about IPO markets are not encouraging. But behind the data hides a more nuanced reality.

69 US IPOs have been withdrawn or indefinitely postponed so far this year, more than in any full year since 2012. Not a great trend, but it is also a sign the public market is more discerning, and is looking for something more appealing than a loss making grocer (Albertson) or an indebted telecommunications company (Digicel). Public market investors overwhelmingly welcome sexy offers like Ferrari (RACE), whose global road-shows had double the expected attendance, and its shares were 20 times oversubscribed. We were one of the lucky ones who got an allocation in this perfectly priced IPO, netting our Fund a nice +13.04% profit.

Only 18 U.S. tech companies have gone public so far this year, to be compared with a seven-year high of 55 in 2014. Usually a great source of new listings, these tech companies are still enjoying a great ride, privately raising tons of money without the hassle of auditing, reporting, and all the “annoying” transparency red-tape that comes with a public listing. But the private investors’ ultimate goal is to exit with a profit, usually by way of a sale or an IPO. Everything has its limits, and the patience of VCs, Hedge Funds and Mutual Funds is no exception. As Bill Gurley, the managing partner of Benchmark Capital put it recently about the billion-dollar start-ups: “Until you get liquid, you really haven’t accomplished anything,”. So, it’s just a question of time before we see the Unicorns coming out of the woods and claiming their stake in the public markets. Today, the tally of unicorns waiting in the wings is 153 with a total private valuation of $529 billion. Having one or two of them getting publicly listed each month would make everyone happy for a while.

In October, 15 out of 17 US IPOs were priced below the initial range. This indicates that more companies have sought valuations above what public investors are willing to pay. This gap will likely increase as Unicorns continue to raise private money at eye popping valuations, while down-to-earth public market investors keep on worrying about China, the Fed, Oil prices, and a little bit of everything else affecting the global economy. In 2014, 25% of the tech IPOs were “down round”. In comparison, they were up by 71% in the first half of 2015! But last stage investors are never short of ideas to bridge the increasing valuation gap and to protect their investment. They come up with ratchets, liquidation preference and a multitude of other preferential rights that makes their equity look a lot like debt.

Take Square, for instance, the next much-anticipated Unicorn to be listed. In its last round of private fundraising in August 2014, Square was valued at $6bn. But investors in that round were given a sweet downside protection in exchange for this inflated valuation. They will be awarded extra shares if the company’s valuation has not risen to at least $7.2bn by the time of its IPO. That is a minimum ROI of 20%!  However, the final word is seems increasingly up to the public markets, and we will see more IPOs priced according to public investor valuation, making the late private round pricing less relevant.

The number of US IPOs drastically dropped from last year, with the amount raised declining by 62.4%. But the US markets are just a fraction of the global IPO market, and coincidentally, European markets broke a few records last month. In the UK, the payment processing firm WorldPay succeeded in becoming the nation’s largest listing since Glencore‘s IPO in 2011, and in Italy, Poste Italiene floated €9 billion worth of shares and made it one of this year’s largest IPOs in Europe.

On the Hong Kong Stock Exchange, 3 big Chinese deals raised a total of 4.6bn, one of them being IMAX (1970.HK), the movie theater operator in which we invested for an impressive +7.10% profit.

Next month in Japan, the Japan Post IPO, and its banking and insurance units, will raise $11.6 billion. This is Japan’s biggest IPO since NT&T in 1987, and the world’s largest since Alibaba in September 2014. The trading date is November 4th, and we will be in!

In October, we participated in a total of 7 IPOs. Besides the two successful deals mentioned above, Mirna Therapeutics (MIRN) brought us a nice return of 10%, while Performance Food Group (PFG) a more tepid +1.97%. More disappointing were our investments in First Data (FDC), Pure Storage (PSTG) and Surgery Partners (SGRY), for a return of +0.78%, -1.76% and -3.42% respectively.

Our Year to Date ROI is now +34.87%, up from +32.46% last month.