Half way through January, it didn’t look like any US IPOs were going to happen. And then, virtually overnight, 8 made it on to our Fund’s pipeline, and 7 of those priced by month end.
However, our investment manager didn’t secure a deal until Friday January 27. We have to go all the way back to December 16 to find the last deal we were involved with, so it had been 42 days without an allocation. How uncommon was this for our Fund? Admittedly, it was the longest stretch we had ever gone. The obvious question to ask, with all the uncertainty going on in the world today, is whether we are going through an unusually difficult time. The short answer is no.
Since the US is the Fund’s major market for IPOs, it seems that the holiday period—and the post-holiday blues that follow it—is an exceptionally fruitless part of the year for IPO activity. The 3rd longest dry spell for our Fund (36 days) was also during—and after—the holiday season of 2013. What happened in 2014 and 2015? We were fortunate enough to get allocations in a few Hong Kong IPOs that gave us modest or no returns. Without this activity in Asia, the dry spell would have been 36 and 47 days respectively. Below are the actual top 5 periods with no IPO activity since our Fund inception:
Fortunately, the investment manager was able to secure 4 deals this month (see next section for details). This was our best showing for any January since 2014. However, when compared to that same 2014, we were able to achieve a much higher level of performance this year with a 20.85% ROI per IPO.
Since there is a definite correlation with how many annual IPOs we partake in and how well the Fund performs, we’re off to a strong start in 2017. Even if we experience a repeat of last year’s low global IPO output, the management team will continue to use the same methodologies that worked so well for the Fund in 2016.