Just before Thanksgiving Day, November came to a close for the IPO market when bankers priced a single deal – the IPO of UAP Holding, a Colorado agribusiness company.

One deal isn’t much to talk about. But that was just a side dish on Wall Street’s November IPO menu. A total of 16 IPOs were priced in November, raising $4.13 billion, according to available records.

How does that stack up with November 2003?

In terms of the number of deals, November 2003 won – with 17 IPOs done, compared with 16 this November.

In terms of dollars raised, November 2004 won the IPO jackpot – with $4.13 billion, compared with November 2003’s take of $1.96 billion.

So this November’s 16 IPOs raised more than twice the dollar volume as the 17 deals priced in the same month a year ago.

Here’s another stat to put in your pipe and smoke: When the first 11 months of 2004 are compared with the same period in 2003, the traffic (the number of IPOs priced) this year exceeds that of 2003 by a ratio of more than 3 to 1.

• From January through November 2004, bankers priced 207 IPOs, which included five unit offerings of common stock and warrants. They raised $39.94 billion.

• From January through November 2003, bankers priced 60 IPOs, which included two unit offerings of common stock and warrants. They raised $9.41 billion.

How UAP Holding’s IPO held up

When UAP Holding went public last week, the company sold 27.4 million shares at $16 each to raise $439 million. Bankers priced the deal on Monday, November 22. The UAP Holding offering had initially been filed as a hybrid of common stock and debt to raise $625 million.

UAP Holding, based in Greeley, Colorado, is a distributor of agricultural and non-crop inputs, such as crop production chemicals, seeds, and fertilizer.

By Friday’s close, UAP Holding’s stock was at $16.49 on the Nasdaq Composite Index. That’s a gain of $0.49, or 3.1 percent, from its initial offering price.

In comparison, the average gain for IPOs priced in November was 25.1 percent, while the average gain so far for 2004 IPOs was 31.7 percent. On that basis, UAP Holding’s IPO was below average.

Still, UAP Holding’s newly minted common stock managed to end its first week with a gain. To paraphrase Gertrude Stein, a gain is a gain is a gain.

IPO scorecard for November 2004

As of Friday, November 26, here’s the IPO market’s performance:

• IPOs priced: 16

• IPOs closed above their initial offering prices: 16

• IPOs closed below their initial offering prices: None

• Average gain as of November 26: 25.1 percent

• The Nasdaq, the IPO market’s barometer, was up 6.43 percent as of the close on November 26.

If you look only at average gain in the aftermarket, November’s IPOs outperformed the Nasdaq by 390 percent.

Of pricing and performance

All you need to know about how well an IPO will do in the aftermarket is to compare its offering terms with its original filing terms.

Here’s the old Wall Street saying:

• Price an IPO above its original filing terms: Double my order.

• Price an IPO below its original filing terms: Cancel my order.

Here is how this “theory” worked out in November 2004:

- Eight IPOs were priced above original filing terms (i.e. an increase in the number of shares and/or increase in the price range):

• Average opening-day gain: 22.2 percent

• Average gain as of November 26: 32.5 percent

- Four IPOs were priced within original filing terms:

• Average opening-day gain: 12.4 percent

• Average gain as of November 26: 18 percent

- Four IPOs were priced below original filing terms (i.e. a reduction in the number of shares and/or reduction in the price range):

• Average opening-day gain: 4.44 percent

• Average gain on November 26: 13.7 percent

November’s hero (as of November 26):

• MarketAxess Holdings priced 5 million shares at $11 each to raise $55 million. The IPO closed on November 26 at $21 per share – up 90.9 percent from its initial offering price. (Industry: Financial services.)

November’s goat (as of November 26):

• Coinmach Service priced 18.3 million Income Deposit Securities (IDS) at $13.64 each to raise $250 million. Each IDS consisted of one share of Class A common stock and an 11 percent senior secured note due 2004 in a principal amount of $6.14. The IPO closed on November 26 at $16.75 per IDS – up 0.81 percent from its initial offering price. (Industry: Laundry services.)

November IPOs vs. the year

Here’s how November’s IPOs performed, compared with deals priced in other months of this year.

In terms of traffic, November was below average for 2004 with 16 deals, compared with a monthly average of 19.1 IPOs for the year’s first 10 months. (That average comes from total traffic of 191 IPOs priced from January through October.)

In terms of dollars, November was above average for 2004 with bankers raising $4.13 billion, compared with a monthly average of $3.58 billion for the year’s first 10 months. (That average comes from total dollar volume of $35.8 billion for 191 IPOs priced from January through October.)

Industry sectors and November’s IPOs

During November 2004, no single industrial sector was dominant in IPO issuance.

The telecommunications sector had three IPOs, while the energy and semiconductor sectors each had two IPOs. November’s remaining nine IPOs were from nine different industrial sectors.

Telecommunications:

• China Netcom Group priced 47.1 million American Depositary Shares (ADS) at $21.82 each to raise $1.03 billion. The IPO closed on November 26 at $24.25 per share – up 11.1 percent from its initial offering price. (Book-runner: Citigroup.)

• InPhonic priced 7.5 million shares at $19 each to raise $142.5 million. The IPO closed on November 26 at $23.99 per share - up 26.3 percent from its initial offering price. (Book-runner: Deutsche Bank Securities.)

• Iowa Telecommunications Services priced 19.1 million shares at $19 each to raise $362.9 million. The IPO closed on November 26 at $20.88 per share – up 9.89 percent from its initial offering price. (Book-runner: Morgan Stanley.)

The three telecommunications IPOs raised $1.52 billion. Their average opening-day gain was 16.5 percent. By the close on November 26, their average gain was 15.6 percent.

Energy:

• Copano Energy priced 6 million shares at $20 each to raise $120 million. The IPO closed on November 26 at $24.93 per share – up 24.7 percent from its initial offering price. (Book-runner: RBC Capital Markets.)

• Ormat Technologies priced 6.25 million shares at $15 each to raise $93.8 million. The IPO closed on November 26 at $18.10 per share – up 20.7 percent from its initial offering price. (Book-runner: Lehman Brothers.)

The two energy IPOs raised $213.8 million. Their average opening-day gain was 10.49 percent. By the close on November 26, their average gain was 22.9 percent.

Semiconductors:

• Monolithic Power Systems priced 5.5 million shares at $8.50 each to raise $46.8 million. The IPO closed on November 26 at $9.80 per share – up 15.3 percent from its initial offering price. (Book-runner: Goldman Sachs.)

• PortalPlayer priced 6.25 million shares at $17 each to raise $106.3 million. The IPO closed on November 26 at $31.82 per share – up 87.2 percent from its initial offering price. (Book-runner: Citigroup.)

The two semiconductor IPOs raised $153.1 million. Their average opening-day gain was 39.76 percent. By the close on November 26, their average gain was 63.2 percent.

Book-runners and November IPOs

No single book-runner got the lion’s share of November’s 16 deals.

Goldman Sachs was the book-runner for three deals.

Four book-runners managed two deals each – Citigroup, Credit Suisse First Boston, Friedman Billings Ramsey, and UBS Investment Bank.

Five other book-runners managed one deal apiece.

Goldman Sachs:

• Monolithic Power Systems (For details, please see above. Industry: Semiconductors.)

• Nalco Holding priced 44.4 million shares at $15 each to raise $666.7 million. The IPO closed on November 26 at $18.91 per share – up 26.1 percent from its initial offering price. (Industry: Water treatment.)

• UAP Holding (For details, please see above. Industry: Agricultural products)

Goldman Sachs’s three IPOs raised $1.15 billion. Its IPOs had an average opening-day gain of 7.24 percent, and were up an average of 14.43 percent each as of November 26.

Citigroup:

• China Netcom group (For details, please see above. Industry: Telecommunications.)

• PortalPlayer (For details, please see above. Industry: Semiconductor.)

Citigroup’s two IPOs raised $1.13 billion. Its IPOs had an average opening-day gain of 30.6 percent, and were up an average of 44.4 percent each as of November 26.

Credit Suisse First Boston:

• MarketAxess Holdings priced 5 million shares at $11 each to raise $55 million. The IPO closed on November 26 at $21 per share – up 90.9 percent from its initial offering price. (Industry: Financial services.)

• PRA International priced 6 million shares at $19 each to raise $114 million. The IPO closed on November 26 at $23 per share – up 21.1 percent from its initial offering price. (Industry: Miscellaneous/business services.)

Credit Suisse First Boston’s two IPOs raised $169 million. Its IPOs had an average opening-day gain of 28.3 percent, and were up an average of 46.7 percent each as of November 26.

Friedman Billings Ramsey:

• Aames Investment priced 35 million shares at $8.50 each to raise $297.5 million. The IPO closed on November 26 at $10.77 per share – up 26.7 percent from its initial offering price. (Industry: Real estate investment trust.)

• Specialty Underwriters priced 12.7 million shares at $9.50 each to raise $120.7 million. The IPO closed on November 26 at $9.60 per share – up 1.1 percent from its initial offering price. (Industry: Property and casualty insurance.)

Friedman Billings Ramsey’s two IPOs raised $418.2 million. Its IPOs had an average opening-day gain of 4.83 percent, and were up an average of 13.2 percent each as of November 26.

UBS Investment Bank:

• Arlington Tanker priced 11.5 million shares at $20 each to raise $229 million. The IPO closed on November 26 at $23.10 per share – up 15.5 percent from its initial offering price. (Industry: Transportation.)

• ZipRealty priced 4.6 million shares at $13 each to raise $59.2 million.

The IPO closed on November 26 at $17.33 per share – up 33.3 percent from its initial offering price. (Industry: Online real estate operator.)

UBS Investment Bank’s two IPOs raised $288.2 million. Its IPOs had an average opening-day gain of 16.2 percent, and were up an average of 22.5 percent each as of November 26.

Back to the sweet spot

Every transaction has its sweet spot. For the IPO market, November’s was sweet indeed.

November’s IPOs outperformed the Nasdaq by about 390 percent. (That’s an average gain of 25.1 percent in the aftermarket for November’s IPOs – or more than three times the Nasdaq’s 6.43 percent gain through the close on Friday.)

For savvy IPO investors, that 390 percent tastes even better than pumpkin pie.