IPO markets offer a pulse on investor sentiment, which indirectly gives us a gauge on expectations for both the economy and the markets. This year, IPO funding has shot through the roof compared to last year. With exchange traded funds (ETFs), you can partake in the IPO surge without having to pick and choose individual companies.
According to Charley Blaine of MSN Money, the number of IPO registrations in the second quarter of 2010 have surged 303% compared to last year. Currently, there are 113 registered companies looking to raise $25.3 billion. Last year, only 28 companies were registered, looking for $7.6 billion.
In addition, 37 companies had their initial public offerings in the second quarter, including Tesla Motors, which, at midday on Aug. 17, is up 13% from its initial offering price. According to Matthew Scott of Daily Finance, “the half-year total of 64 IPOs in 2010 already surpasses the total of 63 for all of 2009.” [There’s an ETF for IPO Activity.]
Maria Pinelli, Americas Director, Strategic Growth Markets, Ernst & Young said, “The resurgence of pipeline activity represents optimism about the growth of the economy and the markets.”
Pinelli also said that in 2009, the majority of IPO activity came from large companies and spinoffs. In contrast, 2010 has shown that investors are again willing to take risks by investing in smaller companies looking to raise less than $100 million.