Get ready for big profits from initial public offerings.
Since mid-December, the market for IPOs has been completely dead. In fact, in the month of January there wasn’t a single IPO.
Market volatility has played a large part in slowing down the activity. Investors have been selling “risky” assets and buying up blue chip stocks, gold and Treasury bills.
But the market is starting to change. After going completely dark from Dec. 18 to Feb. 2, the IPO market is starting to show signs of life.
On Feb. 3, a company called BeiGene (NASDAQ: BGNE) went public at $24. Within days the stock soared 46%.
That same day, a company called Editas Medicine (NASDAQ: EDIT) had its IPO priced at $16. Shares jumped 130% in just five weeks.
Or consider AveXis (NASDAQ: AVXS), which jumped 20% after its Feb. 11 IPO.
Even if you had just bought shares in the public market on the day of the offering, you could have made a decent short-term profit.
If you’ve been following the mainstream media, you’ve probably missed out on these recent IPOs. Don’t beat yourself up. The good news is that the biggest profits are yet to come.
Recent research from a boutique IPO firm called Renaissance Capital presents a timely opportunity.
The firm found that since 2000, there have been 11 periods in which the IPO market shut down. During those periods, new IPOs ground to a halt.
But after the IPO market shutdown ends, new IPOs deliver solid returns. In the three months following a shutdown, the average IPO delivers a 24% return. That compares with a 4% average return for the S&P 500 during the comparable period.
This means that new IPOs in March and April could deliver outsized profits.
Right now, the market is embracing small biotech and medical technology IPOs. With only eight IPOs year-to-date, the market remains relatively quiet.
A few upcoming IPOs to keep an eye on include BioLite Life Sciences on March 11, Senseonics on March 16 and Spring Bank Pharmaceuticals on March 18.
Yet with the major U.S. indexes bouncing back – and recent IPOs generating decent interest and healthy returns – the IPO market should become more active. I expect the breadth of companies filing for IPO to expand as well.
The Wall Street Journal reports that venture capital firms have funded 146 private companies, each valued at more than $1 billion. These include some well-known Silicon Valley companies, including Uber, Airbnb, SpaceX, Dropbox and Spotify.
None of these companies will be rushing to go public in the coming weeks. But as the stock market stabilizes, I expect these pre-IPO companies will start courting investment bankers and filing confidential plans with the Securities and Exchange Commission.
In fact, one of these companies is already preparing for a $30 billion IPO in 2016.
By using this secret and 100% legal loophole, you can grab a stake right now at a fraction of the IPO price.
That’s right. The company’s last round of private financing was in August at a valuation of $4 billion. Yet the company’s chief financial officer recently went on the record stating that he’s planning for a $30 billion IPO.
If you act quickly, you could secure profits of up to 506% if this company goes public. Click here to get the details on this timely opportunity.