Fear of being left out of a booming stock market has sent companies, from headstone makers to pasta producers, scurrying to file initial public offerings, according to the Securities and Exchange Commission's figures for August.
The month was the busiest so far this year for registrations filed with the SEC, at 64. And new issues may continue to rise if market conditions remain favorable, analysts said Wednesday.
"You've got a stock market within a spit of its all-time high and a very substantial rate of mutual fund flows," said Dick Smith, syndicate manager who oversees new issues at Montgomery Securities in San Francisco.
"The first six months of the year were not really constructive from an IPO point of view. We're seeing a better new-issue environment now."
August's preliminary total matches the number of registrations filed during August 1996, said Randall Roth, an analyst with Greenwich, Conn.-based Renaissance Capital Corp., a research firm.
But the total so far this year--314--remains far below last year's record-breaking total of 648, so August's increase is even more significant, Roth said.
August, analysts said, is typically one of the busiest months of the year for filings, as companies seek to go public when the summer vacation season ends.
August's IPO filings represented a wide variety of company sizes and industries, including several in California. Among those filing were Los Angeles-based Petersen Cos., the publisher of Motor Trend and Teen magazines, and St. Helena-based winemaker Beringer Wine Estates Holding Inc. and Santa Barbara-based Big Dog Holdings Inc., a maker of casual clothing.
Smith, who keeps a sign on his desk that reads "Fear is temporary, greed is permanent," said anxiety over missing out on the rising stock market--the Dow Jones industrial average is up 39% over the past year--as well as August's volatility may be fueling the increase in filings.
"The mentality of the entrepreneur and the venture capitalist is that it's all going to go glimmering the day after tomorrow," he said, "so let's file today."
On Wednesday, the Dow closed down 132.63 points to finish at 7,719.28. It was the biggest one-day drop since a 247.37-point plunge on Aug. 15.