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 IPO 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.
August’s preliminary total matches the number of registrations in August 1996, said Randall Roth, analyst at Greenwich, Conn.-based Renaissance Capital.
Still, the number of IPOs actually hitting the market this year is down significantly from 1996’s pace, in part because of stocks’ downturn in spring.
August is typically one of the busiest months of the year for filings, as companies seek to go public once the summer vacation season has ended and Wall Street gets back to work.
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, 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 still generally strong stock market may be fueling entrepreneurs’ desire to issue stock this fall.
The volatility in stocks in August also may have raised concerns that the long bull market may be topping out.
Still, stocks’ troubles recently have been concentrated in blue chips, while smaller stocks have been surging. If the trend persists, it could mean that many small-company IPOs will get a warm reception in coming months.