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    Home»Business»Another beaten down recent IPO may go private. Here’s a look at who might be next
    Business

    Another beaten down recent IPO may go private. Here’s a look at who might be next

    By AdminOctober 26, 2022
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    Another beaten down recent IPO may go private. Here’s a look at who might be next


    Amid the recent economic uncertainty, investors have been prizing companies with an established record, and that hasn’t been great news for the flood of stocks that debuted before the market turned sour. Weber , which went public in August 2021 and is trading at half its offering price, is the latest example of a recent IPO to attract a bid to go private. But many other stocks could end up in a similar situation, according to BMO Capital Markets analyst Simeon Siegel. He identified Traeger, a maker of wood pellet grills, as a stock in his coverage universe that fits the bill. Shares closed Tuesday up 13% in the wake of the Weber deal. “Clearly, this is a trend worth gaining comfort on when recognizing that there remain a host of other recent IPOs sitting far below their deal price with still heavy sponsor ownership,” Siegal wrote in a research note. The poor performance of last year’s offerings has contributed to the slowdown in the IPO pipeline this year. U.S.-listed companies raised $4.8 billion through IPOs in the first half of this year, according to Dealogic and EY. Compare that with 2021 when more than $155.8 billion was raised. To find other companies that could be candidates to go private, CNBC Pro screened for companies that debuted in 2021 and are trading down 50% or more since their first day of trading. Then, in order to find stocks with large insider or sponsor ownership, we sorted for names that have floating shares as a percentage of total shares of 45% or less. And since there is no guarantee that a company will strike such a deal, we also looked for quality companies that are covered by at least six analysts and have buy rating from at least 55% of them and upside to the average price target of at least 40% and a market cap of at least $400 million. Recent IPOs ducking for the door First, to understand why we selected these criteria, let’s look at the recent deals. The year began with Durational Capital Management taking mattress maker Casper Sleep private. Earlier this month, Poshmark agreed to be bought by South Korean internet giant Naver for $1.2 billion , and Mark Wahlberg-backed fitness chain F45 Training Holdings attracted a bid from Kennedy Lewis Investment, its third largest investor. These deals have the potential for big gains. Kennedy Lewis’ $4 per share cash offer was an 83% premium to F45’s closing price ahead of the deal announcement, even though it was far below the stock’s $16 IPO price. Now, there’s Weber’s suitor BDT Capital Partners — its largest shareholder with a 48% stake. At present, the grill maker’s board is evaluating the $6.25 a share bid, and shares have popped above the offer price. The stock closed Tuesday at $6.56, up 30%. Prior to BDT’s interest, Weber shares had languished since its August 2021 debut. Even with the lift from the deal news, shares are only trading at less than half its $14 IPO price. The company, which is known for its dome-shaped grills, had been a pandemic winner as consumers hunkered down at home and fired up the barbecue. But sales have been struggling as the economy opened up again. In July, CEO Chris Scherzinger stepped down as the company withdrew its 2022 forecast and suspended its dividend. Traeger, which Siegel flagged, checks many of the same boxes — and it too has suffered from falling demand for grills. “Looking across our coverage, COOK has a relatively low non-insider market cap (i.e., pseudo-float, assuming a current holder would be interested), heavy insider ownership, respected niche within their product category, and a depressed share price, trading 81% below its IPO price,” Siegel wrote. “We have to assume COOK insiders are running the numbers, which would make sense to us,” he said. Private equity company AEA Investors had a 28.4% stake in the company, and CEO Jeremy Andrus owns an 11% stake, according to FactSet. Pandemic booms and busts Some of the names on CNBC’s screen also have felt the same booms and busts that hit Weber and Traeger during the pandemic. Pool manufacturer Latham Group saw huge demand during the pandemic as people looked for ways to entertain themselves at home. But in its latest earnings report in August, the company slashed its sales forecast for fiscal 2022. Pamplona Capital Management owns a 44.3% stake in Latham, while Wynnchurch Capital holds another 12.8%, according to FactSet. CEO Scott Rajeski holds a 3.4% stake, it said. Energy storage company Fluence Energy was recently reiterated at overweight by JPMorgan. The company, which was formed as part of a joint venture by AES and Siemens , is seen as a way to play the growing demand for battery storage technology. Siemens still owns more than half the company, with a 51.3% stake, according to FactSet. But the company has installed new leadership in recent months, naming both a new CEO and CFO. In August, Canaccord Genuity analyst George Gianarikas said he expected CEO Julian Nebreda, a former AES executive, and CFO Manavendra Sial to focus on improving the company’s profitability and its priorities. Sial had previously served as CFO at SunPower . Ad tech company Integral Ad Science recently said it will be working with Netflix on the streaming service’s closely watched ad-supported subscription plan . It’s a high profile gig for IAS, which verifies that ads are viewable by potential customers and shown in a way that’s “brand-safe” — in other words not adjacent to material that advertisers might find problematic. Vista Equity Partners owns a 60.6% stake in IAS, FactSet said. The private equity firm has announced three take-private deals so far this year. The latest was a $4.6 billion leveraged buyout of cybersecurity provider KnowBe4 , which was announced earlier this month. In August, Vista agreed to buy tax-software firm Avalara for $8.4 billion , including debt, and in January it joined with an affiliate of Elliott Management to buy cloud-computing company Citrix Systems for $16.5 billion . A number of other tech stocks also made the cut, including online data provider SimilarWeb and customer engagement software maker Braze . UserTesting , which debuted the same day as Braze, also ranked on the list. The company has developed software to assess customer experience. —CNBC’s Michael Bloom contributed to this report.



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