I’ve mentioned in the new IPO Community forum recently (which you can sign up for here if you haven’t), that the best way to trade new IPO’s is to wait.  You give the stock at least 2 weeks to play out and let the dust settle on the volatility.  It often doesn’t take long for the best IPO’s to break out from a bullish pattern.. often a short flat base or a triangle formation.  Today in Visa (V), after just 2 weeks of trading, the stock broke out from a bullish triangle formation pattern with a tick up in volume.  So now the lines in the sand are drawn for Visa.  Support at 62.50, with the next level of resistance at the highs of 69.

Here’s a look at the breakout from the triangle formation on the daily.

I really didn’t get interested in trading Visa (V) for much of the day.  Although the price action was decent in Visa throughout the day, volume levels didn’t reveal that institutions were doing much buying until the last hour of trading when volume levels picked up substantially.  Granted, there was some big selling going on as well but ultimately bulls won out with a nice breakout today.  Considering support is nearby at 62.50, in my opinion it’s a good high reward, lower risk trade.

Disclaimer:  This is not a recommend to buy or sell, but an idea for further research.  Trade according to your own tolerance for risk.  I do own a position in Visa (V).

The highly touted, the much anticipated and overly hyped Visa IPO is set to debut tomorrow under the ticker symbol "V".  It priced tonight above the expected range of $37 – 42 at $44/share.  Not much of a surprise there.  I get more emails regarding the Visa IPO then I have total in the 4 years of running this site.  Everyone one wants to know when and how they can get a piece of this action, some that don’t have a broker and have never traded a stock in their life.  Does that tell you about the demand in this thing?  It’s overboard.

I prefer IPO’s that lurk behind the scenes and double while nobody is watching.. By the time the masses are interested you’re out with big gains.  It’s how the game works.  I don’t like the Visa IPO out of the gates tomorrow for this simple reason.  Everyone talks about how well Mastercard (MA) did after it’s IPO, but nobody ever mentions that Mastercard (MA) had a fraction of the hype that Visa did and actually traded sideways for two months after its IPO before breaking out in late summer of 06 for a tremendous run. 

Don’t get me wrong.  I think over time Visa will produce outstanding returns, but jumping in out of the gates tomorrow for fear of "missing out" is a big mistake. 

There are other "off the radar" IPO’s that will produce far greater returns than the Visa IPO over the 6 months and I’m willing to bet a steak dinner on it.  Here’s the bet.  Of the list of IPO’s below that are showing the greatest demand over the past 30 days, I’m willing to bet that the average return of 8 of those will outperform Visa over the next 6 months.  It’s game on for the first person to take the bet in the comments section below.

This is a snapshot of the IPO Tracker here at SelfInvestors.com which shows IPO’s with highest DI score over the past 30 days.  DI is a proprietary indicator I use to measure the demand in a stock using price and volume.  It’s a database of only the highest rated IPO’s over the past 18 months or so in terms of fundamentals (earnings/sales growth, ROE, margins, management ownership, debt/equity). 

I"m currently offering a no obligation 30 day free pass to the tracker for those that join the new IPO community, which you can join below the banner above if you’d like.  I’m working hard to create the #1 private, moderated community exclusive to the best IPOs.  For more on the IPO Tracker, you might like to have a look at a new video demo I put together a few nights ago.  It’s what I like to call low fi production but hey it gets the job done.  I’m thinking of adding cheesy music from 80’s movies in my next videos so enjoy the barebones version while it lasts.

AND with that I present to you the top 15 IPO’s showing positively, absolutely, earth shattering demand over the past 30 days.  Most of these are off the radar and I can assure you nobody will ever email me asking how then can get in.. and that’s just the way I like it.

Now I choose my Great 8 (in equal parts)  to beat the return of the Visa IPO.

OK scratch BLOG it was bought out by BMC. Next.  Ok STV.  Now we’re getting somewhere.  I’m buying hand over fist between 17.50 and 20 with a stop out level below 15.  Big move up after earnings last week and looks ready to go again.  This is bottom dwellers land down here but the accumulations signals more down days then up over the next few months.  I’ll put it in my list of 8 to outperform the Visa IPO over the next 6 months.

Another China display advertiser VISN, but this one is going up unlike FMCN.  Risky but technically looks good.  Broke out at the end of February and pulling back to that area with a bounce off the 50 day moving average.  I’ll add it to the list of Great 8 to outperform the Visa IPO.

Insurance? Yuck.  Don’t like insurance.  Insurance stocks are for Buffet aficionados.  .. but CISG is interesting.  Might include it.

Gushan Environmental – Chinese, Biodiesel, Environment, Energy, IPO.  What’s not to like? Ok, well maybe the earnings aren’t the greatest in recent quarters.. I can’t take them all.  I’m already taking STV and VISN in my Great 8.  GU Out.

I’ll make a long story short –  taking all solar plays in my Great 8.  LDK, TSL, SOL and FSLR.  I’ll even throw Rubicon Technologies (RBCN), a play in the LED space to complete the "green" play picture and round out my Great 8 to beat the performance of the Visa IPO. 

So here’s the bet one last time.  The 8 IPO’s that I’ll take from this list (STV, VISN, CISG, LDK, TSL, SOL, FSLR, RBCN) will on average beat the performance of the Visa IPO over the next 6 months.  You don’t think so?  Chime in and let’s put a steak dinner on the line.

Disclaimer:  I don’t yet own any of the positions mentioned above, but soon, very soon.

IPO’s are returning in 08 this week, but just trickling in and there don’t appear to be any "must haves" but there are 3 what appear to be solid IPO’s that begin trading tomorrow – RiskMetrics Group (RMG), Cascal (HOO) & IPC Hospitalist (IPCM).

RiskMetrics (RMG): provides risk management services to banks, corporations, asset managers, and other institutional investors to help them understand and manage their holdings and make better investment decisions. The company operates through two subsidiaries: Riskmetrics Solutions supplies data, analytics, software, and other information services. Institutional Shareholder Services (ISS) provides financial research and analysis to investors and corporations, allowing them to make informed decisions when voting their proxies or making other corporate governance determinations. RiskMetrics Group has some 3,300 clients worldwide.

RiskMetrics IPO Could Be a Bellwether
Wall Street Journal – Jan 21, 2008

How Does RiskMetrics Measure Up?
New York Times Blogs, NY – 11 hours ago

Cascal BV (HOO): provides water and waste water collection and treatment services around the world for populations ranging from 100,000 to 1 million. Cascal offers privatization, concession, build-own-operate-transfer, and maintenance services; most of its business comes through long term contracts. The company has water works in South America, Africa, and Asia as well as the UK. It also owns Pre-Heat, a gas installation and maintenance company in southern England. More than half of Cascal’s revenue comes from its UK operations.

 Utililty IPO: Cascal
Seeking Alpha, NY – Jan 22, 2008

This is the last week of IPO’s before the holiday lull and probably won’t see them popping up again with any frequency until around the middle of January.  Another hot China IPO hits the street this week on Wednesday along with a couple other decent looking IPO’s

1.  Gushan Environmental Energy (GU):  Chinese biodiesel maker Gushan Environmental Energy produces nearly 200,000 tons of this renewable fuel per year out of vegetable oil, animal fat, and recycled cooking oil. The company buys these raw materials from local vegetable oil and waste management companies, then once processed, the biodiesel is sold directly to marine vessel operators, petroleum wholesalers, and retail gas stations for use in boats, buses, trucks, generators, and other engines. Sales of biodiesel account for more than 80% of Gushan’s revenues, while the remainder comes from selling biodiesel’s by-products, such as glycerine, to food and drug companies.  This is a big company making a whole lotta money.  Trading is expected to begin on Wednesday.

Note: Chris Perruna has a nice analysis of Gushan Environmental (GU)

2. Orion Energy Systems (OESX):  designs, manufactures, and installs energy management systems that include HIF lighting, intelligent lighting controls, and its Apollo Light Pipe product, which collects and focuses daylight without consuming electricity. The firm estimates its products can help cut customers’ lighting-related electricity costs by up to 50% and reduce related carbon dioxide emissions. Since Orion’s inception in 1996 it has installed lighting in nearly 2,000 North American commercial and industrial facilities. Clients include such companies as GE, Kraft, and OfficeMax.  Trading set to begin on Wednesday.

3. Milestone AV Technologies (MLS):  develops and markets a variety of audiovisual and display equipment such as projector and flat panel display mounting, as well as audiovisual furniture and accessories. Established in 2003, Milestone AV Technologies serves more than 4,500 clients, including consumer electronics retailers (Best Buy) and home theater dealers (Abt Electronics). The company markets its products under the Sanus, Chief, and Vuepoint brand names, among others. Third-party suppliers in China, Malaysia, New Zealand, and the US make most of its products.  Trading set to begin on Wednesday.

1.  Xinyuan Real Estate  (XIN): develops large-scale residential projects in China, which include multiple-building housing communities, high-rise apartment complexes, retail outlets, health and leisure facilities, and schools. Xinyuan’s development sites are primarily acquired through public auctions of government land. In addition to constructing these properties, Xinyuan Real Estate offers property management services. It currently has operations in the Sichuan, Anhui, Shandong, Jiangsu, and Henan provinces, covering more than 770,000 sq. meters Trading set to begin on Wednesday.

2.  VanceInfo Technologies (VIT):  helping companies in China advance through outsourcing. Typically serving clients with operations in China (but headquartered elsewhere) VanceInfo Technologies provides outsourced software development and IT services consisting of research and development, enterprise solutions development, application development and maintenance, quality assurance and testing, as well as globalization and localization services. Customers include companies in industries such as technology, telecommunications, financial services, and manufacturing. Major clients include Citibank, IBM, Microsoft, Motorola, and TIBCO.   Trading set to begin on Wednesday.

3.  CGEN Digital Media Company (ADTV):  helps advertisers get their messages to consumers who not only are ready to buy, but already have gone to the store to do so. The company operates an in-store TV advertising network that spans more than 530 retail locations — including hypermarkets and home improvement centers — in about 65 cities in China. CGEN Digital Media makes most of its money from selling network time to more than 250 advertisers, including global consumer brands Nestlé, Kraft, Crest, Johnson & Johnson, and Asahi Beer. It also earns a portion of its revenues from organizing in-store promotional events for retailers and advertisers. In 2007 the company agreed to be acquired by rival Focus Media.  ** Note:  CGEN was acquired by Focus Media (FMCN) yesterday.

4. ChinaEdu Corp (CEDU):  The Company’s primary business is to provide services to the online degree programs of Chinese universities. Its services for online degree programs include academic program development, technology services, enrollment marketing, student support services and finance operations. ChinaEdu also operates private primary and secondary schools, market and support international post-secondary and English language curriculum programs to established learning institutions, and offer online interactive tutoring services to primary and secondary school students. It has relationships with 11 universities, nine of which are under long-term, exclusive contracts that vary from 15 to 50 years in length. Nine of these universities operate online degree programs.  Began trading today at 10.00/share.

5.  K12 Inc (LRN):  The "virtual public school" company offers online educational programs for children in kindergarten through 12th grade (K-12). Products include full-time online public schools (in about a dozen states), course material and product sales directly to parents, and individualized supplemental programs offered through traditional public schools. K12’s programs are targeted at kids who underperform in public school, aren’t safe in public school, or can’t attend public school because of travel issues, disabilities, or because they are athletes or performers.  Trading set to begin on Friday.

6.  Classmates.com (CLAS):  company operates the Mypoints online loyalty marketing service in addition to its popular social networking Web site Classmates.com. Classmates.com helps users locate and communicate with acquaintances from school, work, and the military through a network of more than 50 million registered users. The company’s 2.7 million subscribers pay for access to various tools and content. Advertising on the Web site supplements the company’s subscription fees. Classmates Media also provides targeted marketing services for advertisers looking to reach more than 8 million consumers registered in its MyPoints rewards program.  Trading set to begin on Thursday.

7.  Teekay Tankers (TNK):  owns and manages a fleet of nine double-hull Aframax tankers, which it charters to such customers as ConocoPhillips, Eiger Shipping, SABIC, and Skaugen PetroTrans for use in seaborne transportation of crude oil. Teekay Tankers’ fleet has an overall capacity of about two million deadweight tons (DWT). Wholly owned by Teekay Corporation, a large global operator of medium-sized oil tankers, Teekay Tankers generates revenue by selling both voyage charters (single short-term trips at a variable rate) and time charters (often longer-term and generally fixed-rate).  Trading set to begin on Thursday.

8.  MedAssets (MDAS):  MedAssets helps hospitals widen their profit margins — or at least not lose quite as much. The company’s Spend Management segment operates a group purchasing organization that negotiates prices for hospitals and health systems which then get better deals on medical supplies and devices. Its Revenue Cycle Management segment provides software and consulting services that help track and analyze a hospital’s revenue stream. Such services aim to increase collections and reduce account balances. It counts more than 125 health systems as customers, including Christiana Care, Banner Health, and Fletcher Allen.  Trading set to begin Thursday.

Just about every week for the past couple of months there are new China IPO’s coming to the US Exchanges and many more listed in China.  The latest Chinese company to apply for an IPO is China Quanjude, the oldest Peking restaurant in China and doing business since 1864!  Quanjude runs 9 companies in China and 61 franchised restaurants including 5 overseas.  The state owned company netted about $7.5 million in profit last year.  They’ll kick off the road show on Monday and list on the Shenzhen Stock Exchange.

You’ll want check out two more China IPO’s being listed in the US this week – Giant Interactive (GA) begins trading Tuesday and CNinsure (CISG) begins trading Wednesday.  Both companies have strong fundamentals so they should get a big pop in the opening days.

Disclsore:  all this duck talk is making me hungry.

How can I get in on an IPO before it goes public?  The question always comes up when a big IPO is about to make its debut.  In this case, the Visa IPO, which is set to debut sometime in early 2008.  Unless you have friends in high places or a trading account in the millions, you can just about forget trying to score shares in a company BEFORE it goes public.   Some companies are trying to make the whole process more democratic by going the dutch auction route (see Google and Interactive Brokers) but I don’t think that will become the prevailing trend.  For us mere mortals, we must come up with the creative means to finagle a few profits from the Visa IPO before it hits the public.  I have one idea for you.  You probably won’t get rich and hey I can’t guarantee you’ll make a dime (how’s that for a disclaimer – now do your own DD!), but for grins and giggles I thought I’d throw out a back door entry into the Visa IPO bonanza.  National City Corp (NCC).  Huh?  Here’s my reasoning:  National City owns what will be a 4 – 5% stake in the new public Visa.  Considering NCC does just north of 12 billion in revenue a year, it’s won’t amount to a large slice but enough of a slice to potentially start moving the stock out of the cellar.. a deep dark cellar.  I’m not a bottom fisher and don’t recommend it as a strategy, but for you valuation junkies who like to run the numbers perhaps this trade makes some sense down here?

Here’s what the CEO said in the conference call on Wednesday (transcript courtesy of seeking alpha):

Jill Hennessy

In the Visa perspective, National City is highlighted as having an 8% stake in Visa USA. How large of a gain do you expect to take on the Visa IPO and when do you expect to recognize that value?

Peter Raskind

As a result of our issuance activity and our former ownership with MPC we do have an unusually large stake in the newly restructured Visa. As I suspect many of you are aware, Visa restructured in early October into an independent for-profit company with the ultimate intent of taking that company public. As a result of our approximately 8% share in Visa USA, we end up with a share in the new Visa, the new worldwide Visa, somewhere between 4.5% and 5% of a good-sized entity.

There’s quite a bit of discussion going on right now between the various banks involved and the SEC as to exactly how the accounting should occur for this transaction. That is not yet fully resolved. So the restructuring has already occurred. There will be, we hope, resolution within the next several weeks by way of the SEC as to whether that restructuring creates an accounting event or not.

But even if it does not, there is an expectation that the company will go public some time next year and therefore, presumably at that time a gain would be realized. I would not at all engage in speculation as to what the size of that gain is going to be yet today, but given the size of Visa and our stake in Visa, there’s reason to believe that it will be sizable.

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

My Conclusion:

Keep in mind this is a strategy for profiting before the IPO.  There will certainly be tremendous profit potential after the company IPO’s.  What I see happening is a tremendous build up to the launch of the IPO followed by some big time profit taking after the stock soars on the first day.  Once the dust settles after a week or two, the stock will offer a tremendous opportunity to get in for the long haul.  Why?  Just look at the numbers:

Visa has a 60% market share which is about as close as you can get to a monopoly in this increasingly cashless world.  Mastercard has about a 20% market share and it more than tripled in its first year of trading.  Size certainly doesn’t equate to stock price performance, but given the fact that the larger Visa will have more resources to ward off the avalanche of litigation from merchants, not to mention better economies of scale it should perform at least as well as Mastercard (MA) has.  At any rate, this will be one of the biggest IPO’s ever, so it should fun to watch it all play out.

:::::::::::::::::::::::::::::::

UPDATE 12.30.07

National City stock continues to deteriorate and has yet to clear that down trend which I highlighted in the chart above (so never provided an entry point).  The subprime exposure proved to be too great and the expected Visa benefit isn’t providing any relief.  However, bases on the price and volume action in recent days I’m going out on a limb here and calling a bottom right here right now. 

Barron’s isn’t as bullish.  Have a look at their recent downgrade.

:::::::::::::::::::::::::::::::

UPDATE 2.7.07

I was a bit early on my bottom call in NCC on Dec 30th, but now the bottoming action is firmly in place beginning with the big capitulation day on Jan 22nd which is characterized by a record volume reversal off the lows of the day and a close in the upper half of the range for the day.  12.64 will mark an all time low in NCC and I don’t think you’ll ever see that price again considering all the Fed rate cuts.  It’s a bit extended from those levels but retracement of at least half the move might offer a great entry for the long term holder.  A 50% retrace is (18.14 – 12.64)/2 = 2.25, so a move to around 15 provides a good initial entry point.  In fact this is my strategy with all financials and homebuilders.. wait for a retracement of the post Fed cut surge to initiate long term positions.

The New IPO Tracker service has just launched!  You won’t find a better tracking system for trading IPO’s anywhere.  For a limited time introductory offer as well as IPO trading tips and tricks sign up below.  Talk  to you soon!

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

If you’ve been reading this blog for some time you know I’m a big fan of IPO’s and am actively looking to trade the best IPO’s everyday.  Recent IPO’s I’ve been trading include 3SBio (SSRX), Simcere Pharma (SCR), WuXi Pharma  (WX), Lululemon (LULU) and VMWare (VMW).  All are highly rated and all have produced outstanding returns over the past few weeks. 

In the past I had trouble keeping tabs on the best IPO’s coming to market.  I found that I wasn’t keeping up with them and it wasn’t until several weeks down the road after they had already run up big that I was discovering them.  I looked high and low for a  good tracking service.  A sortable, dynamic database that I could look at a couple times a day and discover the highest rated IPO’s that were moving and moving with volume.  There wasn’t anything available, so I did something about it!

I introduce to you the all the new IPO Stocks Portal page, which features my top ranked IPO’s (IPO’s rated a 27/30 or higher), IPO’s moving with volume during the trading day, news, the latest blog entries, recommended reading and a list of resources. 

In conjunction with the new portal page, I’m also releasing a new product – the IPO Tracker.  This was previously only available as part of the Gold and Platinum member packages, but due to significant interest I’ve decided to offer it as a stand alone service.