Burlington stores and RE/Max both had very good IPO debuts this week. It's been quite some time since I can remember the IPO market being significant to the point were two new issues were able to have good days on the same day.
Getting past the bubble conspiracy theories about the IPO market, and the overheated rhetoric about overheated markets, there's a bigger issue which often goes unnoticed even by Wall Street.
IPO markets are the most important markets ever.
Here's why: The IPO market and the secondary market are the very reasons for the stock markets to exist in the first place. So, to some extent, I look at the IPO market as a way of measuring the health and vitality of the rest of the market.
And if we are speaking strictly numbers, the health and vitality of the market has never been worse.
Ever. Ever as in the last decade. Or two.
Sarbanes-Oxley and a couple of other misguided "reforms" have effectively tamped down on both the IPO and the secondary market restricting capital the companies that most need it. And it's ironic that at the time that the rest of the world is increasingly embracing capital markets, that the United States would be heading in the opposite direction.
Since 1993 the total volume of IPOs offered through 2011 has shrunk by $4 billion while the number of offerings fell from 509 IPOs yearly to 81 yearly over the same period.
What these numbers mean, is that over a period of time when world wealth was growing from $25 trillion to $64 trillion, the number of initial offerings on what are supposed to be the greatest financial markets in the world-- USA, USA!!-- fell by 84 percent.
And 1993 was not one of the go-go 1990s years in the stock market either. Instead it was a stock market coming out of recession at 3,435 on the Dow Jones.
That ladies and gents is where our jobs have gone.
Quick, tell Obama.
A Kauffman Foundation study analyzing the revenues and jobs created by companies before and after they went public, found that from June 1996 to 2010, a total of 2,766 companies completed IPOs in the U.S. Those companies employed five million people prior to the public offerings, and 7.3 million people in 2010. From 1980 to 2000, the U.S. was producing roughly 298 new IPOs per year. But from the 2001 to 2011, the average had dropped to just 90 per year. That slow down in the number of IPOs has had an impact on job creation. According to the study, had the number of IPOs kept pace during the past decade, those companies could have produced another 1.8 million jobs.
Sarbanes-Oxley, in other words, is one of those misguided attempts at "bipartisan reform" that gives "bipartisan reform" a bad name.
It's bad enough when one party or another claims to have a monopoly on wisdom. But I've learned it's even more dangerous when the parties agree on something, like almost happened going to war in Syria.
See: John, McCain, (R)epublocrat™.
Looking at the numbers that the Kauffman Foundation study showed in regards to jobs, it's easy to see where much of the job creation has gone.
And the best thing about job creation of that sort is that it not only creates jobs and therefore income tax revenue, it also creates capital gains tax revenues, which shareholders are only too happy to pay.
In the natural course of things, the IPO market is where entrepreneurs and venture capitalists often seek to get their money back from the very risky investments that they make in the first place.
So this is why Democrats hate this: Wall Street wins, consumers win, companies win, employees win, shareholders win, executives win...and yes, even the government wins.
It's kind hard to divide people against itself when there's so many winners going around.
Obama and Eric Holder have recently had sit downs with the big bank executives from Citi, Wells Fargo, J.P. Morgan. The administration was complaining about: 1) mortgage loans and 2) the government shutdown.
"JPMorgan chief executive Jamie Dimon met Thursday with Attorney General Eric Holder about an investigation into the company's handling of mortgage-backed securities in the run-up to the recession," reported Politico. "A person familiar with the matter said Dimon was at the department to meet with Holder. The person was not authorized to speak on the record about the matter and spoke on condition of anonymity."
Yeah, I bet he spoke anonymously. He probably spied on him anonymously too. And them looked at his tax return anonymously, reviewed his Tea Party application anonymously, reviewed the Obamacare database for information about guns owned by the Dimon household and checked him for any unpaid parking tickets.
Because later Dimon was summoned, along with other bank CEOs, to the White House to help carry the message of panic regarding the government shutdown to the people. One bailout, after all, deserves another.
From CNN Money:
For his part, President Obama said in an interview with CNBC on Wednesday that he told Wall Street CEOs that they "should be concerned."
"This time's different," he said. "When you have a situation in which a faction is willing to potentially default on U.S. government obligations, then we are in trouble."
He warned that all businesses should be worried if the country could be in the same budget negotiation situation during the Christmas shopping season.
But here's a little hint to the bankers: Obama is unlikely to ask about job creation since it's apparent he really doesn't care about job creation. If he does, however, tell him I found the missing jobs.
They went out for a pack of cigarettes with the missing IPO market-- and the national tobacco lawsuit-- Of which real people never saw a penny. And none of them have returned since.
Here's the IPO calendar courtesy NASDAQ.
|Company Name||Symbol||Market||Price||Shares||Offer Amount||Expected IPO Date|
|ANTERO RESOURCES CORP||AR||New York Stock Exchange||38.00-42.00||30,000,000||$1,449,000,000||10/11/2013|
|STONEGATE MORTGAGE CORP||SGM||New York Stock Exchange||20.00-22.00||8,600,000||$217,580,000||10/10/2013|
|SFX ENTERTAINMENT, INC||SFXE||Nasdaq National Market||11.00-13.00||16,666,667||$249,166,671||10/9/2013|
|SFX ENTERTAINMENT, INC||SFXE||Nasdaq National Market||--||26,197,277||$300,000,000||10/9/2013|
|LDR HOLDING CORP||LDRH||Nasdaq National Market||14.00-16.00||5,000,000||$92,000,000||10/9/2013|
|QTS REALTY TRUST, INC.||QTS||New York Stock Exchange||27.00-30.00||12,250,000||$422,625,000||10/9/2013|
|POTBELLY CORP||PBPB||Nasdaq National Market||9.00-11.00||7,500,000||$94,875,000||10/4/2013|
|CHERRY HILL MORTGAGE INVESTMENT CORP||CHMI||New York Stock Exchange||$20||6,500,000||$149,500,000||10/4/2013|
|OCI PARTNERS LP||OCIP||New York Stock Exchange||19.00-21.00||17,500,000||$422,625,000||10/4/2013|
|BURLINGTON STORES, INC.||BURL||New York Stock Exchange||14.00-16.00||13,333,333||$245,333,328||10/2/2013|
|TECOGEN INC.||TGEN||Nasdaq SmallCap Market||5.50-7.50||3,000,000||$25,875,000||10/2/2013|
|EMPIRE STATE REALTY TRUST, INC.||ESRT||New York Stock Exchange||13.00-15.00||71,500,000||$1,233,375,000||10/2/2013|
|RE/MAX HOLDINGS, INC.||RMAX||New York Stock Exchange||19.00-21.00||10,000,000||$241,500,000||10/2/2013|