Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Thursday, July 13, 2006

Cowen & Co's IPO, Broken Already?

Stock Tickers: COWN, GS, LEH, MER, MS

Many IPO's become broken IPO's at some point, but when that happens on the first day it tends to irk those who committed to buying at the pricing. It alst tends to hurt other related IPO's that may be coming out that are in the same sector or that have similar characteristics.

Take a look at Cowen & Co (COWN) down $0.11 from its IPO price at $15.89 after Society General's US unit spun this off in an IPO this morning. This is a horrible time for a broker-dealer to come public because when there are international tensions threatening the markets like we are seeing with Israel right now, it really tends to lead into Joe Q. Public keeping his hands off the trading buttons. COWN priced at $16.00, but that is well under the $19.00 to $21.00 range. The only good thing that happened here was that the 11.2+ million shares didn't change. A negative call on Cowen out of sure didn't help matters.

Cowen and Company, LLC, Credit Suisse and Merrill Lynch & Co., were acting as joint book-running managers for the offering. Keefe Bruyette & Woods and Sandler O'Neill + Partners, L.P. are acting as co-managers.

Keefe, Bruyette, & Woods is also a pending IPO, so they have to be watching this closely. The one thing that may keep "KBW" from being as ugly as Cowen is that they specialize in all aspects of regional banks, and other small and large financial institutions. Traditionally boutiques hold up betterthan "generalists," assuming the core industry or industries they cover aren't considered out of vogue or going into the pits.

Even the larger brokerage firm stocks are trading lower. Goldman Sachs is down 1.9% at $142.41; Merrill Lynch (MER) is down 1.7% at $68.42; Morgan Stanley (MS) is down 1.9% at $61.41; Lehman (LEH) is down 3.02% at $61.34.

Jon C. Ogg
July 13, 2006

Powered by Blogger