By Philip van Doorn
These are exciting times for active money managers: The number of publicly traded companies is increasing, reversing a long-term trend. This is happening because more companies are being brought to market through initial public offerings (IPOs).
And buying shares through an IPO can translate into big returns, as this list (below) of the best-performing stocks that have gone public over the past three years shows. It excludes blank-check companies, including the ones known as SPACs.
Just how big is the boom? There have been 591 IPOs in the U.S. and Canada so far this year, including SPACs, following 630 in 2020, according to data provider FactSet. That 18-month total of 1,221 IPOs compares to 1,535 for the previous five years through the end of 2019.
The number of publicly traded companies had been declining for years , in part because corporate managers didn’t want to be burdened by the complex reporting and disclosure requirements under the Sarbanes-Oxley Act of 2002, according to Brad Lamensdorf, CEO of investment adviser ActiveAlts.
But now, with strong overall performance in the stock market, new interest among individual investors and elevated IPO activity, he sees more opportunities for professional traders and money managers to gain an edge over index funds and ETFs.
Best-performing IPOs in the U.S. and Canada
To show a list of best-performing IPOs, we set parameters for data compiled by FactSet. Blank-check companies, including special-purpose acquisition companies, were excluded. A SPAC typically is designed to effect a transformational merger within two years of its formation. The merger will circumvent the typical regulated IPO process. The typical SPAC goes public at a price of $10 a share and trades around that price until a merger deal is announced. The best-known examples of these include Virgin Galactic Holdings Inc. /zigman2/quotes/208333884/composite SPCE -1.76% , DraftKings Inc. /zigman2/quotes/213120645/composite DKNG +1.29% and Bill Ackman’s Pershing Square Tontine Holdings Ltd. /zigman2/quotes/219769662/composite PSTH +0.15% .
Excluding blank-check companies, there have been 952 IPOs on U.S. or Canadian stock exchanges over the past three years — regardless of where the companies are based. Among those, 74 no longer exist because they were either acquired or delisted. That leaves 878, of which 584 have market capitalizations of at least $200 million, the minimum value set for this list to avoid thinly traded companies.
These 20 are the best-performing IPOs over the past three years from that list:
|Company||Ticker||IPO date||IPO price||Total return from offering date||Market cap. ($mil)|
|BioNTech SE||/zigman2/quotes/214419716/composite BNTX||10/1/2019||$15.00||1477%||$57,117|
|Very Good Butchers Inc.||/zigman2/quotes/225455603/delayed CA:VERY||1/10/2020||$0.19||1411%||$268|
|Annovis Bio Inc.||/zigman2/quotes/216213707/composite ANVS||1/28/2020||$6.00||1304%||$670|
|Shockwave Medical Inc.||/zigman2/quotes/209985970/composite SWAV||3/6/2019||$17.00||1045%||$6,807|
|Fiverr International Ltd.||/zigman2/quotes/212683127/composite FVRR||6/13/2019||$21.00||1000%||$8,279|
|Zoom Video Communications Inc.||/zigman2/quotes/211319643/composite ZM||4/17/2019||$36.00||941%||$88,710|
|SiTime Corp.||/zigman2/quotes/215091577/composite SITM||11/20/2019||$13.00||883%||$2,408|
|Moderna Inc.||/zigman2/quotes/205619834/composite MRNA||12/7/2018||$23.00||862%||$88,882|
|New Found Gold Corp.||/zigman2/quotes/219988403/delayed CA:NFG||7/31/2020||$0.97||797%||$1,429|
|Kodiak Sciences Inc.||/zigman2/quotes/207655028/composite KOD||10/3/2018||$10.00||752%||$4,365|
|Twist Bioscience Corp.||/zigman2/quotes/207089457/composite TWST||10/31/2018||$14.00||749%||$5,808|
|Bill.com Holdings Inc.||/zigman2/quotes/215406166/composite BILL||12/12/2019||$22.00||748%||$15,526|
|Karuna Therapeutics Inc.||/zigman2/quotes/212846564/composite KRTX||6/27/2019||$16.00||719%||$3,859|
|Silvergate Capital Corp.||/zigman2/quotes/214908078/composite SI||11/6/2019||$12.00||706%||$2,451|
|CrowdStrike Holdings Inc.||/zigman2/quotes/212513426/composite CRWD||6/12/2019||$34.00||655%||$51,128|
|E Home Household Service Holdings Ltd.||/zigman2/quotes/226757832/composite EJH||5/14/2021||$4.50||650%||$1,133|
|Nio Inc.||/zigman2/quotes/204905836/composite NIO||9/11/2018||$6.26||604%||$60,052|
|Cloudflare Inc.||/zigman2/quotes/214109260/composite NET||9/12/2019||$15.00||584%||$26,285|
|InMode Ltd.||/zigman2/quotes/213589098/composite INMD||8/7/2019||$14.00||576%||$3,614|
|Dye & Durham Ltd.||/zigman2/quotes/219645550/delayed CA:DND||7/13/2020||$5.53||569%||$2,768|
You can click the tickers for more about each company.
The best performer has been BioNTech SE /zigman2/quotes/214419716/composite BNTX +14.19% , a German-based biotech company listed on Nasdaq that partnered with Pfizer Inc. /zigman2/quotes/202877789/composite PFE +6.11% for the quick development of a COVID-19 vaccine last year. The stock returned 1,477% from its IPO on Oct. 1, 2019 through the close on June 22.
Moderna Inc. /zigman2/quotes/205619834/composite MRNA +20.57% , which developed its own coronavirus vaccine, is also on the list, with a total return of 862% since its IPO on Dec. 7, 2018.
Other names on the list that will be familiar to active investors include Zoom Video Communications Inc. /zigman2/quotes/211319643/composite ZM +5.72% , CrowdStrike Holdings Inc. /zigman2/quotes/212513426/composite CRWD +0.81% , electric-vehicle maker Nio Inc. /zigman2/quotes/204905836/composite NIO -3.45% and Cloudflare Inc. /zigman2/quotes/214109260/composite NET +1.38% .
Here’s a summary of sentiment among Wall Street analysts for the group:
|Company||Ticker||Share “buy” ratings||Closing price – June 22||Consensus price target||Implied 12-month upside potential||Number of analysts polled|
|BioNTech SE||/zigman2/quotes/214419716/composite BNTX||31%||$236.49||$186.33||-21%||13|
|Very Good Butchers Inc.||/zigman2/quotes/225455603/delayed CA:VERY||N/A||$3.75||N/A||N/A|
|Annovis Bio Inc.||/zigman2/quotes/216213707/composite ANVS||100%||$84.25||$45.00||-47%||1|
|Shockwave Medical Inc.||/zigman2/quotes/209985970/composite SWAV||50%||$194.57||$186.00||-4%||6|
|Fiverr International Ltd.||/zigman2/quotes/212683127/composite FVRR||78%||$230.99||$252.33||9%||9|
|Zoom Video Communications Inc.||/zigman2/quotes/211319643/composite ZM||46%||$374.65||$407.00||9%||26|
|SiTime Corp.||/zigman2/quotes/215091577/composite SITM||100%||$127.79||$134.00||5%||6|
|Moderna Inc.||/zigman2/quotes/205619834/composite MRNA||44%||$221.36||$177.00||-20%||18|
|New Found Gold Corp.||/zigman2/quotes/219988403/delayed CA:NFG||0%||$11.62||$4.25||-63%||1|
|Kodiak Sciences Inc.||/zigman2/quotes/207655028/composite KOD||45%||$85.15||$121.45||43%||11|
|Twist Bioscience Corp.||/zigman2/quotes/207089457/composite TWST||43%||$118.79||$123.33||4%||7|
|Bill.com Holdings Holdings Inc.||/zigman2/quotes/215406166/composite BILL||69%||$186.61||$177.80||-5%||16|
|Karuna Therapeutics Inc.||/zigman2/quotes/212846564/composite KRTX||92%||$130.99||$161.17||23%||13|
|Silvergate Capital Corp.||/zigman2/quotes/214908078/composite SI||71%||$96.74||$154.29||59%||7|
|CrowdStrike Holdings Inc.||/zigman2/quotes/212513426/composite CRWD||92%||$256.61||$256.91||0%||24|
|E Home Household Service Holdings Ltd.||/zigman2/quotes/226757832/composite EJH||N/A||$33.75||N/A||N/A|
|Nio Inc.||/zigman2/quotes/204905836/composite NIO||78%||$44.10||$57.38||30%||18|
|Cloudflare Inc.||/zigman2/quotes/214109260/composite NET||81%||$102.57||$96.20||-6%||16|
|InMode Ltd.||/zigman2/quotes/213589098/composite INMD||100%||$94.63||$97.00||3%||5|
|Dye & Durham Ltd.||/zigman2/quotes/219645550/delayed CA:DND||80%||$50.11||$58.90||18%||5|
The analysts polled by FactSet are on the “sell side,” meaning that they work for brokerage firms, many of which may have provided investment banking services to the same companies. While sell-side analysts work in separate departments from the investment-banking departments, it is rare that their first research note on a newly listed company does not include a bullish rating.