HALISTER: BARRON’S ROUNDUP: IPO Slump May Aid Stocks; Monsanto Could Slip

BARRON’S ROUNDUP: IPO Slump May Aid Stocks; Monsanto Could Slip

(Bloomberg) -- The disappearing IPO market may be good for stocks, with only 31 companies going public so far in 2016, fewer than half the tally of 69 a year earlier, Barron’s reported in its cover story of the June 6 issue.
  • In the 12 months following a year with fewer than 100 IPOs, stocks rise an average of 13.1%, according to data from Jay Ritter, a professor at University of Florida.
  • Regulatory hurdles and the growing importance of institutional investors rather than individuals are suppressing the number of initial offerings, Barron’s said.
  • IPO volume doesn’t mirror the rate of acquisitions of venture-capital backed companies, which has been “fairly constant” at about 120 deals per quarter for the past 10 years, Barron’s reported.
  • Transactions on the Nasdaq Private Market, an exchange for private stock, rose to $1.6 billion in 2015, Barron’s said.
Other highlights from this week’s Barron’s (subscription required):
  • Whole Foods Market (WFM) may return 20% over the next year, including dividends, as cost cutting at legacy stores and new shop designs gain traction, Barron’s reported. The shares have fallen 19% from their high last July.
  • Monsanto (MON) may fall if Bayer (BAYN GR) is unable to complete its proposed purchase of the U.S. seed and chemical company, Barron’s said. Bayer has offered $122 a share for Monsanto, which rejected the bid but remains open to a higher price. Deutsche Bank analyst David Begleiter says Monsanto, which closed Friday at $111, could drop to $100 if the deal collapses.
  • Textbook publisher Houghton Mifflin Harcourt (HMHC) may rise 45% over the next two years or so as states refresh their teaching materials, Barron’s reported. Morgan Stanley analyst Denny Galindo estimates the shares may rise to $25 from the current $17.22.
  • Aluminum recycler Real Industry (RELY), backed by Sam Zell, could more than double as M&A has the potential to boost income while aluminum-processing agreements insulate the company from commodity volatility, Barron’s David Englander writes.
  • Cabela’s (CAB) shareholders should “seriously consider taking profits” after a 56% gain for the retailer of hunting and fishing supplies since its October low. That’s when Elliott Management disclosed that it had taken a large stake in Cabela’s and pushed the company to sell itself.
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
MON US (Monsanto Co)
CAB US (Cabela's Inc)
HMHC US (Houghton Mifflin Harcourt Co)
SGGHU US (Real Industry Inc)
WFM US (Whole Foods Market Inc)

People
David Begleiter (Deutsche Bank Securities Inc)
Denny Galindo (Morgan Stanley)
Jay Ritter (University of Florida Foundation Inc)

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