A shortened week in an market that’s as cold as weather outside my place has brought a chill to the mainstream IPO market. Not to despair, the throngs of second and third tier underwriters are still pumping out their mixed bag offerings of low-float IPOs that range from typical medical/biotech firms to Stealth IPOs fronting for dubious enterprises (we already had TKLF today – the newsletter on that one went out Monday night in case you missed it)…
Anyway, not a lot of financial analysis needs to go into these low-float plays, they either run hard on build up hype, debut overheated and crash, or fail to attract any attention at all and just dump out of the gate. I’ll provide the setups and attempt to forecast what I expect from each setup, but bear in mind that these are extremely risky setups, and you should play them accordingly.
Let’s get started:
Jupiter Neurosciences (JUNS) – January 19, 2022 | 3.33M Shares
This IPO was scheduled for Tuesday, and has since been pushed back to Wednesday, but it’s pretty late in the evening now and no pricing has been announced, so I think it’s probably delayed again. I don’t generally play biotech IPOs on the debut, but these setups have given opportunities to wait for a dip and take a position around the quiet period expiration.
The story on this one is they have developed a patented platform that targets neuroinflammation with applications to Alzheimer’s and COVID applications. It is significant to note that their Phase I trials were backed by a grant from the prestigious National Institute on Aging. The underwriter is Dawson James Securities, which is not as sketchy as some of the other lesser-known 3rd tier underwriters, but it also has Roth Capital alongside it, which has been shunned by many investors. Still, my thinking is that this company looks legit on the surface and could be an interesting setup once the price fades down.
The play I am starting to recognize on these low-float biotechs that price in the $4-10 range and have legitimate medical applications is to wait for the share price to trail off into the quiet period, and then start a position down below $2.60 and add on dips until they issue a press release and play the pop. I’ll be keeping an eye on this one.
Four Springs Capital Trust (FSPR) – January 20, 2022 | 18M Shares
Here we have an IPO with top-tier underwriters (Morgan Stanley and Goldman Sachs along with a host of others)… so this is a mainstream debut for a REIT that specializes in single-tenent offices for small professional service operators like dentists, consultants, lawyers, etc. They own 122 properties and hold interests in another 34. I see headlines indicating attempts to go public since 2017, and generally don’t find these setups to be all that volatile on their debuts, so not something I’m too interested in trading or following. But it will be interesting to see how this one performs on the debut: until we see strong IPO debuts for solid companies, we’re not going to get many companies with brand-name recognition braving the current market conditions.
Rhodium Enterprises (RHDM) – January 20, 2022 | 7.7M Shares
This is a crypto mining operation that owns proprietary technology for mining and uses liquid cooling technology to optimize their bitcoin mining operations. As most of us know, bitcoin has come way down from it’s recent highs, and I’m not sure the market is going to be too excited to jump right into a new crypto mining debut. However, if you’re bullish on the future of bitcoin, this might be an interesting miner for a long term investment, though I’d be hesitant to buy off the IPO, as it would surprise me to see this move up off the debut. If you want to start a position here, consider waiting and watching for a dip to build a position. I doubt crypto mining plays will gain momentum until we see a sustained rally in BTC, so perhaps this ticker is best suited for a watchlist alongside IREN and SDIG for possible rallies in recent crypto miner stocks following an upside bounce in Bitcoin.
FGI Industries (FGI) – January 21, 2022 | 2.5M Units
On the surface, this one had a bit of a Stealth IPO look to it going into last week: just 2.5M shares, and clear connections to China, but I received a notification in regards to my allocation request on WeBull for FGI shares that informed me of an update to the prospectus that has now added warrants to the shares: effectively doubling the float and throwing a variable into the debut trade that generally has diminished the running power of low-float IPOs. Th underwriter: The Benchmark Company, does not have any real history of running Stealth IPOs – though AERC’s IPO appears to have been manipulated in some ways, and BFRI got pumped pretty hard once the quite period expired… so maybe this one has something up it’s sleeve. I put in an allocation request for $100 just to get a sense of what kind of fills they give, but am not convinced one way or another that this is a typical Chinese Stealth play… yet. I’ll dig a little deeper later in the week, and even if it’s not a Stealth Setup, it could still run purely on ultra-low float, but the warrants introduce a level of confusion that might throw off a strong debut run.
Samsara Vision (SMSA) – January 21, 2022 | 4.16M Shares
Not to be confused with the recent IPO for Samsara (IOT), this company has developed an implantable miniature telescope technology that is embedded into the eye for treating vision loss due to macular degeneration. Which sounds pretty cool and futuristic, however, it is still in the early commercial stages in Europe and has not gone through the FDA certification for use or sale in America. The underwriter is ThinkEquity, a pretty well established third-tier underwriter whose offerings have been hit-and-miss. I don’t see any reason why this one should run right off the debut. Again, this one might be better put on a watch list for opportunities to accumulate into the quiet period.