Amateur Hour in the IPO Space

 | Mar 28, 2014 | 2:14 PM EDT  | Comments
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Stock quotes in this article:

king

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cbso

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tnet

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FB

Amateurs and pros. That's how I am looking at these recent IPOs. The King Digital Entertainment (KING) deal smacks of rank amateurism. Did the bankers really not know there was no demand at $22? How could they not? What were they thinking? Disastrous.

Then there are CBS Outdoor (CBSO) and TriNet Group (TNET): total pros. Les Moonves, the CEO of CBS, knew exactly what he wanted to accomplish on this deal. He wanted one where everybody wins. The seller, CBS, gets a good price. The buyers, the public, get a good price, and everyone goes home happy. That's what happens when you have a CEO who wasn't born yesterday.

TriNet, brought to you by General Atlantic, another seasoned outfit, worked out perfectly. Priced at $16, the stock opens at $18.50 -- everyone's happy. And then it goes out at $19, meaning that you didn't get skunked if you paid the opening price. Further, it has rallied big today, as people see that this one is a profitable juggernaut. General Atlantic doesn't like to bring dogs to the market. It likes strength, not weakness.

I was thrilled last night to have Burt Goldfield, the CEO of TriNet, on "Mad Money." He told a terrific story about how his company is the go-to outsourcing company for financial and tech concerns, including WhatsApp, the company that everyone is convinced Facebook (FB) overpaid for.

But what I liked best about the company is that unlike many CEOs who tell me that the company can't afford to be profitable because it would limit their growth, TriNet has both excellent growth and profitability.

I have always felt that the CEOs of many newly public companies really have no idea how the IPO process works. They have to rely on the professionals, and that isn't always a good thing. But CBS and TriNet knew their way around. Right now, we are faced with 15 IPOs to come next week, after many of the recent ones have begun to wilt. If the companies had seasoned execs and bloodlines like CBS and TriNet, things would be very different.

When I look at the plethora of companies coming public next, I don't see a lot of TriNets and CBS Outdoors. All I can say is that's real bad for the investors and may be very bad for the market. 

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