A handful of IPOs exploded in Friday's market much like an eruption from a smoldering volcano. They scored an average opening-day gain of nearly 40 percent. But the event that led up to Friday's fireworks didn't just happen overnight.

 

This year's IPO traffic is breaking down into two different markets: Pre-Labor Day and Post-Labor Day.

 

Investors who bought shares of companies that have gone public since Labor Day wound up on the lucky side of the ledger. The numbers tell the story.

 

The average opening-day gain of the IPOs priced since Labor Day is 18.1 percent. That's roughly twice the average opening-day gain of 8.9 percent for the IPOs priced during the first eight months of the year.

 

Here's how the two different IPO markets of 2006 have taken shape so far.

 

Pre-Labor Day:

On Sept. 1, 2006, which was the Friday before Labor Day, the Nasdaq Composite Index, the barometer of the IPO market, ended at 2,193.16, DOWN 0.55 percent from its close at 2,205.32 on Dec. 30, 2005.

 

During those eight months, the new-issues calendar produced 136 IPOs, according to available records. That was an average of about 17 IPOs per month. They had an average opening-day gain of 8.9 percent.

 

On Sept. 1, 2006, the pre-Labor Day Scorecard (excluding unit offerings) looked like this:

• IPOs priced: 105
• Up: 50
• Down: 53
• Unchanged: 2
• Average gain: 4.32 percent
• Nasdaq Composite Index: Down 0.55 percent

Post-Labor Day:

On Dec. 9, 2006, the Nasdaq Composite Index closed at 2,437.36, UP 11.1 percent from Sept. 1, 2006.

 

During those three months and a week, the new-issues calendar produced 76 IPOs. That was an average of about (...read more...)