BLPA’s Rearview Mirror: HubSpot’s IPO–Finally

BLPA’s Rearview Mirror

 

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DJIA Source:  BigCharts.com
DJIA
Source: BigCharts.com

While the Fall, and specifically October, is one of my favorite times of the year, I always enter the month with a sense of dread. This dread was never present before I entered the financial industry. [Ignorance is bliss?]  Somehow, those downdrafts that severely injure one’s portfolio, and take years to rebuild, always occur in October.

This time, five years ago, the market dropped 2400 points, wiping out close to a decade’s worth of gains. It bounced back by 936 points within a few days, although not bottoming out till March of 2009 to close at 6443 points.

The financial press encourages this sense of foreboding with their hand wringing over the lack of a market retrenchment in the past few years, the poor European economy, and so forth. Still, take a minute to enjoy what money can’t buy: brisk weather, sun shiny skies, the Fall crop of apples and pumpkins, and the midget trick or treaters.

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

The news this week was less about earnings than about corporate spin-offs, CEO’s calling it quits and volatility.

This past week saw increased volatility in the market, with four of the five days being plus-100 point swings, bringing the market into negative territory for the year. 274 points down, 272 points up: The market giveth and taketh. The economy continues to be in a muted recovery, and joblessness, a key indicator, is at a recent low, at 5.9 percent.

eBay, Symantec and HP all announced substantial spinoffs. eBay is spinning off PayPal, which accounts for 40 percent of its revenue, an estimated 60 percent of its value, and almost all its profitability.[2] eBay has been fighting Carl Icahn’s idea for a spinoff since January 2014, taking ten months to finally accede to the idea.

Beleaguered Meg Whitman has decided to split HP in two: 1) printers and PC’s and 2) enterprise products. We give Whitman a lot of credit for staying the course, and think the move makes sense. PC’s and printers are close to commodity products, while enterprise products have a significant value-add in the form of content management, communications and networking.

Symantec is splitting into security and information management companies. In spite of its purchase of Veritas, Symantec never managed to capitalize on the Company’s market position. Furthermore, in the security area, Symantec has not kept up with the FireEye’s and Palo Alto Networks of the world. Even in the mobile space, where I’ve been told that security is a bit of a misnomer, competition in the form of Lookout, NQ Mobile, Avast software and Kaspersky Labs are leading the way.[3]

Meanwhile, AMD’s CEO Rory Read called it quits, handing over the reigns to Lisa Su, an IBM former lifer, and MIT BS, MS and PhD. She has her work cut out for her in trying to compete and coexist with Intel. Su has the technical expertise that Read lacked, which is crucial in this business. Still, the stock closed Friday at $2.71 per share, which would tell one that the Company is close to dead.

Gap’s CEO, Glenn Murphy, announced that after eight years at the helm, he will step down next year.[4] It’s been a rough, unrewarding ride. Still, the stock price is more than double when Murphy took the helm.

IPOs[5]

Click on the company stock symbol for the stock chart, and the company name for the S-1 filing.

Dave & Busters (PLAY: Nasdaq), out of Texas, sold 5.9m shares at $15 per share raising $94.4m at a valuation of $586m. The stock closed the week at $17.27 per share.

  • Founded in 1982, the core of our concept is to offer our guests the opportunity to “ Eat Drink Play ” all in one location. We believe we are currently the largest national chain offering a full menu of casual dining food items and a full selection of non-alcoholic and alcoholic beverage items together with an extensive assortment of entertainment attractions, including skill and sports-oriented redemption games, video games, interactive simulators and other traditional games. Unlike the strategy of many restaurants of shortening visit times by focusing on turning tables faster, we aim to increase the length of stay in our locations to generate incremental revenues and improve the guest’s experience.

Diplomat Pharmacy (DPLO: Nasdaq), in Flint Michigan, sold 13.3m shares at $13 per share raising $172.9m at a valuation of $656m. The stock closed the week at $16.02 per share.

  • We are the nation’s largest independent specialty pharmacy and are focused on improving the lives of patients with complex chronic diseases. We believe we have a unique patient-centric approach that positions us at the center of the healthcare continuum for the treatment of these diseases and enables us to drive superior care coordination through partnerships with patients, payors, pharmaceutical manufacturers and physicians. We offer a broad range of innovative solutions to address the dispensing, delivery, dosing and reimbursement of clinically intensive, high-cost specialty drugs.

HubSpot (HUBS: Nasdaq), based in Cambridge, sold 5m shares at $25 per share, raising $125m at a valuation of $759m. The stock closed the week at $29.05 per share.

  • We provide a cloud-based marketing and sales software platform that enables businesses to deliver an inbound experience. An inbound marketing and sales experience attracts, engages and delights customers by being more relevant, more helpful, more personalized and less interruptive than traditional marketing and sales tactics. Our software platform features integrated applications to help businesses attract visitors to their websites, convert visitors into leads, close leads into customers and delight customers, so that they become promoters of those businesses. These integrated applications include social media, search engine optimization, blogging, website content management, marketing automation, email, CRM, analytics and reporting.

MOL Global (MOLG: Nasdaq), based in Malaysia, sold 13.5m shares at $12.50 per share, raising $169m at a valuation of $844m. The stock closed the week at $8.02 per share.

  • We are the largest e-payment enabler for online goods and services in Southeast Asia by payment volume, according to the Frost & Sullivan report. We operate a payments platform that facilitates online and mobile commerce for consumers in emerging and other markets by providing a vast network of payment channels that accept payment using cash and online methods. Our physical distribution network comprises more than 970,000 physical locations in 13 countries across four continents where we maintain a local presence as of June 30, 2014 and physical locations in other countries where we have relationships with aggregators that distribute our products through channels with which they have relationships

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Source:  Creative Commons, rachaeldimski.com
Source: Creative Commons, rachaeldimski.com

Finally, it’s close to the end of apple picking season in New England. Once we’ve had our first frost, apple season is officially over. Kaput.

After Sunday’s swim practice we were inspired to head two miles due West to Sunnycrest Farms and picked close to 20 pounds of apples. It took, maybe, 10 minutes. All types: macintosh, fuji, pink ladies, delicious and more.

When we leave New England, the farms and PYO produce are what I will miss. Fruit doesn’t get much fresher.

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

Affiliates:

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Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

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Susan Woods and Vlad Harris

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Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area. Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office. She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs. When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

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We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

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This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

[1] WSJ Morning Moneybeat

[2] Motley Fool

[3] Market Realist April 4, 2014

[4] WSJ, October 9, 2014

[5]Renaissance Capital