BLPA’s Rearview Mirror: Job Reports and IPO’s

BLPA’s Rearview Mirror

October 5, 2014

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KC-135 refueling B-52It’s been crazy couple of weeks with some long road trips. The highlight was our flight to Colorado Springs, where we sat on webbed seating, and saw the refueling of a B-52 bomber up close and personal. There isn’t much that is more exciting and breath-taking than flying at 450 knots per hour, and lowering and attaching a boom to a B-52. Talk about skill and pressure.

Earnings and the Market[1]

The big news this week was Friday’s jobless rate announcement of 5.9 percent, falling 0.2 percent from August. In case you were getting ebullient, this figure was underwhelming due to the weak wage growth and continued underemployment. Workers continue to be stuck in low-paying and part-time jobs. Average hourly earnings fell $0.01 to $24.53 per hour.[2]

The growth of the world’s five largest economies: China, Japan, France and Germany are anemic. That combined with the prospect of a new war in the Middle Eat against the Islamic State, and Kong’s pro-democracy protests and the Ukraine/Russia turmoil is enough to give the investor pause.

This month the Fed plans to terminate its bond buying program, and begin to raise interest rates. Small-cap stocks are officially in correction territory, with the Russell 2000 having fallen more than 10 percent.

The fourth quarter has been seasonally strong in four of the last five years, with a tepid Octobers, but strong Novembers and Decembers. SI can put on a positive perspective after we’ve eked through October.

And for those of you still investing in stocks, we have some names for you centered around the Ebola theme: Canada’s Tekmira Pharmaceuticals (TKM: CA), BioCryst Pharmaceutical (BCRX: Nasdaq), NewLink Genetics (NLNK: Nasdaq) and Sarepta Therapeutics (SRPT: Nasdaq). Be sure to do your homework.

IPOs[3]

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

All business descriptions are taken the companies S-1 filing.

We expected a rush of IPO’s once Alibaba got through the window, and we weren’t disappointed. After enduring an paucity of IPO’s the flood gates opened. At least for this week.

Investment Management

Medley Management (MDLY: NYSE) sold 6m shares at $18 per share, raising $108m at a valuation of $527m. At the writing of this newsletter, the stock was trading at $16.25 per share.

  • Medley is a rapidly growing asset management firm with approximately $3.3 billion of AUM as of June 30, 2014. We provide institutional and retail investors with yield-oriented investment products that pay periodic dividends or distributions that we believe offer attractive risk-adjusted returns. We focus on credit-related investment strategies, primarily originating senior secured loans to private middle market companies in the United States that have revenues between $50 million and $1 billion

Software

Yodlee (YDLE: Nasdaq) sold 6.3m shares at $12 per share raising 76m at a valuation of $340m. At the writing of this newsletter, the stock was trading at $13.44 per share.

  • Yodlee is a leading technology and applications platform powering dynamic innovation for digital financial services in the cloud. We refer to our platform as the Yodlee Financial Cloud. Our vision is to empower lives with innovative digital financial services. Our customers include financial institutions, Internet services companies providing innovative financial solutions and third-party developers of financial applications. More than 750 organizations in over 10 countries use the Yodlee platform to power their consumer-facing digital offerings, and we receive subscription fees for 16.8 million of these consumers, whom we refer to as our paid users.

Green Energy

Vivint Solar (VSLR: Nasdaq) sold 20.6m shares at $16 per share raising $330m at a valuation of $1.68b. At the writing of this newsletter, the stock was trading at $15.17 per share.

  • We offer distributed solar energy — electricity generated by a solar energy system installed at customers’ locations — to residential customers based on 20-year contracts at prices below their current utility rates. Our customers pay little to no money upfront, typically realize savings of 15% to 30% relative to utility generated electricity immediately following system interconnection to the power grid and continue to benefit from guaranteed energy prices over the term of their contracts, insulating them against unpredictable increases in utility rates.

Consumer

Smart & Final Stores (SFS: NYSE) sold 13.5m shares at $12 per share, raising $162m at a valuation of $852m. At the writing of this newsletter, the stock was trading at $13.64 per share

  • We are a high-growth, value-oriented food retailer serving a diverse demographic of household and business customers through two complementary and highly productive store banners. Our Smart & Final (“Smart & Final”) stores focus on both household and business customers, and our Cash & Carry (“Cash & Carry”) stores focus primarily on business customers.

 

Wayfair (W: Nasdaq) sold 11m shares at $29 per share raising $319m at a valuation of $2.4b. At the writing of this newsletter, the stock was trading at $36.68 per share.

  • We have created one of the world’s largest online destinations for the home. Through our e-commerce business model, we offer visually inspiring browsing, compelling merchandising, easy product discovery and attractive prices for over seven million products from over 7,000 suppliers across five distinct brands.

Medical/Pharma/Biotech

Vitae Pharmaceuticals (VTAE: Nasdaq) sold 6.9m shares at $8 per share raising $55m at a valuation of $124m. At the writing of this newsletter the stock was trading at $6.75 per share.

  • We are a clinical stage biotechnology company focused on discovering and developing novel, small molecule drugs for diseases that represent large market opportunities where there are significant unmet medical needs. We are developing a robust and growing portfolio of novel product candidates generated by Contour®, our proprietary structure-based drug discovery platform.

 

Calithera (CALA: Nasdaq) sold 8m shares at $10 per share raising $80m at a valuation of $179m. At the writing of this newsletter, the stock was trading at $9.35 per share.

  • We are a clinical-stage pharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer. Tumor metabolism and tumor immunology have emerged as promising new fields for cancer drug discovery, and recent clinical successes with therapeutic agents in each field have demonstrated the potential to create fundamentally new therapies for cancer patients. Our lead product candidate, CB-839, is an internally discovered, first-in-class inhibitor of glutaminase, a critical enzyme in tumor metabolism. We are currently evaluating CB-839 in three Phase 1 clinical trials in solid and hematological tumors.

 

Dermira (DERM: Nasdaq) sold 7.8m shares at $16 per share raising $124m at a valuation of $270m. At the writing of this newsletter, the stock was trading at $15.55 per share.

  • We are a specialty biopharmaceutical company focused on bringing innovative and differentiated medical dermatology products to dermatologists and their patients. Our strategy is to leverage our experience to in-license, acquire, develop and commercialize products that we believe can be successful in the dermatology marketplace. Our portfolio of five product candidates targets significant market opportunities and includes three late-stage product candidates, Cimzia (certolizumab pegol), which we are developing in collaboration with UCB Pharma S.A. for the treatment of moderate-to-severe plaque psoriasis, DRM04, which we are developing for the treatment of hyperhidrosis, or excessive sweating, and DRM01, which we are developing for the treatment of acne.

American Addiction Centers (AAC: NYSE) sold 5m shares at $15 per share raising $75m at a valuation of $310m. At the writing of this newsletter, the stock was trading at $18.65 per share.

  • We believe we are a leading provider of inpatient substance abuse treatment services for individuals with drug and alcohol addiction. As of July 31, 2014, we operated six substance abuse treatment facilities located throughout the United States, focused on delivering effective clinical care and treatment solutions across our 467 beds, which included 338 licensed detoxification beds. In addition, we have three facilities under development and an additional property under contract that we plan to develop into a new facility. The majority of our 715 employees are highly trained clinical staff who deploy research-based treatment programs with structured curricula for detoxification, residential treatment, partial hospitalization and intensive outpatient care. By applying a tailored treatment program based on the individual needs of each client, many of whom require treatment for a co-occurring mental health disorder, such as depression, bipolar disorder and schizophrenia, we believe we offer the level of quality care and service necessary for our clients to achieve and maintain sobriety.

Vascular Biogenics (VBLT: Nasdaq) sold 6.7m shares at $6 per share raising $40m at a valuation of $473m. At the writing of this newsletter, the stock was trading at $5.94 per share.

  • We are a clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of first-in-class treatments for cancer and immune-inflammatory diseases. Our clinical pipeline is based on two distinct, proprietary platform technologies that leverage the body’s natural physiologic and genetic regulatory elements.

Colombia

Grupo Aval (AVAL: Nasdaq), Colombia’s largest banking group, sold 81.5m shares at $13.50 per share raising $1.1b at a valuation of $294.3b. At the writing of this newsletter, the stock was trading at $13.50 per share.

Israel

CyberArk Software (CYBR: Nasdaq) sold 5.4m shares at $16 per share raising $86m at a valuation of $473m. At the writing of this newsletter, the stock was trading at 30.38 per share.

  • We are a global leader and pioneer of a new layer of IT security solutions that protects organizations from cyber attacks that have made their way inside the network perimeter to strike at the heart of the enterprise. Our software solution is focused on protecting privileged accounts, which have become a critical target in the lifecycle of today’s cyber attacks.

 

We are hoping they are able to protect our credit cards from the hackers. My Chase card was charged $930.00 to “Insurance Premium,” a questionable charge if I ever saw one. Typically, false charges had been on my American Express card, totaling from a few to ten dollars. This charge was particularly brazen.

Israel Chemicals (ICL: NYSE) sold 60.2m shares at $7 per share, raising $421m at a valuation of $8.89b. At the writing of this newsletter, the stock was trading at $7.18 per share

  • We are a leading specialty minerals company that operates a unique, integrated business model. We extract raw materials and utilize sophisticated processing and product formulation technologies to add value to customers in three attractive end-markets: agriculture, food and engineered materials.

United Kingdom

Travelport Worldwide (TVPT: Nasdaq) sold 30m shares at $16 per share raising $480m at a valuation of $1.9b. At the writing of this newsletter, the stock was trading at $15.86 per share.

We are a leading travel commerce platform providing distribution, technology, payment and other solutions for the $7 trillion global travel and tourism industry. We facilitate travel commerce by connecting the world’s leading travel providers, such as airlines and hotel chains, with online and offline travel agencies and other travel buyers in our proprietary business to business (“B2B”) travel commerce platform (our Travel Commerce Platform).

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All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

Affiliates:

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Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

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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1) WSJ Morning Moneybeat

[2] WSJ, October 3, 2014

[3]Renaissance Capital