Randomly Noted

Kinder Morgan, the largest refined petroleum products operator in North America, filed new documents with regulators today giving a little more color on its upcoming initial public stock offering. It set the size of the deal at 80 million shares and is telling us there will be 707 million shares outstanding after the offering. It didn’t give us a range yet for the size of the offering but this will clearly be a deal that places a market cap on the company at more than $10 billion. This blogger surmises that because one number the company did give was its expected dividend payout: $1.16 a year or a total of $820 million in dividend payouts.

If the market cap was $10 billion, that would be an 8.2% dividend payout – and we shouldn’t expect a dividend yield that high.

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Many industries were battered by the economic recession and credit crisis over the past several years. And the airline industry was one that was very hard hit. Some estimates peg the global losses for the airline industry at around $30 billion for 2008 and 2009. Business travel was significantly cut back by companies looking for ways to save money. Consumers significantly trimmed vacation plans. Airlines were forced to cut routes and capacity. They grounded lots of planes.

So, if you think the economy is rebounding and that businesses and consumers alike are getting ready to spend more travel money, the cyclical airline business is one place to invest. But now, there will be another alternative way to bet on an airline recovery – and one that may show less volatility in its business.

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The FX market is hot. About $4 trillion of currencies are traded every day – a number seen hitting $10 trillion in 10 years. Banks around the world are bulking up their trading desks. And Mrs. Watanabe (the proverbial Japanese housewife who day trades while her husband is at work) continues to do more business than ever all over the world.

So, it is with that backdrop that two of the platforms that cater to the retail investor are looking to go public. Gain Capital, which runs the Forex.com website, is hoping to sell 11 million shares for a maximum $190 million, while FXCM is hoping to sell 15 million shares from $13 to $15.

And while there is no question that FX is hot, investors may approach these IPOs with a little caution.

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You would never see an ad in an American newspaper hawking a stock offering like the headline on this blog suggests. But it is apparently different elsewhere around the world. As I travelled to Singapore today, I was flipping through the Straits Times when I saw this large ad that caught my eyes. In big letters on top of the ad it reads: “Initial Public Offering: Hurry! Subscribe Now!”

The ad itself touts the strengths of the company, it’s growth strategies etc. And it does contain on the  bottom a footnote that suggests investors should get hold of a prospectus to read up on the company. But in the U.S., you can’t so openly reach out to investors in this way. Maybe this approach is being a little more honest and transparent. In the U.S., companies conduct “road shows” where the corporate executives get out in front of institutional investors looking to buy some of the shares. The executives are supposed to say nothing beyond what is in the prospectus. Of course, if that was the case, no investors would come to the road shows. And the road shows are not open to anyone – a small retail investor does’t get an invite.

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If you’ve ever walked into one of the 100 Fresh Market supermarkets, you’ll easily understand why the company’s initial public stock offering was a huge success on Day One.

The produce is super fresh, the cut of meats are incredible and for the stores that are allowed to sell wine, the selections are very good – and very affordable. Around the holidays, they have a wonderful selection of candies and cookies. And a hallmark at many of the stores – right when you walk in the door you walk past an area where they sell attractive baskets and flowers. The senses are put to work the moment you arrive.

And they have a very smart business strategy. I’ve spoken with employees at stores in Virginia Beach, Va., and Greensboro, North Carolina, over the years and they’ve told me the company doesn’t just open stores anywhere. It does a lot of demographic research to make sure it is located very close to areas of wealth. Another way of saying this is a high-end store. The one in Virginia Beach is only a couple of miles away from a Kroger, Farm Fresh and Food Lion. And it is always packed.

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Looking to own a piece of the FBI? How about the IRS? Or the Border Patrol? Ok, it’s not exactly owning a part of one of those agencies but instead, a share of a company that holds leases to buildings housing those agencies.

The new company is called US Federal Properties Trust and it is proposing to sell 13.75 million shares of stock at a price from $19 to $21 each. It will be a real estate investment trust.

The company’s reason for being is to construct or buy buildings that it then leases to various federal government agencies. Commercial real estate still hasn’t recovered and there remains concerns about the default and delinquency rates. But you have to think the federal government and its agencies are somewhat immune to that. At least at a time when you an administration that doesn’t seem interested on slimming down government. So, if you want real estate as part of your portfolio, this could be an interesting option.

Investors looking for a play on the commercial real estate market but don’t have the stomach for defaults and declining property values may have an interesting alternative on the horizon. The company is Velocity Commercial Capital and it filed to go public late last week. It’s relatively small but that’s what makes it attractive.

The company originates or buys small business commercial real estate loans. All are first lein. And the largest loan it will get involved with is $3 million. The average loan value in its portfolio is $391,000.

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So at a time when financial markets are once again spooked by risky investments, it only makes sense that one of the hottest initial public offerings of the year was launched today by a company that is relatively new and has lost money each of the last three years.

Huh?

Make My Trip Ltd. priced it’s five-million share IPO at $14 each and it came darn close to doubling in price by the close of trading (it closed at $26.62). So why did investors go gaga over this IPO?  Think of it as the Priceline or Expedia of India and he potential for the travel business there when the country becomes wealthier.

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Almost everything about the planned IPO by Internet-phone-company Skype is big. Well, almost everything. But we’ll get to that in a minute. When you have a hot company, and this one is right now, everybody and their brother wants a piece of the action. That might explain the reason there are 13 underwriters listed as co-managers for the deal. And while “registered users” doesn’t mean these folks are always using the technology, it does mean a lot of people are at least familiar with the company – it had 560 million registered users as of the end of June.

Average monthly users has more than doubled to 124 million since the end of 2007. Most are using the free, Skype-to-Skype services but more and more people are being upsold to the paid services – like Skype to landline or mobile phone. But still, that number is only 6.5% of average monthly users.

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There was probably a lot of high-fiving and hand clapping when the Tesla Motors IPO was priced and closed the day $6.89 higher – a remarkable feat for an IPO these days and especially given how poorly the stock market in general performed.

So, maybe I am taking the glass half full approach, but, it seems to me the underwriters really mispriced it and left a lot of money on the table. The company itself sold 11.88 million shares. If the deal had been priced closer to where it closed rather than the original $17 price this morning, the company (a novel electric car maker) would have taken in an additional $81 million or so in proceeds. And for the selling shareholders? They would have pocketed nearly $10 million more.

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