Unlike the optimist Ben Snider in the previous article, Owen Lamont, Senior Vice President and Portfolio Manager at Acadian Asset Management, holds a more cautious and wary view of the current IPO boom, advising investors to remain highly patient.
1. In terms of the number of deals, he agrees that we are far from the frequency of several companies listing every week seen in 1999 or 2021. However, in terms of total funds raised, this year has already seen record-breaking fundraising. If a few more large IPOs occur in 2026, even if the total number of deals is not large, it will constitute a de facto "IPO wave," or at least be on the verge of one.
2. A surge in equity issuance is one of the manifestations of a market bubble. Corporate managers often tend to sell stocks when they believe they are overvalued. Past waves of issuance driven by new technologies such as railroads or the internet ultimately resulted in losses for investors. Companies that go public during bubble periods are often not the ultimate winners (e.g., Pets.com in 2000), and true giants (such as Google or Netflix) typically go public later.
3. If a wave of debt issuance coincides with a wave of equity issuance, it's a very negative signal, suggesting that the company's overall enterprise value (debt plus equity) may be overvalued.
4. "IPOs are like bananas; they need to ripen before they're ready to eat." Investors are advised not to rush into participating in the latest IPOs. For investors buying in the secondary market, evidence suggests that waiting 1 to 3 years before buying is usually a better strategy, while closely monitoring "first-day gains." Frequent and extreme first-day surges are a clear signal of speculative frenzy.
