Philip Grant on the 2021 IPO class

They sell, you buy.  In a typical initial public offering, management and large shareholders commit to stand pat on their holdings for 180 trading days.  But that informal industry norm has eroded significantly during the recent bull run.  A quarter of last year’s record haul of U.S. IPOs featured expedited lock-up periods, data from Renaissance Capital show.  That’s the highest on record since data collection began in 2011 and compares to just 9% for the 2020 IPO class. 

Shareholders attempting to vote their displeasure may find limited success, as 32% of last year’s IPO class debuted with a dual class share structure, University of Florida Professor Jay R. Ritter finds.  That’s both the highest gross tally and highest proportion of total IPOs since at least 1980.  For context, about 90% of existing public companies in the U.S. are organized under a one-share, one-vote system, according to the Council of Institutional Investors. 

The Renaissance IPO Index, comprised of the largest, most liquid new U.S. listings and rebalanced on a quarterly basis, has suffered a 41% drawdown over the past 11 months, retracing a substantial junk of its 255% jaunt from the March 2020 nadir.

~ Philip Grant, Almost Daily Grant's, January 24, 2022