This week, like every week, I’m previewing the companies that are slated to go public.
Today, we have a few traditional IPOs and a couple of SPACs to talk about…so let’s
settle in for IPO This Week for the week of October 19th, 2020.
Welcome to Healthy, Wealthy, and Wise, the channel that has evolved to talk about all
the big, and not-so big companies going public, whether it’s by a traditional IPO, a SPAC
or even a direct listing. And this is our weekly featured show where we preview all
the companies scheduled to have their IPOs for the upcoming week, as well as cover any
companies with lockup expirations and notable quiet periods ending. As always, shout out
to the community, I really appreciate you taking some time out of your busy days to
watch these videos. And for anyone new here, my name is Kevin and I want to welcome you
to the channel. If you end up liking the video and our focus on covering IPOs, I hope you
consider subscribing, after all it’s free... and subscribing will make sure you don't miss
any information on the company that could turn into the next big thing.
After such a popular response from last week's episode, I was planning to shoot this video
back outside on the deck. But Mother Nature didn't cooperate, as she decided to rain all
over my plans… It happens. Hopefully we can do it another time or two before it gets
cold and all of those colorful leaves go away. But whether I’m inside or out, we’ll do
what we do, and make sure we're getting a heads up on the new companies coming out.
So let’s jump into this and start with our traditional IPOs. And first up, we have:
Guild Holdings, ticker symbol GHLD, a mortgage servicer and lender that plans to raise $153
million at a $1.1 billion market cap. For some background, the company was founded way
back in 1960 to originate and service residential mortgages. And just so you know, I say ‘way
back’ to anytime older than me. The company provides loan sourcing and mortgage services,
and it is among the longest operating seller-servicers in the US, as it now operates in 31 states.
The company says it focuses on extending the lifecycle of their client relationships. And
with that focus, they report that, during the twelve months ended June 30, 2020, they
had an overall recapture rate of 61%. So what’s that, right? Well according to the filing,
the recapture rate is calculated as the total unpaid principal balance of their clients
that originated a new mortgage with them in a given period, divided by the total unpaid
principal balance of their clients that paid off their existing mortgage and originated
a new mortgage in the same period. Now, unlike so many companies that we talk
about holding IPOs, this company is profitable, and has reported generating a profit each
year since 2008, with their net income growing substantially since that time. For the six
months ended June 30, 2020, total net revenue was $604.3 million, which is more than double
from the same period in 2019. A lot of this, of course, was a result of the drop in interest
rates related to the pandemic that sent a lot of people out to refinance their loans
leading the company to collect more origination fees. The big question is, how much longer
will the boom in refinancings last? And with an economy that is still being impacted by
the pandemic, could the housing market eventually cool off? You have to consider those concerns
as a near-term risk. One strategy the company does have in order to continue to grow is
to eventually expand into all 50 states. Now needless to say, there is competition
out there. And of the biggest names is a company that also IPO’d this year, Rocket Companies,
a leader in the industry, with tons of commercials on TV. We talked about them a lot during their
IPO, so if you’re interested in learning more about them or just even getting a refresher
on them in order to scout the competition, I’ll link the video that had the most detailed
analysis for you in the description. Back to Guild Holdings, we expect to have
pricing set on Wednesday, October 21st within a range of $17 to $19. Trading should then
begin on Thursday. Before we move on, I just want to ask you
to please press that like button or let me know in a comment that you’re enjoying this
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better with this myself. So no pressure, but I would be really grateful if you could do
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Okay, moving on we have McAfee, the well known, cybersecurity solution company that has been
around for a long time, 1987 in fact. Notice how I didn’t say ‘way back’ this time?
This company is basically a spring chicken in my book. And if you’re wondering why
they hadn’t gone public before, well….they had. In 2010, Intel acquired them before eventually
spinning them off a couple of years ago. As for the company itself, McAfee was founded
to develop computer intrusion detection and protection software and was one of the pioneers
in the industry. The company focuses both on the consumer and enterprise market.
On the consumer side, with their flagship product, McAfee Total Protection, the company’s
service provides device security and online protection that can be applied to multiple
devices, including different types of devices, and across multiple operating systems. According
to their filing, their consumer-focused products protected over 600 million devices as of June
27, 2020. They have longstanding partnerships with many of the leading PC manufacturers,
and through these relationships, their consumer security software is pre-installed on devices
on a trial basis that is then often converted to a paid subscription.
For enterprises and governments, McAfee offers a comprehensive cyber-security solution that
protects customers against adversarial threats across cloud, on-premise, hybrid environments
and endpoint devices. Their cloud-native MVISION platform is a solution that is designed to
secure employees working on enterprise cloud services such as Office 365, Salesforce, and
Slack. The company counts 78% of Fortune 500 companies as customers, as of June 27 of this
year. For some financial numbers; in fiscal year
2019, McAfee generated 2.64 billion dollars in net revenue with a $236 million dollar
net loss. For the 26 weeks ending June 27, 2020, McAfee is reporting $1.4 billion dollars
in net revenue and a swing to profitability with $31 million dollars in net income.
As to the IPO itself, McAfee will trade under the ticker MCFE and plans to raise $759 million
by offering 37 million shares within a proposed price range of $19 to $22. At the midpoint
of the proposed range, McAfee would command a fully diluted market value of $9.6 billion.
A couple of things to know about this IPO: one positive and one not-so-positive. On the
positive side, the company is planning to offer a quarterly dividend, which would come
in at an annual dividend yield of 1.7% at the midpoint of the price range. The not-so-positive
part is that even after using the proceeds of the IPO to pay off debt, it still will
have a lot of debt on the books. The IPO is set to be priced Wednesday October 21st and
then begin trading on Thursday. Are you feeling a little déjà vu on McAfee?
Like thinking we’ve already talked about them? Well, we did…just last week in one
of our feature videos. In that video, I provided a more detailed analysis of McAfee’s history,
products, financials, market outlook, and competitors. So if you’re interested in
the company and you missed that video, I’ll link it for you in the description as well,
so that you can get that extra, more in-depth information.
Next on the board comes from Datto Holding Corporation, ticker MSP. Datto was founded
with the mission to create enterprise-grade technology for small and medium businesses
and that technology is delivered through their growing, world-wide network of managed service
providers. The platform provides a family of integrated tools that enable the managed
service providers to provide security and continuity services to their customers.
The cloud-based platform offerings include Unified Continuity, Networking and Business
Management software solutions. The Unified Continuity and Networking offerings ensure
the ongoing availability and security of mission-critical IT systems for small and medium businesses
on-premise, in private clouds, and in the public cloud. These solutions are simple for
managed service providers to deploy, configure and manage across their customers through
a single portal. Their Business Management software provides critical operational tools
for efficient workflow management and delivery of end-to-end managed services. The platform
also includes a host of business development tools, training, and content that helps managed
service providers address the challenges of marketing and selling to those small and medium
business customers. As stated in their filing, Gartner estimates
the global Small and Medium Business IT spend in 2019 reaching $1.2 trillion and growing
at a 4.6% compound annual growth rate through 2023. In the first half of the year, the company
was profitable as revenue and operating margins continued to grow.
Datto plans to raise 561 million dollars at a 4.2 billion dollar market cap, with the
company intending to use the majority of the proceeds to pay down debt. The IPO is set
to be priced on Tuesday within a range of $24 to $27 and then trading will begin on
Wednesday. Before moving on, we have a couple of late
additions to the calendar that I want to briefly mention. The first is Abcam, United Kingdom-based
research tool provider. The company identifies, develops, and distributes reagents and tools
for life science research, with its customers being primarily scientists and researchers.
The other is a preclinical oncology biotech named Foghorn Therapeutics that has candidates
being developed for blood-related cancers and solid tumors. I don’t have much more
on these companies as they hit the calendar right before I started recording, but I wanted
you to know that they are out there and give you a quick overview of what they do.
Next up we have two SPACs that I want to mention that are both looking to start trading on
Tuesday. The first is Helix Acquisition, ticker HLXA. This blank check company plans to raise
$100 million to acquire a business in the healthcare industry, which could cover a broad
mix of companies. The sponsor is an affiliate of Cormorant Asset Management who has focused
exclusively on the healthcare industry since 2013.
The other SPAC is Bull Horn Holdings, ticker BHSEU. According to IPOScoop.com, Bull Horn
intends to focus on leading sports, entertainment and brand companies that have potential for
brand and commercial growth with enterprise values between $300 million and $900 million.
Their CEO is Robert Striar who is the president of M Style, a sports, entertainment and consumer
brand marketing agency. Additionally, former NBA star and analyst Baron Davis has agreed
to serve on Bull Horn Holdings’ board of directors.
So there’s a couple of SPACs getting ready to the hit market for those of you interested
in SPACs. Obviously we'll have to keep an eye on who they eventually identify as their
targets. Next on our agenda, let’s take a look at
companies whose locked up shares are expiring. This week, there is only one, ORIC Pharmaceuticals,
ticker ORIC. And then for a few notable quiet periods ending on companies we’ve covered
in the past, we have GoodRx, Laird Superfoods, Corsair Gaming, and Bentley Systems. If you
want to get a quick reminder of what these companies are about, I’ll link the IPO This
Week episode we featured them in. So there you go. What do you think? Are you
looking at any of these companies as possibilities for you? Let us know in the comments. And
again, if you're new here or just a frequent visitor, I hope you consider subscribing to
the channel... it's so easy, you just got to press that little red subscribe button,
and that's it! And with that, thanks again for watching,
and until next time, have a great day!