Maryland’s Inovalon [INOV] IPO a success, market modestly up

More ridiculous happy talk keeps markets buoyant today, but how long can this silly jawboning continue to fly in the face of economic truth?

Inovalon execs ring NASDAQ opening bell.
Inovalon execs ring the NASDAQ's opening bell celebrating their successful IPO. (Via Facebook)

WASHINGTON, February 12, 2014 – U.S. markets are moderately positive as we approach the Thursday noon hour, which stands to reason since Wednesday’s trade was largely on the downside. The DJIA is currently up a bit over 56, the broader S&P 500 is up a decent 13 reflecting some recovery in oil prices and finance, and the tech-heavy NASDAQ is positive to the happy tune of 38+ points.

Allegedly, the positive mood is due to joy over the latest cease-fire agreement between Czar Vladimir and the Ukraine. This is silly, of course, because whether you’re negotiating with a Commie or an (allegedly) ex-Commie, any deal you think you have always turns out the same way—the Commie violates the agreement because he never intended to observe it anyway, merely buy a little more time to beef up weaponry, positions and gain cover in the always supine international media.

NASDAQ Times Square display.
NASDAQ proclaims its latest IPO, Inovalon, this morning on its Times Square marquee screen. (Image via Facebook)

On the plus side, the IPO of Bowie, Maryland-based cloud-computing company Inovalon (INOV) priced at $27 late Wednesday evening, a point above the top of its already increased price spread. Opening for trade late Thursday morning on the NASDAQ, shares popped about 15 percent to $33 and change, but have settled down to about $30 as we write this, a roughly 11.5 percent gain thus far.

This is likely an example of realistic pricing. The underwriters got a decent stock price for their clients while still leaving some room for that all important “pop,” so beloved by the wealthy investors who usually get the lion’s share of any “hot” company IPO. A win-win, except if you didn’t have to get in.

To the Maven’s surprise, after asking for 200 shares of INOV and expecting none, the IPO roulette table smiled and granted him half that amount. We will enjoy the ride, which might bail us out of last month’s dog of an IPO, finance and insurance firm Patriot National (PN) which, after nearly 30 days’ trading, has yet to equal its IPO price of $14, indicating this dog was priced too high, even after a big reduction in the ask.

This stuff matters to the Maven since the house rules of his discount brokerage more or less don’t allow successful IPO purchasers to flip their shares until they’ve held them for at least 31 days. This makes each IPO a crap shoot. Often the IPO will pop, sometimes massively. But then, all the rich guys who have most of the shares will start flipping them and driving them down. After a month of this, when the Maven can finally sell, a lot of the initial bragging-rights gain has vanished.

But so it goes. If a little guy can end up making even 5 percent in 31 days on this kind of crap shoot, that’s an annualized return of 60% —assuming you can keep doing this indefinitely. (Which you can’t.) Nonetheless, as with the free money at least some employers put into your 401(k), there’s no point in giving up free money or the potential for getting it, so we keep playing and are generally ahead.

Ergo, we’ll wait our 31 days, at least, to see if the big boys leave us anything from Inovalon’s nifty opening trade and we’ll take it if we can.

The other big news today takes us back to our initial topic, namely, the forced happy talk that the financial media punditocracy continues to put out. These statements are otherwise known as lies, similar to those put out by the global warmists climatistas every time a severe cold snap blasts across the nation as it’s about to do over this upcoming long weekend.

“See,” they say, “we told you. This unusually bitter cold is all about global warming climate change.” It’s become such an obvious crock at this point that only morons like those in the White House would continue to give these bald-faced lies any credibility at all.

Speaking of the climatistas and bald-faced lies, however, CNBC’s financial punditocracy is giving them a run for their money today. Running online right now on CNBC is a headline article on employment whose subhead reads:

More Americans than expected filed new claims for unemployment last week, but the trend is consistent with a strengthening labor market.

Huh? Let’s read ahead to the first and second graf:

The number of Americans filing new claims for unemployment rose more than expected last week, but the underlying trend remained consistent with a strengthening labor market.

Initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 304,000 for the week ended Feb. 7, the Labor Department said on Thursday.

These goofballs have got to be kidding. First, that misleading subhead. How can “more Americans than expected” filing new unemployment claims last week support a trend “consistent with a strengthening labor market”? What kool-aid is this reporter drinking? Maybe the same stuff the warmists are drinking when they try to convince us that our looming New Ice Age is being caused by global warming climate change.

The report repeats the subhead’s startling non-news in its first paragraph. But it makes matters worse when it gives us the numbers. Unemployment claims increased 25,000 last week to a seasonally adjusted 304,000. That’s higher than the number of new jobs added to the economy last week, a dismal number the pundits cheered. Which means that more people lost their jobs last week than were employed during the same week.

Add to this the 300,000 per week number of new jobs we consistently need to put everyone back to work who wants to work—and fulltime, too—the net effect becomes clear. We’re losing jobs again, even as the White House and its feeble-minded minions are out on the hustings telling us how good we’ve got it.

It’s this consistent lying, from the latest Putin “agreement” with Ukraine to the latest allegedly nice talk from Greece’s new Communist government to the positive spin Wall Street has been putting on our actually stalling economy and you have to wonder when the Revolution is going to come.

As for investing, it’s one day at a time in this environment.

Today’s trading tips

We did pick up our tiny allotment of 100 Inovalon IPO shares this morning, so that was nice. We didn’t get any shares of Sol-Wind Renewable, however, because there weren’t any. For some reason—likely low interest—this latest alternative energy play IPO was “withdrawn indefinitely.” That term in IPO parlance means anywhere from two weeks or so, to, well, indefinitely.

We actually dislike most if not all solar and wind IPO plays because the only reason any of them make money is because the Obama Administration is forcing us to subsidize them via the taxes we pay. Of course, the alternative energy bigwigs get to keep fat salaries out of that money, whereas the individual taxpayer is SOL. Are you catching our climate change drift here.

We’ll often “invest” in these dicey alternative energy IPOs anyway, however, because there’s often enough dumb money chasing it that we can exits in our mandatory 31 days with a profit before that investment peters out or goes bankrupt. This happened circa 2010 or so with storage battery maker A123. The Maven made money on this one and then exited. Not two years later, that Obama-blessed Michigan startup went bankrupt. Those still holding the stock lost all their money. And the battery capacity the American taxpayers built was snapped up at fire-sale prices by—ta da!—the Chinese. Take that, losers!

The only other trade we’re trying today, at the suggestion of one of our investment services, is a small position in the volatile double-short (inverse) Japanese yen ETF, YCS. So far, we’re down about 0.25 percent on that one. But this chart-based service usually manages, on purpose, to get us in on ETFs on a down day, getting us a better price before it goes the way the charts said it would.

We’d advise, however, that any of these double- and triple-short ETFs are very short term plays. And worse, if you don’t watch them all day like the Maven does, you could get completely hosed as they can move up and down quite violently. When the violence is not in your intended direction, that can give you a big loss. So stay away from these things unless you just have to gamble. Which the Maven occasionally does.

Otherwise, it’s still dangerous out there, so we’re holding more than the normal amount of cash. It’s the smart thing to do when everyone is lying to you.

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