Slim Thursday pickings for oil infrastructure IPO shares

Underwriters for Solaris Oilfield and Gardner Denver Holdings plan to price their IPOs Thursday evening. But will the price justify current risks?

Compression equipment simulation. (Screen capture of an Exterran video description, via the company's website)

WASHINGTON, May 11, 2017 – Short column again today, or relatively short anyway. As we’ve duly noted in our companion column, trading action is negative, goofy and not very convincing today, with volume having that “lower than average” feeling.

Read also: Snap Inc., Macy’s, Trump-Comey fallout trash stocks Thursday

All we’re looking at today, aside from a decent Thursday recovery for our Allergan convertible preferred “A” shares position (symbol: AGN/PRA, your broker’s symbol may vary), is a pair of IPOs we’ve put in for but may ultimately not decide to buy.

Trading Diary

For the record, we’ve requested a modest number of shares in both Solaris Oilfield (proposed symbol: SOI) and Gardner Denver Holdings (proposed symbol: GDI). Both IPOs are involved one way or another in the oil patch, with SOI providing products and services to drillers and GDI marketing compression and flow-control equipment and other services in the energy and industrial environments.

Frankly, neither of these companies looks exciting, given current uncertainties in the oil patch. Further, GDI is one of those real companies that was “taken private” some years back by vulture capitalists who, having milked the company for what they could get, are offering it back to the public now with a load of debt.

Of the two, GDI may very well have the better prospects in the end. But we saw last year what happens to small companies in the oil patch when oil prices go south. So we may finalize our share request after both issues price tonight if they come in at a substantial discount from their currently expected pricing range.

Otherwise, we’ll take a pass. As our readers know, we put in for shares in a similar IPO last week, only to have the IPO withdrawn by the underwriters, thus making the “buy or pass” decision for us. It’s possible the same fate may await both these IPOs later this evening, although strengthening oil prices over the last two days might just encourage both companies and their underwriters to take a chance on what could be an improving market.

This pair of IPOs is risky, though. In this “Sell in May” season, maybe it’s best to keep some cash for another day.

Click here for reuse options!
Copyright 2017 Communities Digital News

• The views expressed in this article are those of the author and do not necessarily represent the views of the editors or management of Communities Digital News.

This article is the copyrighted property of the writer and Communities Digital News, LLC. Written permission must be obtained before reprint in online or print media. REPRINTING CONTENT WITHOUT PERMISSION AND/OR PAYMENT IS THEFT AND PUNISHABLE BY LAW.

Correspondingly, Communities Digital News, LLC uses its best efforts to operate in accordance with the Fair Use Doctrine under US Copyright Law and always tries to provide proper attribution. If you have reason to believe that any written material or image has been innocently infringed, please bring it to the immediate attention of CDN via the e-mail address or phone number listed on the Contact page so that it can be resolved expeditiously.