IPO Investing

You have probably read the box in the textbook from our favorite IPO guru, Professor Jay Ritter. Recently, Dr. Ritter wrote an article for Forbes that discusses a specific type of IPO that has proven profitable for investors. Growth capital-backed IPOs, which are companies backed by venture capitalists or private equity firms and invest in tangible assets, have proven to be winners. Since 1980, these firms have a 3-year average return of 61 percent if bought at the end of the first day of trading. Dr. Ritter's recommendations for 2014 had an 11 month return of 20.6 percent, which is a return we would like. So which 2015 IPOs does he recommend? Summit Materials (SUM), DavidsTea (DTEA), Blue Buffalo Pet Products (BUFF), and Surgery Partners (SGRY) all meet the growth-capital IPO criteria.