Tags: IPO | stock | market | correction

Flood of IPOs May Signal Stock Market Correction in the Offing

By Dan Weil   |   Wednesday, 13 Nov 2013 09:23 AM

A raft of initial public offerings (IPOs) has hit the market this year, punctuated by Twitter's IPO last week.

With stock prices hovering around record highs, this slew of IPOs could signal a market correction around the corner.

"I wouldn't be surprised by a market correction here. I don't think anyone would," Michael Farr, president of Farr, Miller & Washington investment management firm, told The Wall Street Journal.

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U.S. companies have issued $51 billion of IPOs so far this year, according to Dealogic. That's the highest total for this period since $63 billion in 2000. That, of course, was the year that bubbles in both tech stocks and IPOs burst.

Farr doesn't expect any kind of meltdown now.

"Before we hit a real stock market top we see an excess of excess. We see a real divorce between supporting fundamentals and share prices," he said, adding that it that hasn't happened yet.

However, James Barksdale, president of Equity Investment Corp., told The Journal, "People are becoming complacent about risk."

As for tech IPOs, they are no longer likely to feature familiar faces, according to CNNMoney.

"When it comes down to it, how many technology companies really are well-known names to consumers?" Kathleen Smith, principal at IPO fund manager Renaissance Capital, told the news service.

"Most true tech — not like Facebook, which is essentially an advertising company — is about the back-end technology that consumers don't know about. Those will never be household names."

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