Fred -Good luck with your strategy!
Conoco jumps after biggest U.S. IPO
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By Holly Rosenkrantz
NEW YORK, Oct 22 (Reuters) - Conoco Inc. stock jumped in its first day of trading on Thursday, a day after the nation's eighth-largest oil company went public in the biggest stock offering ever in the United States.
Conoco rose to $24.75 on the New York Stock Exchange, where it was the most active issue, up from the $23 price in its initial offering, which raised $4.4 billion Wednesday to top the $2.6 billion raised by Lucent Technologies Inc. when it was spun off by AT&T Corp. in 1996.
In the offering, parent company DuPont Corp. sold 30 percent of Conoco and plans to sell the rest next year as it focuses on biotechnology and other products.
Although the market for new stocks is the gloomiest in years, demand for Conoco was strong enough for lead underwriter Morgan Stanley Dean Witter to boost the value of the offering from the original $3.3 billion or so.
The strength of demand for the offering and on the first day of trading was a sign that investors are still willing to bet on select initial public offerings (IPOs), market analysts said.
''A little bit of a flag has been run up the pole to state that the market will respond to quality and value,'' said David Menlow, president of the IPO Financial Network in Springfield, N.J. ''Not everyone is going to be able to run though the door just because Conoco was a success, but this clearly is not a market that is dead.''
With the stock market's volatility in recent months, investors have become scared to bet on most new issues, and companies are nervous that new stock may tumble in value soon after it is offered to the public. This jittery climate has led scores of companies to pull their IPOs at the last minute.
Despite all that, DuPont pushed ahead and sold 30 percent of Conoco, up from the 25 percent originally planned, because the offering was different than the small, unprofitable start-up companies that dominate the IPO market.
Conoco owns 4,900 gas stations in the United States and had third-quarter profit of $160 million, down from $256 million a year earlier. Conoco also plans to pay a dividend that would yield 3 percent to 4 percent, making it a good value, analysts said.
''It's considered a significant discount compared to its peers,'' said Ben Holmes at Colorado-based data company IPO Pros.
Given Conoco's success in an otherwise weak market, analysts said the deals with the best prospects now are large companies that can boast of a long track record.
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