IPOs on Pace for Record Month

Record-high stock prices are fueling the busiest month for IPOs in at least a decade.

Fifteen companies priced initial public offerings on U.S. exchanges in the first 10 days of May – the traditional start to summer sell-off period. Ten IPOs priced last week alone, making it just the second double-digit IPO week since 2007. Another 12 IPOs are scheduled to go public in the coming days.

The largest May IPO thus far has been Quintiles Transnational (NYSE: Q), a biopharm research organization that raised $947 million in its debut. Three of last week’s IPOs were real estate-related – a nod to the ongoing housing recovery.

One thing that could slow the IPO market down in the coming weeks is the modest returns. Of the 15 companies that have gone public this month, only three of them have managed double-digit returns. Eight of them are either in the red or flat since their debuts.

Insys Therapeutics (INSY) has been May’s most successful IPO by far. It’s a company that sells synthetic marijuana as a cancer drug. So far, that’s been a big seller (I’ll give you one guess as to why): the stock posted a first-day return of 18.8% and is up 35.4% since its May 2 debut.

Seven more companies are slated to go public this week. If the current pace holds, there would be 45 IPOs this month. To put that in perspective, no month has had as many as 30 IPOs since May 2007, and the 31 that went public in October 2004 marks the highest monthly IPO tally of the last decade.

As long as stocks keep setting records, the IPO market is likely to remain red-hot.