“The four best performers in the IPO market over the past 12 months say a lot about what the new-issues market will look like for the rest of this year,” writes Raymond Hennessy in today’s Wall Street Journal.

“That’s because Wall Street underwriters, and investors, keep an eye on what initial public offerings of stock have worked for them in the recent past when it comes to assembling their docket of new offerings.”

“Despite a recent emphasis on older, larger companies, the technology theme still offers some of the best returns. Companies with strong brands are popular, too.”

“Here they are:”

“University of Phoenix Online is, fundamentally, a dot-com, with the company offering college courses online. Yet, as people have fled other Internet companies, they’ve poured into University of Phoenix, with the shares ending Tuesday’s trading on Nasdaq at $48.67, or 248% above the $14 offering price set Sept. 27.”

“Is this a case of some investors just never learning? Not really. Being a dot-com isn’t necessarily bad. Being a money-losing, cash-burning one is. University of Phoenix not only is profitable, it has actually navigated the current economic slump pretty well. University of Phoenix and its parent, Apollo Group, raised its earnings figures for their coming fiscal fourth quarter and year-end 2001 on June 25.”

“Coach Inc., the upscale leather-goods retailer, is the best performer among the so-called Old Economy IPOs, ending Tuesday on the New York Stock Exchange at $38.55, or 141% above its $16 offering price set Oct. 14. Coach has benefited from a demand from new-issues investors for highly recognized brands, and that’s a direct result from the frenzy that took place in IPOs in 1999.”

“Specialty Laboratories Inc. is a clinical testing company, running health tests for hospitals and physicians. As such, it is in the notoriously cyclical health-care-services sector, but the cycle has been working in its favor. The company went public Dec. 7 at $16 a share, and closed Tuesday on the NYSE at $36.50, a 128% gain. Specialty Labs is just one of several strong entries from health-care services, including strong offerings this year from hospital companies Select Medical Corp. and United Surgical Partners Inc. Though July’s calendar for IPOs remains in flux, four of the seven companies scheduled to come to this market are health-care companies.”

“On paper, at least, Verisity Ltd. shouldn’t be doing well. It makes chip-testing equipment. It has been a rough time for chip makers, so one might assume that those companies that feed off the semiconductor names would be suffering as well. Wrong. Verisity is the Class of 2001’s best performer, ending Tuesday on the Big Board at $16.80, or 140% above its $7 offering price. The reason for the strength of Verisity, and a similar company, Simplex Solutions Inc.? Well, even though chip makers are on the slide, cutting costs and staff, they don’t scale back their research and development budgets for competitive reasons. The other reason: price. Both Verisity and Simplex came at a time earlier this year when underwriters were pricing IPOs extraordinarily low. That helped several deals work. They moved away from that trend at the end of the second quarter, pricing deals more aggressively. That helped spawn a string of IPOs that fell below their offering prices in subsequent trading.”