IPOs near All-Time Highs

IPOs are one type of all-time high that I've been thinking about lately. Stocks that have recently gone public have no overhead resistance (a key characteristic of big winners), are often in new and growing industries (the "N" in CANSLIM), have the potential to turn into story-stocks (another key). While doing some research on the topic I read this white paper about IPOs by Renaissance Capital LLC. The abstract states:

"investment advisors and academics alike have cautioned investors to avoid the IPO market, insisting that IPOs underperform in the long run and ultimately coining the phrase “IPOs are a loser’s game.”... This paper discredits the notion that “IPOs are a loser’s game” with new data that shows IPOs in fact outperform. ... This white paper also explains  the benefits of incorporating IPOs into the asset allocation strategy and shows that if structured properly, IPOs can add superior risk-adjusted returns to a portfolio. Finally, this treatise explores common misconceptions about IPOs."

The authors give three reasons why IPOs produce excess returns:

1. uncovering future market leaders, 
2. gaining exposure to growing new industry groups, and 
3. identifying these companies before they are added to established indices.

And it goes on to show that an IPO index has substantially outperformed the S&P500 and the Russell 3000 from 2003 to 2009. Moreover, the IPOs have a low correlation with these major indices, similar to what I have observed for all-time highs (especially small-caps that aren't in a big index).

So I did a quick scan on Yahoo Finance and put together this list of the top performing US IPOs over the past 3, 6, and 12 months. There are a couple of breakouts to all-time highs (JKS and PNG) and some decent bases/ trading ranges that could produce a breakout in the future (KRA).