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Mayflower Advisors’ Larry Glazer sees trouble lurking in the market as more tech names get ready to go public.
Glazer, who manages assets of $3.5 billion, believes the rush of new stock offerings is masking near-term challenges and suggests the smart money is running for the exits.
“It’s a bit concerning for investors. In particular, it’s an ominous sign for the rest of technology,” he said Tuesday on CNBC’s “Futures Now.” “These are largely technology companies. They have limited profitability — the size and the scale of which are enormous.”
He’s referring to Lyft, the ride-sharing company, which is down about 12 percent from its market debut on Friday. Its competitor Uber is expected to launch its IPO roadshow this month. Plus, Pinterest is also planning to start trading.
“This is about the pipeline of deals that are coming to the market, many of which are really exciting companies,” Glazer said. “That’s actually the problem because it comes at the expense of existing technology companies that are matured, that are already in portfolio managers’ hands, that have to be sold. … So, that massive supply may overwhelm the market.”
He also suggests the timing is poor for these IPOs to come all at once. He notes they’re hitting Wall Street as earnings slow down, valuations get richer and investor sentiment rises from the first quarter.
“We want to be a little bit more patient,” he said. “We don’t want to have a myopic view and just focus on one sector,” he said.
Glazer has been urging investors to resist big tech since last year. On “Futures Now” last September, he was worried that too many investors were in the wrong trade. By December, tech was getting crushed.
“Tech was the laggard in the Q4,” he noted. “Now it’s the leadership area.”
Despite his warning, Glazer isn’t negative on the year and sees pockets of opportunities in other groups — namely financials, energy and emerging markets.
“Look overseas if a China trade deal is made,” Glazer said. “There’s a lot of opportunity. The economy has certainly got room here.”
