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SCORECARD - Grading the IPO Underwriters

The most active underwriters of initial public offerings don't always bring to market the best-performing deals for investors.

Going public may just be the most important -- and nerve-racking -- decision any company will make. Managing and pricing an IPO is tricky, so picking the right underwriter is crucial. Bankers often boast of their league table prowess to win mandates, but quantity doesn't necessarily mean quality. Consider the ten firms that earned the most fees from debut offerings in 2006. Ranking them by how their deals fared in aftermarket performance tells another story. Citigroup earned the second-greatest share of underwriting fees, but its deals, on average, have returned just 19.3 percent since being freed to trade, ranking it last in the group. Conversely, some firms whose deals have performed well -- like Bear Stearns, ranked second in aftermarket performance -- aren't doing as many IPOs as their rivals. Then there's Goldman Sachs, showing why it's the class of Wall Street: It finished first for both quantity and quality.