Looking under the hood of index performance, this next chart shows the percentage of index companies that were priced up, down, or flat for the quarter.
What's interesting in this recent quarter is that we still don't see an overwhelmingly strong performance from all companies underlying the index. On the one hand, the percentage of companies with negative returns did continue to decline. Only 41% of index companies had price declines in the quarter, and this was the lowest percentage since Q4 2021. However, the percentage of companies with positive index performance actually dropped a little in Q3 versus Q2 as well. Only 25% of companies were priced up.
So, what's the story here? In short, average positive performances outpaced average negative returns. Winners won more than losers lost. This showed up in a variety of ways, not exclusively in secondary market pricing. It also showed up in the form of some successful exits. Klaviyo and Instacart were both in the index holdings before going public. Klaviyo in particular generated a positive 82% performance from its last private price to its first public closing price.
Q3 was an interesting one for the competing forces of: one, a trend in improving markets; and two, a recent return of some caution toward the end of the quarter.
Looking first at the trends in trade premium discounts, after ending Q2 with a median spread of minus 52%, in Q3, premium discounts bounced around.
Hitting first, a recent high of minus 50% discount in August, before falling again in September to a discount of minus 63%. In July and August, we also saw premium discount improvements at the 75th and 90th percentiles, as companies at the 90th percentile even traded at a 51% premium in August before falling again in September to end the quarter at a 20% discount.
While there's invariably some noise in those metrics, one of the things that was clearly shown in these numbers is the tail of those two quarters. First, some strength followed by the return of some caution.
Turning to our indications of interests or IOIs data, what we saw was directionally similar to what we saw in trade premium discounts. But the IOI data perhaps puts an emphasis on caution rather than fear when looking at the September market.
Where bid/ask spreads had briefly hit a high of 30% in April of this year, by the end of Q2, they dropped to a more modest 18% and that downward trend continued in Q3. In August, they hit a recent low at 12% before moving up modestly to end the quarter at 15%. This put the spread just slightly above the historical average spread of 14%. Once again, a sign of caution, but hardly fear.
The last data point I'll touch on as it regards to trading activity is our Right of First refusal or ROFR data.
Here we saw signs of continued strength as the percentage of companies with insider buying remained elevated in Q2, following a similarly strong Q1. On 22% of companies traded in Q2, the Right of First Refusal was executed, and company insiders purchased the shares from the seller at the previously agreed upon trade price.