Investors Wary of New Stock Issues. INITIAL PUBLIC OFFERINGS

`THE IPO market is dead in the water,'' says Philip Maher, managing editor of The IPO Reporter, a newsletter. ``It's been a really bad first quarter.'' Initial public offerings (IPOs) are the first public stock offered by a new company. Between January and April of this year, there were only 42 IPOs, valued in total at $3.02 billion.

Were that rate to continue this year, it would be impossible to duplicate last year's total of 280 IPOs, raising $23.4 billion. But even last year's overall numbers, Mr. Maher notes, were down sharply from the recent high of 719 IPOs registered in 1986.

``Investors are just not interested in IPOs right now,'' says William McGrath, president of the New York division of Packard Press Corporation, a financial printer that publishes prospectuses and other documents relating to new public offerings. ``The first quarter of this year was the worst quarter for IPOs since back in 1982.''

IPOs are important, experts here note, both for what they are and for what they say about the capitalist, entrepreneurial economic system in the United States. Many IPOs finance new or young companies. Their abundance reflects the extent to which entrepreneurs are willing to go public and seek funding from individual and institutional investors.

And what the paucity of IPOs is saying about the giant US economy, says Maher, is that ``it is now a tough time to be an entrepreneur.''

IPOs, which have tended to be purchased by individual investors rather than institutional investors, took a beating after the stock market drop in October 1987.

At first, Maher says, investors were reluctant to buy speculative new issues because of fears about the long-range prospects of equities in general. Now, investors are attracted to competing high-yield, relatively short-term, nonstock instruments such as money-market accounts and federally insured bank certificates of deposit.

Many entrepreneurs have used IPOs to ``cash out'' of their companies - that is, they sell their shares (ownership) to the public and leave the company, allowing it to be continued by directors and managers. But, says Maher, given the current difficulty in selling IPOs, entrepreneurs, whether seeking to sell out or obtain the capital for expansion, are having to look elsewhere for money. They sometimes get it from a small group of private investors (a private placement) or from venture-capital firms. In many cases, these new investors require them to stay with their companies.

Another trend has affected IPOs in recent years, says Maher. Scores of major companies, through leveraged buyouts and mergers, have gone private as corporate leaders have discovered that access to capital is not dependent on public offerings and that management gains a greater hand over corporate affairs by not having to answer to pesky stockholders.

Many small, privately capitalized companies need to go public to expand their borrowing ability, says Mr. McGrath. But they can't do so, because they can't sell their stock.

``Many smaller firms are waiting out high interest rates, until such time as the market once again supports IPOs,'' he says.

Most of the IPOs this year have been relatively small in terms of capital raised, says Maher. Indeed, most of the them taking place are by new closed-end investment funds, which, although technically IPOs, are actually mutual funds investing the money raised by the IPO in the stock of other companies. That phenomenon began during 1988. Of last year's total of $23.4 billion raised through IPOs, about $18.5 billion was sold by closed-end funds. The year before the share of closed-end funds was only several billion of the total of $24.2 billion.

One sector seeing considerable IPO activity is ``environmental cleanup firms, such as companies that are aimed at cleaning up asbestos,'' says Maher.

The IPO Reporter, published weekly by Dealers' Digest Inc. of New York, records only actual IPOs, that is, transactions in which an investment banking firm engages in a definite stock underwriting. The investment firm or group of firms first buys the entire issue of stock and then resells these shares to investors. Some more-speculative IPOs are ``best-effort IPOs.'' In this case, the investment banking firm does not take ownership of the new stock issue itself, but does try to sell it to the public. For whatever reason, it sometimes may not be able to sell the entire issue. In that case, the company must take back the unsold stock and try to raise money elsewhere.