IPOX Indexes Lag During Option Expiration

  • IPOX Indexes lag during option expiration.
  • Significant deal flow set to commence trading, US/European IPOs in focus.

IPOX Indexes lag during option expiration. The IPOX Indexes traded lackluster for a second week in a row across global regions, reflective of continued sideways trading in the global benchmarks. In the U.S., for example, the IPOX 100 U.S. (IPXO), benchmark for the performance of the largest IPOs and Spin-offs in the United States and underlying index for the USD million 573 First Trust U.S. IPO ETF (ticker: FPX), fell -0.17% to -1.82% YTD, lagging the benchmarks. Sentimnet was similar across the other global regions, with the IPOX Europe Indexes (IXTE, IPND) and IPOX APAC Indexes (IPTA, CNI) all underperforming the benchmarks. Relative weakness was mostly driven by declines in select IPOX Spin-offs, including IL-based drug maker Abbvie (ABBV: -3.73%), consumer staple Kraft Heinz (KHC US: -3.18%) or payment processor Pay Pal (PYPL US: -4.94%), while in Europe, weak earnings and the big impact of the shift in text messaging to Facebook/WhatsApp hit telecom carrier Telefonica Deutschland (O2D GY: -9.05%).

IPOX-linked First Trust U.S. IPO ETF (FPX) since 2006:

Most upside was recorded by small-caps in the IPOX universe, including medical equipment maker Catalent (CTLT US: +20.13%), industrial Keysight Technologies (KEYS US: +15.24%) or synthetic biotech services provider Intrexon (XON US: +15.20%).

Significant deal flow set to commence trading, US/European IPOs in focus. The performance of the median equally-weighted IPOs was just slightly positive last week (+1.20%), as the week’s largest deal (MUST SP) fell below offer on its trading debut. Ahead of a shortened US trading week, substantial deal flow is lined up for the week of May 23rd. In the US, focus is on the US billion 1 IPO of food services provider US Foods Holding (USFD US), the P/E-backed IPO since payment processor First Data (FDC US: +4.20%) went public in October 2015. Other no-table firms set to commence trading in the US include payment processor Cotiviti Holdings (COTV US), industrial Gypsum Supply and Management (GMS US) and IL-based Midland States Bancorp (MSBI US), as well as two more healthcare deals (CLSD US, RETA US). Ahead of the Brexit vote, the IPO calendar is also building in Europe, with firms including industrial Philips Lighting (LIGHT NA) and Paris-based e-commerce firm Maison du Monde (MDM FP) lined up to debut on the stock market.

IPOX Returns (%) (P) Week 2015 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) -1.01 0.99 -6.44
IPOX Intern. (IPXI)* -0.43 -5.85 -6.50
Exposure: United States (USD)
IPOX US Comp. (IPXC) 0.35 -3.90 -2.17
IPOX 100 U.S. (IPXO)* -0.17 1.57 -1.82
IPOX 30 U.S. (IPXT) -0.54 4.91 -1.51
Exposure: Europe (EUR)
IPOX Europe (IXTE) -0.14 14.41 -8.10
IPOX Nordic (IPND) 0.05 23.88 -3.96
Exposure: Asia-Pacific (Developed) (USD)
IPOX Asia-Pacific (IPTA) -1.35 -2.32 -1.19
Exposure: China (USD) (x A-Shares)
IPOX China (CNI) -0.39 -9.10 -15.07

*Basis for Exchange-Traded Products (ETPs)

IPOs (week of May 16): Ticker Return (%)
Grupo Supervielle SA SUPV US 5.64
Manulife US REIT MUST SP -4.82
Merus BV MRUS US 1.00
PhaseRx Inc PZRX US 1.20
Pulse Biosciences Inc PLSE US 3.75
TEM Holdings Ltd 8346 HK 360.38
Yadea Group Holdings Ltd 1585 HK -0.58
IPOs (week of May 23): Ticker Sector
Clearside Biomedical Inc CLSD US Health Care
Cotiviti Holdings Inc COTV US Info Technology
GMS Inc GMS US Industrials
Maisons du Monde SA MDM FP Info Technology
Midland States Bancorp Inc MSBI US Financials
Philips Lighting NewCo BV LIGHT NA Industrials
Reata Pharmaceuticals Inc RETA US Health Care
US Foods Holding Corp USFD US Con. Staples

Josef Schuster is the founder of IPOX Schuster LLC (www.ipoxschuster.com), a Chicago-based Financial Services company specialized in Financial Products Design related to Initial Public Offerings and corporate Spin-offs. He is the chief architect of the IPOX Indexes, a global index group initiated in 2004 that encompasses an index technology allowing for asset-allocation focused exposure to the “going public” effect associated with global IPOs and Spin-offs. Mr. Schuster earned his Bachelor of Arts degree in Business Administration in 1994 from the European Business School, London. Mr. Schuster was also awarded a MSc in Accounting and Finance in August 1996 and a MPhil / PhD in Accounting and Finance in June 2003 from the London School of Economics.

ABOUT THE IPOX INDEXES: Through the range of the IPOX Indexes, market participants have an innovative opportunity to navigate the global IPO and Spin-off market and to track the performance of this economically significant sector more accurately and comprehensively than with any other index group. The IPOX Indexes accomplish the systematic indexation of the aftermarket performance of the IPO and Spin-off sector, while – at the same time – preserving the benefits of diversification. Linked to the IPOX 100 U.S. Index, for example, IPOX-linked investment products available to investors include the pioneering USD million 600, 5-star First Trust U.S. IPO ETF (ticker: FPX). On February 18, 2016, CME Group, the world’s largest exchange operator, launched e-mini IPOX 100 U.S. Index Futures, offering market participants for the first time a tool to manage the aggregate risk associated with U.S. IPOs and Spin-offs.

Disclosure: the author has no position in the stocks mentioned.

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