IPOX U.S. Indexes lag foreign counterparts as international IPO activity outpaces the U.S. The performance of the IPOX Indexes mirrored the pattern in global IPO activity last week as deal volume abroad surpassed deal flow in the United States. In the IPOX Indexes Universe, while renewed weakness in U.S. small-caps pressured the IPOX 100 U.S. Index (IPXC, IPXO, IPXT), big momentum in specialty deals drove the IPOX Europe Indexes (IXTE, IPND) and IPOX International (IPXI) to multi-year highs. Individual names driving relative and absolute gains in the IPOX Europe (IXTE), e.g., continued to include French engineering services provider SPIE (SPIE FP: +6.04%), 15’ Bayer Spin-off specialty chemicals maker Covestro (1COV GY: +5.63%) or Italian high-end luxury apparels maker Moncler (MONC IM: +4.14%). In the IPOX International (IPXI) – benchmark for the performance of the largest and best performing IPOs and Spin-offs with a domicile outside the U.S. – other big movers included recent Spin-off Chinese restaurant operator Yum China (YUMC US: +14.52%), Chinese social networker ever-volatile Meitu (1357 HK: +8.28%) or Japan transit provider 10/16 IPO Kyushi Railway Group (9142 JP: +3.94%). We also note a fresh all-time high in IPOX Asia-Pacific (IPTA)-tracked “British International School” operator Nord Anglian Education (NORD US: +10.10%). Firms recording downside were mostly U.S. domiciled and linked to Monday’s release of U.S. car sales, such as Camping World (CWH US: -11.20%), auto parts maker Adient (ADNT US: -8.01%) and car producer Fiat Chrysler (FCAU US: -7.41%).
|IPOX Price Returns (%)||Last Week||Q1 2017||2017 YTD|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global (IPGL50)||-0.13||8.33||8.19|
|IPOX International (IPXI)*||0.39||11.49||11.93|
|Exposure: United States|
|IPOX Composite U.S. (IPXC)*||-0.46||9.26||8.76|
|IPOX 100 U.S. (IPXO)*||-0.81||6.12||5.26|
|IPOX 30 U.S. (IPXT)||-0.83||5.90||5.02|
|Exposure: Europe/Nordic Region|
|IPOX Europe (IXTE)||0.80||9.03||9.90|
|IPOX Nordic (IPND)||1.07||3.84||4.95|
|Exposure: Asia-Pacific/China Region|
|IPOX Asia-Pacific (IPTA)||-0.02||8.32||8.29|
|IPOX China C. (IPXUCHCHP)*||0.98||11.44||12.53|
|IPOX China (CNI)||0.80||11.52||12.41|
* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [commodity trading symbol: IPOM7]).
IPOX-linked ETF performance update, AUM rise. Amid continued brisk activity in the global New Listings Market, select IPOX-linked investment products traded mixed last week, but saw a net increase in AUM. The IPOX-linked, 5-star, 10-year old 700.15 million First Trust U.S. Equity Opportunity ETF (FPX) fell to +5.48% YTD, e.g., while the First Trust International IPO ETF (FPXI) rose for yet another week, extending its YTD gain by +0.52% to +13.09% YTD.
Q2 sees surge in global deals, upcoming IPOs. A massive 15 notable global IPOs (non China-A shares) commenced trading last week with the average (median) equally-weighted IPO gaining +5.23% (+0.99%) based on the difference between the final offering price and the week’s close. In the cross-section, while U.S. IPOs continued to be significantly underpriced (average initial return: +16.55%, median: +13.96%), firms abroad left virtually no money on the table (average initial return +1.11%, median: +0.00%). While the valuation consumer lender Elevate Credit (ELVT US: +15.31%) was almost cut in half (!!!) into the IPO, negative sentiment around incumbent ’10 IPO Swift (SWFT US: -2.53%) pressured the IPO of Schneider National (SNDR US: +0.00%). The strong debut in applications software maker Okta (OKUS: +38.29%) underlined indiscriminate demand for specialty deals in the U.S. Ahead of the shortened trading week, 9 sizeable firms debuted in Europe. Focus during the upcoming week shifts back to the U.S., with at least 6 companies from various industries lined up to go public on the NYSE or NASDAQ.
|Traded IPOs (week of 04/03/2017)||Country|
|Actic Group AB||Sweden|
|Banca Farmafactoring SpA||Italy|
|Elevate Credit Inc.||United States|
|Galenica Sante Ltd||Switzerland|
|Gestamp Automocion SA||Spain|
|Hess Midstream Partners LP||United States|
|Isofol Medical AB||Sweden|
|Kunming Dianchi Water Treatment Co Ltd||China|
|Okta Inc.||United States|
|Schneider National Inc||United States|
|SSM Holding AB||Sweden|
|X-Fab Silicon Foundries SE||Belgium|
|Upcoming IPOs (week of 04/10/2017)||Country|
|Cadence BanCorp||United States|
|FM Mattsson Mora||Sweden|
|Netmarble Games Corp||South Korea|
|Netshoes Cayman Ltd||Brazil|
|Oceania Healthcare Ltd||New Zealand|
|Tocagen Inc||United States|
|Yext Inc.||United States|
|Warrior Met Coal LLC||United States|
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.
This article is provided for educational purposes only and is not considered to be a recommendation or endorsement of any trading strategy. The author is not affiliated with Lightspeed Trading and the content and perspective is solely attributed to the author.