The IPOX® Week, April 16, 2018

  • IPOX Indexes record gains ahead of option expiration.
  • IPOX-linked ETFs (FPX, FPXI) Performance Review.
  • IPO Deal-flow Review & Outlook: Subscription software maker Zuora (ZUO US) soars on debut. Healthy deal flow seen across the board.

IPOX Indexes record gains ahead of option expiration. Amid more muted geopolitics and renewed corporate action activity ahead of U.S. option expiration, the IPOX Indexes rose last week with the IPOX 100 U.S. (IPXO) – proxy for the “going public” effect in the largest U.S. New Listings by applying the IPOX® Indexes Technology – adding +2.14% to +1.21% YTD on the week, +15 bps. ahead of the S&P 500 (SPX), proxy for U.S. stocks. In individual stocks, we note another takeover amongst the IPOX 100 U.S. (IPXO) Portfolio Holdings: After IPOX Holdings Biotech Bioverativ (Sanofi), luxury pet food maker Blue Buffalo (General Mills) or softmaker maker MuleSoft (CRM), cash rich mega-cap large pharma Novartis is set to acquire IL-based biotech Avexis (AVXS US: +82.16%) at a large premium. Other IPOX Holdings with significant upside focus during the week included Spin-off aluminum producer Alcoa (AA US: +14.38%), Australian software maker Atlassian (TEAM US: +10.37%) or German semiconductor maker Siltronic (WAF GY: +10.15%), while losses in Russia’s biggest gold producer Polyus (PLZL LI: -23.94%) after foreign sanctions in China-linked healthcare and biotech stocks including China Resources Pharma (3320 HK: -11.92%) or Shanghai Fosun Pharma (2196 HK: -8.72%) after the recent big run-up weighted on the performance of the respective portfolios.

IPOX-linked ETF (FPX, FPXI) performance review. Linked to the IPOX® 100 U.S., the USD billion 1.07, 5-star (10-year) First Trust U.S. Equity Opportunities ETF (FPX) rose to +1.38% YTD, while the 4-start (3-year) First Trust International IPO ETF (FPXI) added to +4.01% YTD. “FPX” and “FPXI” offer investors a turnkey solution to the “going public” effect of the largest U.S. (FPX) and International (FPXI) New Listings, often a pure proxy for economic growth and innovation.

IPOX® 100 U.S. – Investing with the “FPX” ETF since 2006:

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) 1.03 28.59 3.07
IPOX International (IPXI)* 0.28 37.80 3.43
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* 2.45 33.64 2.22
IPOX 100 U.S. (IPXO)* 2.14 26.04 1.21
IPOX 30 U.S. (IPXT) 1.63 26.63 -0.18
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) 1.12 19.27 1.91
IPOX Nordic (IPND) 0.16 17.91 -3.86
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) 0.90 23.30 2.36
IPOX China (CNI) -0.06 37.67 10.27

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME listed e-mini IPOX® 100 U.S. Index Futures [Symbol: IPOM8].

IPO Deal-flow Review & Outlook: Another tech unicorn subscription-management platform provider Zuora (ZUO US) soars on debut. Healthy deal flow seen across the board. Only 2 notable (non-China A shares and non-local India) firms debuted last week, with the average equally-weighted firm increased by +48.13% based on the difference between the final offering price and Friday’s close. Upsized cloud-based subscription software maker Zuora (ZUO US: +47.14%) soared in its priced-above-range IPO. The success of Zuora, together with the recent public offerings of Dropbox (DBX US) and Spotify (SPOT US) underlines strength of Tech IPOs. Indonesian special chemical maker Tridomain Performance Materials (TDPM IJ: +49.12%) also surged after debut. Significant deals set to commence trading this week include AT&T’s (T US) DirecTV Latin America Unit Vrio Corp (VRIO US), graphite electrode maker GrafTech International (EAF US) – the largest IPO in the steel sector in a decade and Dell Technologies’ (DVMT US) cloud-native platform provider Pivotal Software (PVTL US).

Select IPOs traded (week: 04/09/2018) Country
Tridomain Performance Materials PT  Indonesia
Zuora Inc  U.S.A.
Select IPOs expected (week: 04/16/2018) Country
 FirstCaribbean International Bank Ltd  Barbados
 GraTech International Ltd  U.S.A.
 Jupiter Mines Ltd  Australia
 Level One Bancorp Inc  U.S.A.
Mereo Biopharma Group PLC Britain
MorphoSys AG Germany
Pivotal Software Inc U.S.A.
Qualitas Medical Ltd Malaysia
Serviceware SE Germany
SLB Development Ltd Singapore
Surface Oncology Inc U.S.A.
Vrio Corp U.S.A.

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.

Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services provided by any of the above service providers and any service used to execute any trading strategies are solely based on the independent analysis of the user.

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