The IPOX® Week, April 24, 2017

  • IPOX 100 U.S. Index (IPXO) records strong gain, set to start new trading week at all-time high.
  • IPOX International (IPXI) Index gains for 3rd week.
  • Significant deal flow lined up, largest deal outside U.S.

IPOX 100 U.S. (IPXO) records strong gain, set to start new trading week at all-time high. The IPOX 100 U.S. Index (IPXO) bounced after two weeks of declines and finished option expiration week near an all-time high, gaining +1.69% to +6.06% YTD, +84 bps. more than the S&P 500 Index (SPX), gauge for U.S. large-caps. Amid earnings and rising U.S. small-caps, the relative strength was driven by big gains in small- and mid-caps with a focus on recently added investment banking firm Moelis & Co. (MC US: +10.47%) and Advancepierre Foods (APFH US: +8.95%), as well as airline technology provider Sabre Co. (SABR US: +9.54%) or heavily weighted U.S. banking group Citizens Financial Group (CFG US: +4.99%). Amid weakness in energy stocks, laggards included oil and natural gas explorer RSP Permian (RSPP US: -6.19%), refiner Murphy USA (MUSA US: -5.87%) or Parsley Energy (PE US: -4.14%). In all, 86/101 portfolio holdings rose, with the average (median) equally-weighted holding gaining +2.32% (+2.49%) on the week, more than the market-cap weighted IPOX 100 U.S. Index (IPXO).

IPOX International (IPXI) gains for 3rd week. The IPOX International Index (IPXI), which provides access to the ‘going public’ effect associated with the largest 50 New Listings over the past 4-years domiciled outside the United States (currently representing USD billion 952 of total market-cap), extended its big performance run for yet another week and gained +0.78% to +13.33% YTD. The portfolio benefited from big gains in e-commerce and social media firms domiciled outside the U.S. including Shopify (SHOP US: +8.14%), JD.com (+5.79%), Weibo (WB US: +5.40%) or Alibaba (BABA US: +2.63%).

IPOX Price Returns (%) Last Week Q1 2017 2017 YTD
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 0.92 8.33 8.90
IPOX International (IPXI)* 0.78 11.49 13.33
Exposure: United States
IPOX Composite U.S. (IPXC)* 1.32 9.26 9.79
IPOX 100 U.S. (IPXO)* 1.69 6.12 6.06
IPOX 30 U.S. (IPXT) 1.80 5.90 5.97
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) -0.82 9.03 9.31
IPOX Nordic (IPND) -0.45 3.84 6.37
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) -0.12 8.32 8.60
IPOX China C. (IPXUCHCHP)* 0.85 11.44 13.61
IPOX China (CNI) 0.26 11.52 12.60

* 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 ETFs rose last week: The IPOX 100 U.S. Index-(IPXO)-linked, 5-star, 718 million First Trust U.S. Equity Opportunities ETF (FPX) rose to +6.39% YTD, while the First Trust International IPO ETF (FPXI) gained to +14.22% YTD.

ipox-april-24

Significant deal flow lined up, largest deal outside the U.S. Three notable IPOs commenced trading during the shortened European/Asian trading week, with the average (median) equally-weighted firm gaining +20.98% (+0.14%) based on the difference between the final offering price and the week’s close. Significant deal flow is lined up for the upcoming week, with 7 firms across industries set to go public in the U.S. including U.S. domiciled Carvana (CVNA US), an operator of an online platform for buying used cars, infrastructure software maker Cloudera (CLDR US), business trade show operator Emerald Expositions Events (EEX US), flooring retailer FDO Holdings (FND US) or NCS Multistage Holdings (NCSM US), an engineering services provider to the energy industry. The largest deal, however, is the IPO of Seoul, Korea, based- and traded gaming software maker and distributor Netmarbles Games Corporation (251270 KS) which raised USD billion 2.3 IPO at the top of the range.

Traded IPOs (week of 04/17/2017) Country
China New Higher Education Group Ltd China
PCSB Financial Corp United States
Select Energy Services Inc United States
Upcoming IPOs (week of 04/24/2017) Country
Carvana Co. United States
China Rapid Finance Ltd. China
Cloudera Inc. United States
Emerald Expositions Events Inc. United States
FDO Holdings Inc. United States
Netmarble Games Corp South Korea
NCS Multistage Holdings Inc. United States
Oceania Healthcare Ltd New Zealand
Verona Pharma PLC Great Britain
Zymeworks Inc. Canada

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.

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