The IPOX® Week, April 30, 2018

  • Most IPOX Indexes record sharp losses, diverge from benchmarks. IPOX Europe (IXTE) extends YTD gain.
  • IPO Deal-flow Review & Outlook: U.S. Tech IPOs rise sharply / Healthcare platform Ping An Good Doctor (1833 HK) in focus.

Most IPOX Indexes record sharp losses, diverge from benchmarks. IPOX Europe (IXTE) extends YTD gain. A jump in equity markets volatility and big trading ranges in U.S. equities amid heightened anxiety over U.S. rates pressured the IPOX Indexes last week, with the IPOX Global Index (IPGL50) – benchmark for the performance of the largest and most liquid global IPOs and Spin-offs by applying the IPOX® Indexes Technology – declining by -1.65% to +2.50% YTD, lagging the global market by a large -137 bps. during the last full trading week of the month. Losses ran steep across the IPOX Regional Indexes Universe: In the U.S., for example, the IPOX 100 U.S. (IPXO) fell -1.94% to +0.92% YTD, while the IPOX Asia-Pacific (IPTA) fell -1.21% to +0.95% YTD and the IPOX China (CNI) shed -1.58% to +7.96% YTD. Significant gains in select exposure following strong earnings left the IPOX Europe (IXTE) as the best performing IPOX Regional Index last week, gaining +0.66% to +3.00% YTD, its best close since February 2nd, 2018.

Individual Stocks in Focus: Amid earnings, returns amongst individual portfolio holdings were widely distributed across the IPOX Portfolios last week. In the IPOX 100 U.S. (IPXO), for example, big gains in Consumer Financial Santander Consumer (SC US: +18.81%) or drug maker AbbVie (ABBV US: +6.62%) were more than offset by large declines in communications equipment maker Casa Systems (CASA US: -24.27%) or cable & satellite services providers Altice USA (ATUS: -10.89%) and Spin-off Liberty Broadband (LBRDA US: -16.02%), while the losses in aluminum producer Spin-off Alcoa (AA US: -14.01%) on trade sanctions contributed to the weak sentiment. In IPOX exposure trading outside the U.S., we note big gains in European utilities including Danish windfarm operator IPOX Europe (IXTE) heavyweight Orsted (ORSTED DC: +6.28%) and German utility Uniper (UN01 GY: +5.74%) on strong earnings, while declines in Norway’s sporting goods distributor XXL (XXL NO: -13.60%) or Netherlands domiciled Philips Lightning (LIGHT NA: -18.00%) and HFT firm Flow Traders (FLOW NA: -11.87%) pressured the respective portfolios. We also note the renewed weakness in some of the China-domiciled biotech exposure with firms including 3SBio (1530 HK: -7.86%) and Wuxi Biologics (2269 HK: -5.36%) adding to recent losses.

IPOX-linked ETFs (FPX, FPXI) follow the weakness in the underlying Indexes. In the U.S. for example, the IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) shed -1.90% to +1.03% YTD. Linked to the IPOX International (IPXI), the First Trust International IPO ETF (FPXI) fell to +3.90% YTD. “FPX” and “FPXI” offer investors a turnkey solution to the “going public” effect associated with the largest U.S. (FPX) and International (FPXI) New Listings, often a pure proxy for economic growth and innovation.

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) -1.65 28.59 2.50
IPOX International (IPXI)* -1.61 37.80 2.49
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* -0.40 33.64 3.09
IPOX 100 U.S. (IPXO)* -1.94 26.04 0.92
IPOX 30 U.S. (IPXT) -1.71 26.63 -0.50
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) 0.66 19.27 3.00
IPOX Nordic (IPND) -0.26 17.91 -1.09
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) -1.21 23.30 0.95
IPOX China (CNI) -1.58 37.67 7.96

* 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: U.S. Tech IPOs rise sharply / Healthcare platform Ping An Good Doctor (1833 HK) in focus. At least 8 notable (non-China A shares and non-local India) firms debuted last week, with the average (median) equally-weighted firm adding a large +34.03% (+33.50%) based on the difference between the final offering price and Friday’s close. The U.S. based tech unicorns e-signature leader DocuSign (DOCU US: +37.00%), software developer Smartsheet (SMAR US: +30.00%), and human capital management platform provider Ceridian (CDAY US: +38.73%) all priced above range and surged based on final offer, while laser manufacturer nLight (LASR US: +56.31%) and insurance provider Goosehead Insurance (GSHD US: +57.50%) also recorded significant initial returns. Focus this week is on the IPO of Ping An Insurance Spin-off, Chinese healthcare platform Ping An Healthcare and Technology (1833 HK), the largest IPO YTD in the Hong Kong market.

Select IPOs traded (week: 04/23/2018) Country
Ceridian HCM Holding Inc  United States
DocuSign Inc  United States
Goosehead Insurance Inc  United States
Hapvida Participacoes e Investimentos SA  Brazil
nLight Inc  United States
Notre Dame Intermedica Participacoes SA  Brazil
Smartsheet Inc  United States
Smiles Inclusive Ltd  Australia
Select IPOs expected (week: 04/30/2018) Country
 Banco Inter SA  Brazil
 Carbon Black Inc  United States
 Ceva Logistics AG  Switzerland
 CI Capital Holding Co SAE  Egypt
 Construction Partners Inc  United States
 Fundamentum Supported Housing REIT PLC  Britain
 Green Organic Dutchman Holdings Ltd/The  Canada
 Inspire Medical Systems Inc  United States
Ping An Healthcare and Technology Co Ltd Canada
Spirit of Texas Bancshares Inc United States
UNITY Biotechnology Inc 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.

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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