The IPOX® Week, August 01, 2016

  • IPOX Indexes build on big gains across global regions, outperform markets. IPOX International (IPXI) in focus.
  • Most global deals price and record solid initial gains. More IPOs lined up with IPOs in the U.S. in focus.

IPOX Indexes build on big gains across global regions, outperform markets anew. IPOX International in focus. The IPOX Indexes extended the string of gains from the previous weeks across most of the IPOX Indexes universe last week. As currency markets continued to gyrate with USD/JPY recording record swings, most upside focus was on the IPOX International Index (IPXI). The underlying for the Nasdaq-listed First Trust International IPO Fund (FPXI) surged +2.88% on a big re-bound in the string of recently listed Japanese privatization IPOs. Amid earnings season, strength extended across the IPOX Regional Indexes universe. In the U.S., e.g., the IPOX 100 U.S. (IPXO) – underlying for the 5-star USD million 585 First Trust U.S. IPO ETF (FPX) – rose +0.48% to +4.19% YTD, surpassing the S&P 500 (SPX) by +55 bps. Relative strength extended to the European market, with the IPOX Europe (IXTE) gaining +1.71%, having now almost recovered all of the big Brexit-linked relative selling. While the IPOX China (CNI) fell less than the market, gains were also recorded by the IPOX Nordic (IPND) and IPOX Developed Asia-Pacific (IPTA). Stocks with most upside in the liquid IPOX Regional Indexes Portfolios included China consumer finance play 12/2015 IPO Yirendai (YRD US: +19.53%), British online food ordering service Just Eat (JE/ LN: +13.34%), optical products supplier Lumentum Holdings (LITE US: +10.04%) or online household goods retailer Wayfair (W US: +9.00%). We note solid gains in IL-based IPOX heavyweights drug maker Abbvie (ABBV US: +3.79%) and US social networker Facebook (FB US: +2.43%) after earnings, while IPOX International (IPXI) heavyweight real estate developer China Vanke (2202 HK: +8.81%) jumped after takeover rumors resurfaced. Decliners after earnings included U.S. social networker Twitter (TWTR US: -9.42%), payment processors Vantiv (VNTV US: -7.84%) and Transunion (TRU US: -7.65%) or Japanese Gaming platform operator 12/2012 IPO Colopl (3668 JP: -20.56%).

IPOX Returns (%) (P) Week 2015 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 1.17 0.99 -2.81
IPOX Global 30 (IPGL30) 1.51 -0.96 0.03
IPOX Intern. (IPXI)* 2.88 -5.85 -3.67
Exposure: United States (USD)
IPOX US Comp. (IPXC) 0.09 -3.90 4.39
IPOX 100 U.S. (IPXO)* 0.48 1.57 4.19
IPOX 30 U.S. (IPXT) 0.65 4.91 4.98
Exposure: Europe (EUR)
IPOX Europe (IXTE) 1.65 14.41 -8.73
IPOX Nordic (IPND) 0.10 23.88 -0.42
Exposure: Asia-Pacific (Developed) (USD)
IPOX Asia-Pacific (IPTA) 2.41 -2.32 3.35
Exposure: China (USD) (x A-Shares)
IPOX China (CNI) -0.44 -9.10 -12.50

*Basis for Exchange-Traded Products (ETPs)
Most global deals price and record solid initial gains. More IPOs lined up with IPOs in the U.S. in focus. At least 7 significant accessible (non-Chinese A-Shares) firms commenced trading last week with the average (median) equally-weighted IPO gaining +5.63% (+7.82%) based on the difference between the final offering price and the week’s close. Italy’s air traffic control operator Enav SpA (ENAV IM) counted as the week’s most significant deal, raising EUR 759 million in the largest IPO in Italy YTD. Amongst the deals going public in the U.S., most upside was recorded by French data analytics firm Talend (TLND US). Amid the big shake-out in U.S. biotech IPOs with 09/14 IPO Tokai Pharma (TKAI US: -76.18%), 06/15 IPO Seres Pharma (MCRB US: -68.26%) or 08/13 IPO Tobira Therapeutics (TBRA US: -61.69%) plunging during the week, biotech Kadmon Holdings (KDMN US: -25.42%) debuted poorly on the NSYE. Focus during the upcoming week remains on deals taking place in the U.S., including the USD million 485 IPO of BNP Spin-off First Hawaiian (FHB US), the largest Financial institution in the State of Hawaii. Other deals include P/E-backed Texas-based home furnishing retailer At Home Group (HOME US), which seeks to raise USD million 116 for ca. 15% of the firm. Proceeds of the profitable firm are earmarked to repay indebtedness under a second lien facility. Japan’s Mitsui Fudosan Logistics Park (3471 JP) and Australia’s Viva Energy (VVR AU) are set to extend to long list of recent IPOs in the global REIT IPO sector.

IPOs (week of July 25): Ticker Return (%)
EC World Real Estate ECWREIT SP 0.00
Enav SpA ENAV IM 7.82
Kadmon Holdings Inc KDMN US -25.42
Kinsale Capital Group Inc KNSL US 14.19
Marimo Regional Revitalization 3470 JP -11.41
Tactile Systems Technology TCMD US 12.60
Talend SA TLND US 41.67
IPOs (week of Aug 01): Ticker Sector
At Home Group Inc HOME US Cons. Discr.
Dining Concepts Holdings 8056 HK Cons. Discr.
First Hawaiian Inc FHB US Financials
Mitsui Fudosan Logistics Pk. 3471 JP Financials
Motif Bio PLC MTFB US Health Care
Viva Energy REIT Ltd VVR AU Financials

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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