The IPOX® Week, August 08, 2016

  • IPOX-linked ETFs in Focus: FPX, FPXI.
  • IPOX Indexes record massive relative gains across global regions on strong earnings.
  • IPOs debut with initial gains. Few deals lined up.

IPOX-linked ETFs in focus: FPX, FPXI. Linked to the IPOX 100 U.S. Index (IPXO) and the IPOX International Index (IPXI), both the First Trust U.S. IPO ETF (FPX) and the First Trust International IPO ETF (FPXI) recorded outsized gains last week: The 5-star USD million 590 FPX rose +1.18% to +5.93% YTD, while FPXI added +1.35% to -1.79% YTD.

IPOX Returns (%) (P) Week 2015 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 0.76 0.99 -2.11
IPOX Global 30 (IPGL30) 1.18 -0.96 1.15
IPOX Intern. (IPXI)* 0.69 -5.85 -3.07
Exposure: United States (USD)
IPOX US Comp. (IPXC) 1.51 -3.90 5.96
IPOX 100 U.S. (IPXO)* 1.29 1.57 5.54
IPOX 30 U.S. (IPXT) 1.46 4.91 6.51
Exposure: Europe (EUR)
IPOX Europe (IXTE) 0.98 14.41 -7.78
IPOX Nordic (IPND) 0.83 23.88 0.40
Exposure: Asia-Pacific (Developed) (USD)
IPOX Asia-Pacific (IPTA) -0.56 -2.32 2.61
Exposure: China (USD) (x A-Shares)
IPOX China (CNI) 2.27 -9.10 -10.53

*Basis for Exchange-Traded Products (ETPs)
IPOX Indexes record massive relative gains across global regions on strong earnings. The IPOX Indexes extended gains from the previous weeks with select indexes recording a massive relative performance jump. In the U.S., e.g., the diversified IPOX 100 U.S. (IPXO) surged +1.29% to +5.54% YTD, well ahead of the market, while the narrower and more large-cap centric IPOX 30 U.S. (IPXT) reached a fresh all-time high. Big relative gains extended to Europe: While benchmarks fell, the IPOX Europe (IXTE) recorded solid gains. Moreover, Nordic IPOs and Spin-offs as modelled by IPOX remained one of Europe’s best performing relative performance strategies, with the IPOX Nordic (IPND) extending the YTD gain to +0.40%, a massive +975 bps. YTD ahead of the Nordic market. Relative strength extended to both the IPOX Asia-Pacific (IPTA) and the IPOX China (CNI). In the U.S., select hard-hit exposure rose most following more solid earnings and/or short covering including fitness devices maker Fitbit (FIT US: +12.74%), payment processors Square (SQ US: +10.72%) and First Data (FDC US: +6.13%), or social networker Twitter (TWTR US: +9.74%). Upside momentum was also driven by relative strength in select IPOX heavyweights including Buffett-backed Tim Hortons/Burger King tie-up Restaurant Brands (QSR US: +4.38%), consumer staple Kraft Heinz (KHC US: +2.78%), spin-off Hewlett Packard Enterprises (HPE US: +4.23%) or drug maker Shire (SHPG US: +3.48%). Other firms extending recent (perceived corporate action driven) gains included London-based food delivery service Just East (JE/ LN: +7.64%) closing at a fresh post-IPO high or IPOX heavyweight takeover candidate real estate developer China Vanke (2202 HK: +6.18%). Companies recording big losses after earnings included IPOX Asia-Pacific (IPTA) heavyweight beverage maker Suntory (2587 JP: -6.70%), U.S. travel website operator TripAdvisor (TRIP US: -13.09%) or travel technology solutions provider Sabre (SABR US: -7.55%).

IPOs (week of Aug. 1): Ticker Return (%)
At Home Group Inc HOME US 2.07
Atomera Inc ATMR US 7.73
Dining Concepts Holdings Ltd 8056 HK 851.11
First Hawaiian Inc FHB US 8.00
Gemphire Therapeutics Inc GEMP US -8.00
Mitsui Fudosan Logistics Park 3471 JP 6.48
Viva Energy REIT VVR AU 15.45

IPOs debut with initial gains. Few deals lined up. At least 7 significant accessible firms (excluding Chinese A-Shares and domestic India) commenced trading last week with the median IPO gaining +7.73% based on the difference between the final offering price and the week’s close. All large deals rose based on offer, including respective REITs going public in Asia-Pacific (3471 JP, VVR AU). In the U.S., most focus was on the USD million 485 IPO of BNP Spin-off Nasdaq-listed First Hawaiian (FHB US), the largest Financial institution in the State of Hawaii. Most interest received the Hong Kong IPO of small/mid-cap Dining Concepts (8056 HK), which rose +851.11% above offer. The firms owns and operates under licenses certain specialty restaurants in Hong Kong, including Le Pain Quotidien. The USD million 161 IPO of Medical Labs & Testing Services provider Medpace Holdings (MEDP US) is the most sizeable deal scheduled for the week of Aug. 8th in the U.S., while food supplement retailer Ausupreme International (2031 HK) and restaurant group Royal Catering Group (8300 HK) add to the long list of micro- and small-cap IPOs in Hong Kong.

IPOs (week of Aug. 8): Ticker Sector
Ausupreme International 2031 HK C. Discretionary
Medpace Holdings Inc MEDP US Health Care
Motif Bio PLC MTFB US Health Care
Protagonist Therapeutics Inc PTGX US Health Care
Royal Catering Group 8300 HK C. Staples

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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