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The IPOX® Week, August 28, 2017

  • Key IPOX Indexes have big week as corporate actions, small-cap strength propel IPOX U.S. Indexes anew.
  • IPOX-linked ETFs record strong gains, AUM rise.
  • Global Deal-flow Review and Outlook: No significant accessible deals price, no IPOs scheduled.

Key IPOX Indexes have big week as corporate actions, small-cap strength propel IPOX U.S. Indexes (IPXC, IPXO, IPXT) anew. Select IPOX Indexes surged last week, positively impacted by (perceived) corporate actions as U.S. small-caps (RUT: +1.45%) recovered, the U.S. dollar fell and risk declined (VIX: -20.90%). On the global level, the IPOX Global 50 (IPGL50) – the diversified benchmark for the performance of the largest New Listings in the global regions using the IPOX Indexes Technology – added +1.91% to +21.17% YTD, significantly outpacing the global market for a second week in a row. Within the IPOX Indexes Universe, the IPOX U.S. continued to trade particularly well with the large-cap centric IPOX 30 U.S. (IPXT) closing at a fresh weekly all-time high. While the IPOX Europe (IXTE) fell fractionally last week, we note continued gains in the IPOX International (IPXI), which finished the week at yet another weekly all-time high, adding +1.17% to +31.66% YTD.

IPOX portfolio holdings in focus – IPOX Indexes continue to be on the winning side of (perceived) corporate actions. In the U.S., most focus was on takeover candidate U.S. car maker IPOX heavyweight Fiat Chrysler (FCAU US: +18.14%), while U.S. health care services provider Quintiles IMS (Q US: +7.94%) – bought by IPOX in 2013 – surged on its addition to the S&P 500 (SPX: +0.72%), the key gauge for U.S. stocks. Other firms with notable moves included John Malone’s Liberty Media Formula One (FWONA US: +10.74%) [as it expands content to esports]), base metal maker Spin-off Alcoa (AA US: +9.14% [up on (perceived) activist investor interest], as well as beleaguered U.S. social networker Snap (SNAP US: +5.50% [rising for a second week as usage of Facebook (FB US: -0.65%) amongst younger people is expected to decline]). Friday’s big drop in CA-based application software maker Veeva (VEEV US: -11.58% [on a muted earnings report]) and weakness amongst most consumer staples did little to change to positive overall tone. In non-U.S. domiciled exposure included in the IPOX International (IPXI), e.g., e-commerce platform provider Shopify (SHOP US: +9.68%), HK-traded packaged food maker Dali Foods (3799 HK: +7.45%) and Chinese social media platform operator Weibo (WB US: +7.04%) ranked as the best weekly performers, while a good earnings report by China-linked real estate behemoth China Vanke (2202 HK: +5.28%) helped to offset the negative impact of the big plunge in Chinese social network operator Momo (MOMO US: -18.78% [after earnings]). We note new weekly post-IPO highs in the list of recently issued large IPOs in Europe’s Nordic region, such as Denmark-based payment processor Nets (NETS DC: +4.20%) and Dong Energy (DONG DC: +2.09%), the world’s largest windfarm operator.

IPOX Price Returns (%) Last Week Q2 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 1.91 5.54 21.17
IPOX Global (IPGL30) 1.24 8.07 21.02
IPOX International (IPXI)* 1.17 9.24 31.66
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 1.81 7.44 22.00
IPOX 100 U.S. (IPXO)* 1.79 3.86 11.66
IPOX 30 U.S. (IPXT) 2.09 4.62 13.48
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) -0.19 4.95 18.63
IPOX Nordic (IPND) 0.36 8.64 15.35
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) -0.39 2.99 14.91
IPOX China C. (IPXUCHCHP)* 2.12 10.06 35.58
IPOX China (CNI) 2.28 4.62 26.12

* 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: IPOU7]).

IPOX-linked ETFs record strong gains, AUM rise. The performance of IPOX-linked Exchange-Traded-Funds (ETFs) mirrored the strong gains in the underlying IPOX Indexes last week. For example, the IPOX 100 U.S. (IPXO)-linked First Trust US. Equity Opportunities ETF (FPX) added +1.77% to +12.27% YTD. Launched in April 2006, assets of the five-star (three-year) ETF rose to USD million 853. Further, the younger USD million 21 IPOX International (IPXI)-linked First Trust International IPO ETF (FPXI) extended the YTD gain to +34.96%, setting a fresh weekly all-time high. The “FPX” ETF and “FPXI” ETF provide a diversified granular global solution to investing in the “going public” effect associated with the largest and typically best performing New Listings (IPOs and Spin-offs) domiciled in the U.S. and trading on a U.S. market (“FPX”) and domiciled outside the U.S. trading on an accessible global exchange (“FPXI”).

Global Deal-flow Review and Outlook: No significant accessible deals price, no IPOs scheduled. Amid holidays, no notable accessible global (non-China A shares) firms debuted last week. Ahead of the shortened U.S. trading week-end with U.S. Labor Day marking the end of summer, no significant accessible IPOs are set to debut during this week.

Select IPOs traded (week: August 21, 17) Country
No notable accessible IPOs traded
IPOs set to debut (week: August 28, 17) Country
No notable accessible IPOs scheduled

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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