The IPOX® Week, February 18, 2019

  • S&P 500 (SPX) follows FANG-free diversified IPOX 100 U.S. (ETF: FPX) above key technical level as U.S. rates stay low, China trade deal nears; Nasdaq 100 (NDX) lags.
  • Other IPOX Indexes record big week, too.
  • IPO Deal-flow Review & Outlook: Virgin Trains USA called off the biggest U.S. listing YTD; iconic jeans brand Levi’s filed for IPO. Little deal flow seen this week.

S&P 500 (SPX) follows FANG-free diversified IPOX 100 U.S. (ETF: FPX) above key technical level as U.S. rates stay low, China trade deal nears; Nasdaq 100 (NDX) lags. Ahead of the shortened U.S. trading week, global equities surged on big short covering as the S&P 500 (SPX) – benchmark for U.S. stocks – followed the IPOX 100 U.S. (IPXO) to break through big technical resistance. Amid stable U.S. rates, we note the renewed relative weakness of the Nasdaq 100 (NDX), big driver of 2017 and 2018 U.S. stock market returns. On the week, the IPOX 100 U.S. (ETF: FPX) added +2.85% to +16.46% YTD to record an 8th consecutive week of gains, extending the YTD lead vs. the S&P 500 (SPX) by +42 bps. on the week to a large +574 bps. YTD. Just 11% of the IPOX 100 U.S. (ETF: FPX) portfolio stocks closed in negative territory, with the average (median) equally-weighted holding adding +3.46% (+3.15%), outpacing the applied market-cap weighted IPOX 100 U.S. (ETF) for a 2nd week. Outsized portfolio gains were again driven by big jumps in select small- and mid-caps (after earnings), including biotech 2018 IPO Guardant Health (GH US: +28.16%), specialty chemicals maker Westrock Co. (WRK US: +4.44%) 2016 Spin-off Ingevity (NGVT US: +20.68%) or health care services provider IPOX heavyweight Iqvia (IQV US: +10.13%). Weakness in biotech 2018 IPO Allakos (ALLK US: -13.01%) did little to dent the portfolios positive momentum on the week. Abroad, we note Friday’s news about the buyout of Linkedin competitor Germany’s Scout24 (G24 GY: +12.96%) by U.S. private equity. The firm is member of the IPOX International (ETF: FPXI) and IPOX Europe (ETF: FPXE).

IPOX® 100 U.S. Investing with the “FPX” ETF since 2006

IPOX ETF Performance Updates: The IPOX 100 U.S. (IPXO)-linked, 5-star $1.1 billion First Trust U.S. Equity Opportunities ETF (FPX) added +2.82% to +16.52% YTD, while the IPOX International (IPXI)-linked 5-star First Trust International Equity Opportunities ETF (FPXI) advanced to +11.39% YTD and the IPOX Europe (IPOE)-linked First Trust IPOX® Europe Equity Opportunities ETF (FPXE) rose to +11.40 % YTD.s

IPOX® Indexes Price Returns (%) (RT) Last Weerk 2018 2019 YTD
IPOX® Indexes: Global/International
IPOX® Global (IPGL50) (USD) 2.83 -11.37 13.06
IPOX® International (IPXI)* (USD) 2.45 -13.41 9.93
IPOX® Indexes: United States
IPOX® Comp. U.S. (IPXC)* 3.14 -7.59 14.71
IPOX® 100 U.S. (IPXO)* 2.85 -8.80 16.46
IPOX® 30 U.S. (IPXT) 2.69 -10.28 14.11
IPOX® Indexes: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) 2.92 -13.46 10.52
IPOX® Nordic (IPND) 4.45 -15.45 11.71
IPOX® 100 Europe (IPOE)* (USD) 2.53 -16.60 9.36
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) 0.72 -3.21 2.56
IPOX® China (CNI) (USD) 2.99 -22.83 12.20
IPOX® Japan (IPJP)** (JPY) 0.76 -13.70 2.65

* Basis for ETFs: FPX US, FPX LN, FPXE US, FPXU FP, FPXI US, TCIP110 IT and CME-traded e-mini IPOX® 100 U.S. Futures (IPOH9). ** Live since 07/18. Please contact [email protected] for other IPOX® Indexes.

IPO Deal-flow Review & Outlook: Virgin Trains USA called off the biggest U.S. listing YTD; iconic jeans brand Levi Strauss filed for IPO. Amid the shortened U.S. trading week, little deal flow seen: At least seven firms debuted last week across accessible global regions, with the average (median) equally-weighted firm dropping -4.83% (-0.83%) based on the difference between the final offering price and Friday’s close. Facing a skeptical valuation, Softbank Group (9984 JP: +3.15%)-owned Fortress Investment Group-backed Florida private express passenger railroad operator Virgin Train USA abruptly aborted its scheduled IPO after failing to find enough bids for its shares after lowering its range. Gene-editing agricultural company Cibus and reginal bank BankFlorida also postponed their IPOs last week. Other cash-hungry small-cap biotechs remained on track, yet delivered disappointing initial returns. Abroad, Korean specialty chemical material supplier Chunbo (278280 KS: +23.50%) ranked as the best performer of the week. After a busy week with biotech IPOs raising more than $250 million, we are expecting a quiet week with little deal flow seen. Though the IPO market has been below norm YTD, we not brisk filings activity, including blue jeans inventor, San Francisco-based, family-owned Levi Strauss & Co (LEVI US). The 166-year-old apparel maker was one of the largest IPOs in 1971. Then, the firm priced at $47/share with $47.8 million in gross proceeds, equivalent to ca. $300 million today. In 1985, the firm was taken private in a $1.7 billion leverage buyout at $50/share. The valuation jumped to ca. $14 billion in 1996 based on a $265/share stock buyback plan. We also note the firms dual class share structure.

Select IPOs traded (week: 02/11/2019) Domicile
Chunbo Co Ltd Korea
TCR2 Therapeutics Inc United States
Select IPOs expected (week: 02/18/2019) Domicile
Bmit Technologies PLC Malta

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