IPOX International extends outsized gains on jump in IPOX Europe, IPOX Asia-Pacific and IPOX China. Non-U.S. domiciled stocks lifted the sentiment in the IPOX Indexes last week, with the IPOX® International extending the YTD gain by +1.22% to +7.19% YTD, a massive +693 bps. ahead of the International Market YTD. The Index – which pools the largest and most liquid non-U.S. domiciled IPOs and Spin-offs into a separately tradable equity sector by applying the IPOX® Indexes Technology – benefited from big gains in Brazilian low-cost airline 04/17 IPO Azul (AZUL US: +10.71%) or China-linked exposure including 10/16 Spin-off consumer staple Yum China (YUMC US: +8.19%) or Financial China International Capital (3908 HK: +4.05%), while Europe-linked IPOX exposure continued to trounce the stagnant benchmarks, driven by strong gains in specialty deals such as 06/16 IPO Dutch Life Insurer ASRL Netherland (ASRLN NL: +7.31%), exchange operator 06/14 IPO Euronext (ENX FP: +6.53%) or Swiss solar panel manufacturer 04/16 IPO VAT Group (VACN SE: +4.28%). Specialty apparel makers 12/13 IPO Moncler (MONC IM: -1.44) and 03/17 IPO Canada Goose (GOOS US: -3.62) fell in tandem to ahead of the spring season.
IPOX® International Investing with the 4-star “FPXI” ETF:
Sentiment in the IPOX U.S. universe was notable mixed las week with the IPOX 100 U.S. dropping -0.20% to +4.53% YTD, lagging the broad U.S. equity market by -75 bps. on the week. Big declines in (perceived) high-growth stocks after earnings and weakness amongst the IPOX heavyweights pressured the portfolio, including online furniture retailer 10/14 IPO Wayfair (W US: -22.84%), social networker 03/17 IPO Snap (SNAP US: -14.54%) or window maker 01/17 IPO Jeld-Wen (JELD US: -9.91%). Strong gains in take-over candidate organic pet food maker 07/15 IPO Blue Buffalo Pet Products (BUFF US: +13.99%), fitness club operator 08/15 IPO Planet Fitness (PLNT US: +13.59%) or IPOX heavyweight 10/15 Spin-off Hewlett Packard Enterprises (HPE US: +10.68%) helped to mitigate the losses on the week. In all, 54/100 IPOX 100 U.S. Index holdings rose on the week, with the average (median) equally weighted portfolio stock dropping (gaining) -0.05% (+0.12%) on the week, ahead of the applied market-cap weighted IPOX 100 U.S.
|IPOX Price Returns (%)||Last Week||2017||2018 YTD|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global (IPGL50)||0.36||28.59||5.61|
|IPOX International (IPXI)*||1.22||37.80||7.19|
|Exposure: United States (USD)|
|IPOX Composite U.S. (IPXC)*||1.43||33.64||6.41|
|IPOX 100 U.S. (IPXO)*||-0.20||26.04||4.53|
|IPOX 30 U.S. (IPXT)||-0.32||26.63||4.03|
|Exposure: Europe/Nordic Region (EUR)|
|IPOX Europe (IXTE)||1.84||19.27||2.53|
|IPOX Nordic (IPND)||-0.15||17.91||1.19|
|Exposure: Asia-Pacific/China Region (USD)|
|IPOX Asia-Pacific (IPTA)||1.32||23.30||3.65|
|IPOX® China Comp. (IPXUCHCP)||3.22||42.57||7.67|
|IPOX China (CNI)||1.97||37.67||11.23|
* 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: IPOH8].
IPOX-linked ETFs mirrored the trend in the underlying indexes last week: For example, the 5-star (10 year) USD billion 1.07 First Trust U.S. Equity Opportunities ETF (FPX) – which tracks the IPOX® 100 U.S. (IPXO) – fell to +4.39% YTD, while the 4-star (3 year) First Trust International IPO ETF (FPXI) – which tracks the IPOX® International (IPXI) – jumped to +7.39% YTD. “FPX” and “FPXI” provide a turnkey portfolio solution to access the “going public” effect associated with IPOs and Spin-offs, often a pure proxy for economic growth and innovation.
IPO Deal-flow Review & Outlook: Light deal flow, no significant IPOs lined up. Only 1 notable (non-China A shares and non-local India) firms debuted last week, adding +12.63% based on the difference between the final offering price and Friday’s close. The London-based GBP million 208.4 alternative lending firm TruFin (TRU LN: +12.63%) climbed based on final offer. While Asian stock markets resumed normal trading hours after the Lunar New Year holiday, the shorten trading month of February led to a light IPO deal flow globally. To close out the month, focus this week is on only one deal, the IPO of Germany’s machine vision technology provider small-cap Stemmer Imaging (S9I GR) with the firm seeking to raise EUR million 93.60.
|Select IPOs traded (week: 02/19/2018)*||Country|
|Select IPOs expected (week: 02/26/2018)*||Country|
|Stemmer Imaging AG||Germany|
* Company operates in Closed-end funds, Country funds-closed-end, Special Purpose Entity, or Specified Purpose Acquisition are excluded.
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.
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