The IPOX® Week, January 07, 2019

  • Most IPOX Indexes rise during first week of trading in the New Year. IPOX 100 U.S. (IPXO) extends strong showing since expiration.
  • IPOX Factoid of the Week: U.S. domiciled IPOs leave USD billion 5.9 “on the table” by underpricing in 2018.
  • IPO Deal-flow Review & Outlook: Seasonally weak month expected; U.S. government shutdown.

Most IPOX Indexes rise during first week of trading in the New Year. IPOX 100 U.S. (IPXO) extends strong showing since expiration. Amid strong U.S. economic numbers, Chinese central bank action and smoother words from the Fed, the IPOX Indexes finished another week of big swings with significant gains. In the U.S., e.g., the IPOX 100 U.S. (IPXO) – yardstick for U.S. IPO, IPO M&A and Spin-off performance – extended the strong showing since December Futures and Options expiration week, adding +2.34% last week, +48 bps. more than when compared to the S&P 500 (SPX), benchmark for U.S. large-caps. Here, 73/100 firms closed the week in positive territory, with the average (median) equally-weighted portfolio holding adding +2.07% (+2.16%), lagging the applied market-cap weighted IPOX 100 U.S. (IPXO). Significantly oversold firms led the strong showing, including IT services provider Spin-off Perspecta (PRSP US: +11.15%), applications software maker Pluralsight (PS US: +9.72%) or security services provider ADT (ADT US: +9.17%). We note another good week for IPOX heavyweight IPO/Spin-off M&A drug maker Baxalta Spin-off owner Shire (SHPG US: +3.64%) ahead of its takeover by Japan’s Takeda (TAK US), effective Monday, January 7, 2019. Solid returns extended to other IPOX Indexes, including the IPOX Europe (IXTE, IPOE) and IPOX Asia-Pacific (IPTA) which all enjoyed a strong start to the New Year.

IPOX® 100 U.S. Investing with the ‘FPX’ ETF since 2006

Select IPOX-linked product performance: The IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) rose +2.30% to +1.24% YTD, while the IPOX International (IPXI)-linked “FPXI” and IPOX Europe (IPOE)-linked “FPXE” ETF also enjoyed a strong start to the New Year, respectively. Amongst the range of long-only actively managed IPOX-linked funds, the Catalyst IPOX® Allocation Fund (OIPAX) added +2.54% to +1.30% YTD last week.

IPOX® Indexes Price Returns (%) (RT) 2017 2018 Last Week
IPOX® Indexes: Global/International
IPOX® Global (IPGL50) (USD) 28.59 -11.37 1.58
IPOX® International (IPXI)* (USD) 37.80 -13.41 1.30
IPOX® Indexes: United States
IPOX® Comp. U.S. (IPXC)* 33.64 -7.59 2.85
IPOX® 100 U.S. (IPXO)* 26.04 -8.80 2.34
IPOX® 30 U.S. (IPXT) 26.63 -10.28 2.00
IPOX® Indexes: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) 19.27 -13.46 2.30
IPOX® Nordic (IPND) (EUR) 17.91 -15.45 2.67
IPOX® 100 Europe (IPOE)* (USD) 41.77 -16.60 1.49
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) 23.30 -3.21 1.26
IPOX® Comp. China (IPXCUCHP) (USD) 42.57 -23.78 0.35
IPOX® China (CNI) (USD) 37.67 -22.83 -1.37
IPOX® Japan (IPJP)** (JPY) 15.32 -13.70 -0.02

* 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 (IPOZ8). ** Live since 07/18. Please contact [email protected]  for other IPOX® Indexes (EOD).

IPOX Factoid of the Week: U.S. domiciled firms leave USD billion 5.9 “on the table” by underpricing their IPOs during 2018. 139 U.S. domiciled firms went public in the U.S. last year, raising a combined USD billion 32.1 from investors and adding USD billion 177.6 in total market capitalization to U.S. exchanges, with the average (median) equally-weighted firm adding +18.09% (+8.20%) based on the difference between the final offerings price and the first close. With the average (median) firm selling 23.14% (21.45%) of total equity, just 22% of firms closed the first day below final offer. Based on the initial number of shares sold, issuers of U.S. domiciled firms left a combined USD billion 5.9 “on the table” by underpricing their offerings in 2018. Some issuers, however, priced their IPOs at the expense of their initial investors which in some cases was also followed by subsequent poor aftermarket returns, including security services provider ADT (ADT US: -57.07% based on IPO price), low-float biotech Moderna (MRNA US: -33.83%) or Gates Industrial (GTES US: -30.32%).

IPO Deal-flow Review & Outlook: Seasonally weak month expected; U.S. government shutdown. Only 2 micro-caps debuted during the first week of 2019 across accessible global regions, with the average equally-weighted firm losing 4.87% based on the difference between the final offering price and Friday’s close. No U.S. IPOs are scheduled for the coming weeks, amid the extended shutdown of the SEC. The pipeline for the upcoming week remains quiet with only one microcap, leisure food and grocery products retailer Best Mart 360˚ (2360 HK), set to debut in Hong Kong.

Select IPOs traded (week: 12/31/2018) Domicile
Weigang Environment Technology Holding Group Ltd China
Zhejiang Cangnan Instrument Group Co Ltd China
Select IPOs expected (week: 01/07/2019) Domicile
Best Mart 360 Holdings Ltd China

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