The IPOX® Week, January 22, 2018

  • Most IPOX Indexes extend gains to close at record.
  • IPOX-linked ETFs mirror rise in underlying indexes.
  • IPO Deal-flow Review and Outlook: Hong Kong-based C-Mer Eye Care surges on debut, while ADT flops. More IPOs in pipeline with U.S. biopharma leading the way.

Most IPOX Indexes extend gains to close at record. Amid generally strong earnings, most of the style-box agnostic IPOX Indexes extended YTD gains during U.S. Options expiration week to rise to new records. In the U.S., for example, the diversified IPOX 100 U.S. (IPXO) closed above the 3,200 Mark for the first time, adding +1.24% to +5.67% YTD, outpacing the S&P 500 (SPX) – yardstick for U.S. stocks – by +38 bps. on the week. Strength extended to non-U.S. domiciled exposure with the IPOX International (IPXI) adding +1.95% to +8.56% YTD, extending its YTD lead vs. the International Market to +388 bps.

IPOX 100 U.S. Investing with the 5-star “FPX” ETF since 2006:

ETF.com ranks IPOX-linked “FPXI” ETF as top performing international ETF. Exchange Traded Funds (ETFs) linked to the IPOX Indexes reflected the strong gains in the underlying IPOX Indexes. In the U.S., for example, the NYSE-listed USD billion 1.05 First Trust U.S. Equity Opportunities ETF (FPX) – which tracks the IPOX 100 U.S. (IPXO) – added +1.19% to +5.61% YTD. Bigger gains were recorded by the NASDAQ-listed First Trust International IPO ETF (FPXI) – which tracks the IPOX International Index (IPXI): The Fund added +1.82% to +9.30% YTD, ranking as the best performing internationally-focused ETF traded in the U.S, according to www.etf.com. “FPX” and “FPXI” offer investors a one-stop, turnkey solution to access the “going public” effect associated with the performance of the largest U.S. (FPX) and International (FPXI) IPOs and Spin-offs by applying the IPOX® Indexes Technology.

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 1.85 28.59 8.26
IPOX International (IPXI)* 1.95 37.80 8.56
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 0.56 33.64 5.57
IPOX 100 U.S. (IPXO)* 1.24 26.04 5.67
IPOX 30 U.S. (IPXT) 1.70 26.63 6.79
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 1.55 19.27 4.60
IPOX Nordic (IPND) -1.45 17.91 1.48
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 0.93 23.30 5.77
IPOX China C. (IPXUCHCHP)* 0.26 42.57 7.22
IPOX China (CNI) 1.90 37.67 11.94

* 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].

IPO Deal-flow Review and Outlook: Hong Kong-based C-Mer Eye Care surges on debut, while ADT flops. More IPOs in pipeline with U.S. biopharma leading the way. At least 7 notable (non-China A shares and non-local India) firms commenced trading last week with the average (median) equally-weighted firm adding +55.42% (+11.06%) based on the difference between the final offering price and Friday’s close. Indicative of the optimism for Hong Kong specialty IPOs, ophthalmic services provider C-Mer Eye Care (3309 HK: +344.14%) soared in its first week of trading. A stark contrast provided the IPO debut of security services provider debt-heavy P/E-backed USD billion 9.6 ADT (ADT US: -11.50%), however: Amid valuation concerns, big overhang and rising rates, the company priced its downsized IPO far below its indicative range and finished the week significantly below final offer. Other U.S. deals fared better, including REIT Americold Realty Trust (COLD US: +7.05%) and energy services firm Nine Energy Service (NINE US: +13.48%). Focus this week is on deals in the U.S., including Brazil-based payment processor PagSeguro Digital (PAGS: US), the second multi-billion offering YTD. Amid the takeover frenzy for small-cap biotech firms, a number of small-cap biopharmaceutical companies are also lined up to debut.

Select IPOs traded (week: 01/15/2018) Country
ADT, Inc U.S.A.
Americold Realty Trust U.S.A.
Al Mashaar REIT Saudi Arabia
Bank of Gansu Co Ltd China
C-Mer Eye Care Holding Ltd Hong Kong
Nine Energy Service Inc U.S.A.
Zhenro Properties Group Ltd China
Select IPOs expected (week: 01/22/2018) Country
ARMO BioSciences Inc U.S.A.
Entera Bio Ltd Israel
Gates Industrial Corp PLC U.S.A.
Menlo Therapeutics Inc U.S.A.
PagSeguro Digital Ltd Brazil
PlayAGS Inc U.S.A.
resTORbio Inc U.S.A.
Solid Biosciences LLC U.S.A.

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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