The IPOX® Week, January 29, 2018

  • Strong earnings & Corporate actions drive IPOX U.S. and IPOX International to big week / “FPX” ETF adds +3.43%, “FPXI” ETF adds +3.08% on the week.
  • IPO Deal-flow Review & Outlook: Amid takeover frenzy, U.S. Biotech’s record significant gains. More IPOs in pipeline.

Strong earnings & Corporate Actions drive IPOX U.S. and IPOX International to big week. Amid strong earnings ([ABBV US: +17.75%]), effective and perceived Corporate M&A ([BIVV US: +60.71%], [TWTR US: +2.58%]), focus was on the IPOX U.S., with the diversified style-box agnostic IPOX® 100 U.S. (IPXO) closing above the 3,300 Mark for the first time, adding +3.45% to +9.32% YTD and outpacing the S&P 500 (SPX) – yardstick for U.S. stocks – by a massive +120 bps. on the week. On the back of big gains recorded by China-linked exposure ([BABA US: +11.50%]), strength extended to non-U.S. domiciled stocks, with the IPOX® International (IPXI) adding +2.88% to +11.69% YTD.

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

Exchange Traded Index Funds (ETFs) reflected these outsized gains: In the U.S., e.g., the NYSE-listed USD billion 1.1 First Trust U.S. Equity Opportunities ETF (FPX) – which tracks the IPOX® 100 U.S. (IPXO) – added +3.43% to +9.32% YTD, while the NASDAQ-listed First Trust International IPO ETF (FPXI) – which tracks the IPOX® International Index (IPXI) – added +3.08% to +12.66% YTD, with both funds ranking as a top performing ETF in their respective category, 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. The sector often serves as a pure proxy for economic growth and innovation.

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 2.35 28.59 10.80
IPOX International (IPXI)* 2.88 37.80 11.69
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 5.02 33.64 10.87
IPOX 100 U.S. (IPXO)* 3.45 26.04 9.32
IPOX 30 U.S. (IPXT) 3.25 26.63 10.26
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) -0.42 19.27 4.16
IPOX Nordic (IPND) -0.01 17.91 1.47
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 2.25 23.30 8.15
IPOX China C. (IPXUCHCHP)* 6.02 42.57 13.68
IPOX China (CNI) 4.41 37.67 16.88

* 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 & Outlook: Amid takeover frenzy, U.S. Biotech’s record significant gains. More IPOs in pipeline. At least 9 notable (non-China A shares and non-local India) firms commenced trading last week with the average (median) equally-weighted firm adding +29.37% (+16.44%) based on the difference between the final offering price and Friday’s close. Three U.S. domiciled small-caps biotech firms including ARMO BioSciences ARMO US: +74.94%), Menlo Therapeutics (MNLO US: +67.71%) and Solid Biosciences (SLDB US: 41.38%) soared after upsizing. We also note the significant gains in Goldman Sachs and Morgan Stanley-led Brazil payment processor PagSeguro Digital (PAGS US: +35.37%), after upsizing and pricing above indicative range. Following dismal ADT (ADT US: -3.95%), another P/E-backed firm disappointed, with power transmission equipment manufacturer Gates Industrial (GTES US: -0.53%) finishing the week below final offer. More deals are lined up towards the end of the month, making it for the busiest January IPO market in four years: Focus this week includes travel concessions operators Hudson (HUD US) and Corporación América Airports (CAAP US), Argentina’s largest private sector power generator Central Puerto (CEPU US), while and South Korea’s leading mobile messenger app operator Kakao (KCR SP) seeks a notable listing in Singapore.

Select IPOs traded (week: 01/22/2018) Country
ARMO BioSciences Inc U.S.A.
Bhiraj Office Leasehold REIT Thailand
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.
Slate Office REIT Canada
Select IPOs expected (week: 01/29/2018) Country
Central Puerto S.A. Argentina
Corporación América Airports S.A. Luxembourg
FTS International Inc U.S.A.
Hudson Ltd U.S.A.
Kakao Corp South Korea
Sol-Gel Technologies Ltd Israel
Salmones Camanchaca S.A. Chile
VICI Properties Inc 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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