The IPOX® Week, July 23, 2018

  • IPOX Indexes trade mixed during expiration week, IPOX 100 U.S. weighed by weakness in select heavyweights.
  • Stockholm-traded specialty IPOs surge after earnings.
  • IPO Deal-flow Review & Outlook: U.S. dominates deal pipeline/Chinese e-commerce startup Pinduoduo (PDD US) set for debut in the U.S.

IPOX Indexes trade mixed during expiration week, IPOX 100 U.S. weighed by weakness in select heavyweights. The IPOX Indexes traded mixed during expiration week as strength across smaller specialty deals was mitigated by weakness in select IPOX heavyweights ahead of key earnings, amid smoother sailing across global equity markets. While the IPOX 100 U.S. (IPXO), for example, lagged the S&P 500 (SPX) – benchmark for U.S. stocks – for the second week in a row, the IPOX Asia-Pacific (IPTA) and IPOX Nordic (IPND) continued their strong momentum from the previous week to close higher. Focus in individual equities was on the big weakness in the high-dividend paying IPOX heavyweights consumer staple Buffett-owned Kraft Heinz (KHC US: -4.95%) and IL-based drug maker AbbVie (ABBV: -7.99%) which both reversed their previously built positive momentum ahead of earnings and pressured the IPOX 100 U.S. (IPXO) against the U.S. benchmarks. Notable holdings which extended their run into uncharted territory to close last week at a post-IPO high included online furniture retailer Wayfair (W US: +6.15%), payment processors Square (SQ US: +5.14%) and First Data (FDC US: +2.06%), or Fitness Club operator Planet Fitness (PLNT US: + 2.38%). In Markets outside the U.S., we note significant strength in the IPOX Nordic (IPND) after portfolio holdings reported strong earnings, including Stockholm-traded online casino solutions provider Evolution Gaming (EVO SS: +17.69%), medical equipment maker Lifco (LIFCOB SS: +14.85%) or cable & satellite services provider Com Hem Holding (COMH SS: +13.71%).

IPOX-linked Investment Products Performance Update: Last week, the USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) fell +8.15% YTD, while its international version (FPXI) rose to +1.96% YTD. Amongst IPOX-linked actively managed funds, the Catalyst IPOX® Allocation Fund (OIPAX) is up +11.58% YTD.

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

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) 0.07 28.59 3.54
IPOX International (IPXI)* 0.06 37.80 0.10
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* -0.71 33.64 8.61
IPOX 100 U.S. (IPXO)* -0.60 26.04 7.88
IPOX 30 U.S. (IPXT) -0.49 26.63 4.54
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) -0.09 19.27 5.40
IPOX Nordic (IPND) 0.85 17.91 3.26
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) 0.43 23.30 0.43
IPOX China (CNI) -1.37 37.67 5.06

* 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: IPOU8].

IPO Deal-flow Review & Outlook: U.S. dominates deal pipeline/ Chinese discounter Pinduoduo (PDD US) set for the latest China tech IPO in the U.S: At least 16 (non-China A shares and non-local India) firms debuted last week across accessible regions, with the average (median) equally-weighted firm adding +20.31% (+4.95%) based on the difference between the final offering price and Friday’s close. Nasdaq-listed Canadian medical marijuana company Tilray (TLRY US: +75.12%) and CA-based biopharmaceutical company Allakos (ALLK US: +94.72%) ranked as the best performing IPOs last week, while downsized cancer biopharma company Constellation Pharmaceuticals (CNST US: -20.73%) slid after debut, becoming the worst performer of the week. The U.S. IPO market is lining up for another busy week with tech IPOs in focus, including web browser maker Norway-based Opera (OPRA US), cybersecurity firm Tenable (TENB US) and Tencent-backed Chinese e-commerce platform Pinduoduo (PDD US). The platform integrates a Groupon concept where buyers can enjoy discounts when purchasing in groups. With only 3 years of operating history, PDD is aiming for a $20 billion valuation.

Select IPOs traded (week: 07/16/2018) Domicile
7Road Holdings Ltd China
Allakos Inc United States
Constellation Pharmaceuticals United States
Crinetics Pharmaceuticals Inc United States
E-House China Enterprise Holdings China
Qilu Expressway Co Ltd China
Replimune Group Inc United States
Rubius Therapeutics Inc United States
TheWorks.co.uk PLC Britain
Tilray Inc Canada
Select IPOs expected (week: 07/23/2018) Domicile
Aurora Mobile Ltd China
Bloom Energy Corp United States
Cango Inc China
Endava Plc Britain
Focus Financial Partners Inc United States
Opera Ltd Norway
Pinduoduo Inc China
Provention Bio United States
Tenable Holdings Inc United States

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.

Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services provided by any of the above service providers and any service used to execute any trading strategies are solely based on the independent analysis of the user.

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