The IPOX® Week, July 25, 2016

  • IPOX Indexes extend rally, outperform benchmarks across global regions. Key earnings lined up.
  • Deals across regions record strong initial gains. More IPOs lined up with IPOs in the U.S. in focus.

IPOX Indexes extend rally, outperform benchmarks across global regions, key earnings lined up. The IPOX Indexes built on the big recent gains with all regional indexes significantly surpassing the respective equity benchmarks. In the U.S., e.g., the IPOX 100 U.S. (IPXO) – underlying for the 5-star USD million 580 First Trust U.S. IPO ETF (FPX) – rose +1.30% to +3.70% YTD, surpassing the S&P 500 (SPX) by +69 bps. Relative strength extended to the European market, with the IPOX Europe (IXTE) gaining a strong +2.52% and continuing to recover from the big Brexit-linked relative selling. Most relative upside in Europe remained in the Nordic region, however, with the IPOX Nordic (IPND) – a specialty portfolio tracking IPOs and Spin-off in Denmark, Finland, Norway and Sweden using the IPOX technology – gaining +2.42% to -0.52% YTD, a massive +1399 bps. difference vs. the Nordic market benchmark year-over-year and indicating the impetus behind the strong ECM activity in Europe’s Nordic region. The IPOX Indexes focusing on Asia-Pacific traded similarly, with both the IPOX Developed Asia-Pacific (IPTA) and IPOX China (CNI) beating the market. Relative upside was driven by big moves in select exposure after quarterly results, including Chinas Bank of Jinzhou (416 HK: +33.96%), Germany’s online retailer Zalando (ZAL GY: +21.14%), Copenhagen-based IT services provider NNIT (NNIT DC: +13.00%), Philips Spin-off Philips Lighting (LIGHT NA: +12.95%), U.S.-based specialty retailer Burlington Stores (BURL US: +10.08%) or Burger King/Tim Horton tie-up, Buffett-backed Restaurant Brands (QSR US:+8.03%). US-traded payment processor Paypal (PYPL US:-4.27%) or Tokyo-traded medical equipment maker Cyberdyne (7779 JP: -11.40%) recorded significant losses on the week. Quarterly earnings releases from IPOX heavyweights including social media behemoth Facebook (FB US), IL-based drug maker AbbVie (ABBV US) or analytics firm Nielsen (NLSN US) provide for the potential of large relative performance moves in the IPOX U.S. Indexes (IPXC, IPXO, IPXT) during the upcoming week.

IPOX Returns (%) (P) Week 2015 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 1.17 0.99 -4.46
IPOX Global 30 (IPGL30) 1.26 -0.96 -1.46
IPOX Intern. (IPXI)* 1.06 -5.85 -6.36
Exposure: United States (USD)
IPOX US Comp. (IPXC) 1.54 -3.90 4.29
IPOX 100 U.S. (IPXO)* 1.30 1.57 3.70
IPOX 30 U.S. (IPXT) 1.46 4.91 4.30
Exposure: Europe (EUR)
IPOX Europe (IXTE) 2.52 14.41 -10.19
IPOX Nordic (IPND) 2.42 23.88 -0.52
Exposure: Asia-Pacific (Developed) (USD)
IPOX Asia-Pacific (IPTA) 0.58 -2.32 1.02
Exposure: China (USD) (x A-Shares)
IPOX China (CNI) 1.64 -9.10 -12.12

*Basis for Exchange-Traded Products (ETPs)

Deals across regions record strong initial gains. More IPOs lined up with deals in the U.S. in focus. At least 8 significant accessible (non-Chinese A-Shares) firms commenced trading last week with the average (median) equally-weighted IPO gaining +15.93% (+15.99%) based on the difference between the final offering price and the week’s close. In emerging markets, most focus was on the successful listing of Philippines-domiciled cement producer Cemex Holdings (CHP PM). Deals in the U.S. continued to display big initial gains, with all IPOs (BOLD US, PI US, PTHN US, TPIC US) closing at or significantly above offer. IPOs in the U.S. continue to take center stage during the upcoming week, with another four companies set to to commence trading (all small-caps). Here, focus is on Goldman Sachs-led, French domiciled infrastructure software maker Talend (TLND US) and JP Morgan-led specialty insurer VA-based Kinsale Capital (KNSL US), while Citigroup-led Kadmon Holdings (KDMN US) and JP Morgan-led Bioventus (BIOV US) extend the long list of recent IPOs in the U.S. health care space. In Europe, the EUR million 805 IPO of Italy’s navigation and transportation support services provider Enav (ENAV IM) marks the first significant IPO since the Brexit vote.

IPOs (week of July 18): Ticker Return (%)
Audentes Therapeutics Inc BOLD US 0.00
CEMEX Holdings Philippines Inc CHP PM 11.07
Impinj Inc PI US 39.71
Patheon NV PTHN US 20.90
Pharnext SA ALPHA FP -1.48
Prosper Construction Holdings 6816 HK 4.00
Range International Ltd RAN AU 30.00
TPI Composites Inc TPIC US 23.27
IPOs (week of July 25): Ticker Sector
Australis Oil & Gas Ltd ATS AU Equity Energy
Bioventus Inc BIOV US Health Care
EC World REIT ECWREIT SP Financials
Enav SpA ENAV IM Industrials
Kadmon Holdings LLC KDMN US Health Care
Kinsale Capital Group Inc KNSL US Financials
Marimo REIT Inc 3470 JP Equity Financials
Talend SA TLND US Info Tech

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.

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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