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The IPOX® Week, July 31, 2017

  • IPOX Indexes trade mixed last week, IPOX International (IPXI) closes at historic weekly high.
  • IPOX-linked ETF update: “FPXI” ETF extends gains.
  • Global Deal-flow Review and Outlook: Strong gains for specialty IPOs, Venator Materials (VNTR US) lined up.

IPOX Indexes trade mixed last week, IPOX International (IPXI) closes at historic weekly high. Amid mixed earnings causing significant losses in select individual portfolio holdings and renewed weakness in the U.S. Dollar, the IPOX Indexes traded mixed last week. Within the IPOX Indexes Universe, e.g., while the IPOX U.S. Indexes (IPXO, IPXT) weakened with the broad U.S. market, the IPOX International (IPXI) gained anew, closing out the week at a historic weekly high. Amid earnings season, the distribution of individual securities’ returns with the respective IPOX portfolios diverged sharply: In the IPOX U.S. (IPXO, IPXT), e.g., strong gains in Spin-offs media firm Liberty SiriusXM (LSXMA US: +7.19%) or cable services provider Liberty Broadband (LBRDA US: +5.93%) were unable to offset big declines in U.S. social networker Twitter (TWTR US: -16.71%) or heavyweight IL-based drug maker Abbvie (ABBV US: -5.61%). In the IPOX International (IPXI), however, strong gains in luxury carmaker Ferrari (RACE US: +5.75%) or IPOX heavyweight Chinese e-commerce platform Alibaba (BABA US: +3.73%) more than outweigh the negative impact of a big plunge in smaller and less heavily weighted firms, including Israel-based website developer Wix.com (WIX US: -12.59%), Finland-based industrial machinery maker Valmet (VALMT FH: -11.06%) or Just Eat (JE/ LN: -9.27%), the London-based online marketplace for restaurant delivery. We also note continued strength in the IPOX Europe (IXTE).

IPOX-linked ETF update: “FPXI” ETF extends gains. Last week, IPOX-linked ETFs traded mixed: While the First Trust US. Equity Opportunities ETF (FPX) fell to +12.86% YTD and assets rose to USD million 858, the First Trust International IPO ETF (FPXI) added +0.65% to +30.06% YTD, far outpacing most other U.S.-traded ETFs focusing on providing broad international equity exposure. The NASDAQ-traded “FPXI” ETF captures the largest, most liquid and best performing IPOs and Spin-offs domiciled outside the U.S. and trading on a global stock exchange by applying the IPOX® Indexes Technology.

IPOX Price Returns (%) Last Week Q2 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 0.07 5.54 18.72
IPOX Global (IPGL30) -0.01 8.07 19.82
IPOX International (IPXI)* 0.96 9.24 28.62
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 0.54 7.44 22.05
IPOX 100 U.S. (IPXO)* -0.30 3.86 12.39
IPOX 30 U.S. (IPXT) -0.20 4.62 13.13
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 0.00 4.95 17.30
IPOX Nordic (IPND) -0.27 8.64 15.69
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 0.21 2.99 13.45
IPOX China C. (IPXUCHCHP)* 0.95 10.06 30.15
IPOX China (CNI) -0.51 4.62 23.51

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [commodity trading symbol: IPOU7]).

Global Deal-flow Review and Outlook: Large number of deals start trading, more IPOs lined up. 12 notable accessible global (non-China A shares) firms debuted last week, with the average (median) equally-weighted stock adding +10.78% (+3.64%) based on the difference between the final offering price and the week’s close. While the week’s largest deal, the IPO of Polish telecom carrier Play Communications (PLY PW: +0.69%) finished the week just above the low end of the final offering range, the successful debut of the week’s key specialty deals, including Glasgow-based women’s apparels maker London-traded Quiz (QUIZ LN: +18.25%), as well as Seattle-based realestate services provider Nasdaq-traded USD billion 1.8 Redfin (RDFN US: +44.67%) underlined the strong underpinning demand for respective growth deals. The IPO of Texas-based Huntsman (HUN US: +0.82%) Spin-off specialty chemicals maker Venator Materials (VNTR US) takes center-stage this week: In the middle of the USD 20-22 range, the firm seeks to raise USD million 476.7 for ca. 21.4% of the firm with Citigroup, Goldman Sachs & Co., BofA Merrill Lynch and J.P. Morgan acting as lead underwriters. The firm does not expect to pay a dividing and proceeds from the deal are going to selling shareholders.

Traded IPOs (week of July 24, 2017) Country
Arena Events Group PLC Britain
Biotoscana Investments SA Luxembourg
Celltrion Healthcare Co Ltd South Korea
Convenience Retail REIT Australia
Greencoat Renewables PLC Ireland
PLAY Communications SA Luxembourg
Quiz PLC Britain
RBB Bancorp United States
Redfin Corp United States
Sienna Biopharmaceuticals Inc United States
Tamar Petroleum Ltd. Israel
Tak Lee Machinery Holdings Ltd Hong Kong
Upcoming IPOs (week of July 31, 2017) Country
Clementia Pharmaceuticals Inc Canada
IRB Brasil Resseguros S/A Brazil
Omega Geracao SA Brazil
Venator Materials PLC United States

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.

This article is provided for educational purposes only and is not considered to be a recommendation or endorsement of any trading strategy. The author is not affiliated with Lightspeed Trading and the content and perspective is solely attributed to the author.

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