The IPOX® Week, June 13, 2016

  • Deflation Angst hits stocks ahead of expiration; IPOX Indexes fall, some lag benchmarks strongly.
  • Unabated IPO deal flow in Europe continues.
  • More IPOs lined, focus Europe ahead of Brexit vote.

Deflation Angst hits growth stocks ahead of expiration; IPOX Indexes fall, some lag benchmarks strongly. Amid continued declines in global yields (TLT US: +1.16%), some of the IPOX Indexes lagged sharply ahead of U.S. Futures and Options Expiration. In the U.S., e.g., the IPOX 100 U.S. (IPXO) – underlying for the First Trust U.S. IPO ETF (FPX) – fell -1.76% to -0.14% YTD, sharply underperforming the S&P 500 (SPX), the key gauge for U.S. stocks. Big selling pressure in large-cap pharma and biotech exposure weighed with IL-based drug maker AbbVie (ABBV US: -6.15%) or synthetic biology services provider Intrexon (XON US: -12.74%) leading the way. Amid the fall in yields, recent REIT IPO MGM Growth Properties (MGP US: +5.03%) surged anew, while entertainment firm Dave and Buster (PLAY US: +15.20%) closed in on a USD billion 2 valuation. Just 37/103 IPOX 100 U.S. (IPXO) holdings rose, with the average (median) equally-weighted stock falling by -1.50% (-1.10%), better than when compared to the applied market-cap weighting index. IPOX Indexes in other world regions traded mixed last week: While the IPOX Europe Indexes (IXTE, IPND) beat the weak benchmarks for a second week in a row, the IPOX Indexes focusing on Developed Asia-Pacific (IPTA) and China (CNI, IPXUCHCP) lagged the market.

IPOX-linked First Trust U.S. IPO ETF (FPX) since 2006:

Unabated IPO deal flow in Europe continues, More IPOs lined, focus Europe ahead of Brexit vote. While U.S. media remained focused on weak U.S. IPO deal flow, IPO Activity across Europe continued to outpace other world regions, despite weak markets. Highlight of the week was the IPO of Danish privatization utility USD billion 15.9 Dong Energy (DENERG DC: +7.23%), which followed on the success of utility IPOs in the Americas (H CN: +22.2% since IPO) and New Zealand (MEL NZ: +105.8% since IPO, ZEL NZ: +173.6% since IPO). Most other significant deals across the freely accessible global regions traded mixed, with most upside focus on the IPO of Singapore-domiciled engineering services provider Chuan Holdings (1420 HK: +15.91%).

IPOX Returns (%) (P) Week 2015 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) -1.95 0.99 -5.93
IPOX Intern. (IPXI)* -1.95 -5.85 -6.53
Exposure: United States (USD)
IPOX US Comp. (IPXC) -1.46 -3.90 -0.48
IPOX 100 U.S. (IPXO)* -1.46 1.57 -0.17
IPOX 30 U.S. (IPXT) -1.55 4.91 0.19
Exposure: Europe (EUR)
IPOX Europe (IXTE) -2.39 14.41 -8.49
IPOX Nordic (IPND) -2.04 23.88 -4.22
Exposure: Asia-Pacific (Developed) (USD)
IPOX Asia-Pacific (IPTA) -1.53 -2.32 0.39
Exposure: China (USD) (x A-Shares)
IPOX China (CNI) -1.67 -9.10 -14.19

*Basis for Exchange-Traded Products (ETPs)

Ahead of the Brexit vote (June 23), most focus during the week of June 13 (by number of IPOs) remains on European IPOs. The largest deal, however, is the USD million 315 U.S. IPO of Goldman Sachs-led event technology services provider Schillerpark/IL-based PSAV Inc. (PSAV US).

IPOs (week of June 06): Ticker Return (%)
Accrol Group Holdings PLC ACRL LN 10.00
ASR Nederland NV ASRNL NA 2.56
Atkore International Group Inc ATKR US -0.00
B2Holding AS B2H NO 0.42
Basic-Fit NV BFIT NA -3.33
China Online Education Group COE US -0.11
Chuan Holdings Ltd 1420 HK 15.91
DONG Energy A/S DENERG DC 7.23
Nordic Waterproofing Holding NWG SS 0.70
PiezoMotor Uppsala AB PIEZO SS -9.60
IPOs (week of June 13): Ticker Sector
Atrae Inc 6194 JP IT
B3IT Management AB B3IT SS IT
Cereno Scientific AB CRNOB SS Health Care
PSAV Inc PSAV US Industrials
Redwood Pharma AB REDW SS Health Care
SwedenCare AB SECARE SS Health Care
TF Bank AB TFBANK SS Financials
Time Out Group Ltd TMO LN C. Discretionary
Virtualex Consulting Inc 6193 JP IT

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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