The IPOX® Week, June 18, 2018

  • FAANG-free IPOX 100 U.S. surges for 2nd week, significantly outpaces U.S. Market benchmarks.
  • IPOX-linked AUM reach all-time high.
  • IPO Deal-flow Review & Outlook: Adyen soars / U.S. health care IPOs and Japan’s Mercari (4385 JP) in focus.

FAANG-free IPOX 100 U.S. surges for second week, significantly outpaces U.S. Market benchmarks. With the exception of the IPOX China (CNI), all IPOX Indexes rose during option expiration week. For a 2nd week in a row, e.g., the FAANG-free IPOX 100 U.S. (IPXO) significantly outpaced U.S. Market benchmarks last week, gaining +1.75% to +8.92% YTD, +495 bps. YTD ahead of the S&P 500 (SPX), yardstick for U.S. stocks. Positive relative and absolute momentum in the IPOX 100 U.S. (IPXO) extended as the portfolio continued to benefit from a number of unique developments: First, specialty New Listings – some of them just recently issued and mostly untracked by the conventional benchmarks – including infrastructure software maker Dropbox (DBX US: +31.74%) or Coupa Software (COUP US: +4.48%) – rose anew as a group on strong growth prospects underpinned by solid earnings. Second, long positioning by index funds into IPOX 100 U.S. (IPXO) heavyweight social networker Twitter (TWTR: +12.69%) continued after its inclusion into the S&P 500 (SPX). Third, a good week in old economy beleaguered IPOX heavyweights consumer staple Kraft Heinz (KHC US: +4.93%) or energy play EQT (EQT US: +5.06%) mitigated the impact of the mostly earnings-driven declines in some individual holdings, including retailer Michaels (MIK US: -11.94%). In non-U.S. domicile exposure, despite the plunge in the Euro (EUR: -1.35%), we note the good week in the IPOX International (IPXI), mostly driven by the big jump in Canada-based Anorak maker Canada Goose (GOOS US: +38.49%).

IPOX-linked Investment Products Update: Amid all-time highs in AUM in IPOX-linked products, the USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) added +1.82% to +9.18% YTD last week, while the IPOX International (IPXI)-linked First Trust International IPO ETF (FPXI) fell to +4.80% YTD. Amid an overweight to recently listed specialty IPOs, we note another big week for the Catalyst IPOX® Allocation Fund (OIPAX), an actively managed mutual fund. The fund gained +2.49% to +13.17% YTD last week.

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) 0.60 28.59 4.48
IPOX International (IPXI)* 0.47 37.80 3.37
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* 1.34 33.64 11.12
IPOX 100 U.S. (IPXO)* 1.75 26.04 8.92
IPOX 30 U.S. (IPXT) 1.40 26.63 4.56
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) 1.45 19.27 4.01
IPOX Nordic (IPND) 0.54 17.91 3.06
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) 0.18 23.30 3.03
IPOX China (CNI) -1.30 37.67 16.81

* 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: IPOM8].

IPO Deal-flow Review & Outlook: Adyen soars / U.S. health care IPOs and Japan’s Mercari (4385 JP) in focus: At least 14 notable (non-China A shares and non-local India) companies debuted last week, with the average (median) equally-weighted firm adding +22.41% (+16.61%) based on the difference between the final offering price and Friday’s close. Dutch payment processor Adyen (ADYEN NA: +75.00%) ranked as the top performing IPO based on final offer last week, making it the biggest tech IPO and the 3rd largest IPO in Europe of the year. Chinese payment services provider Huifu Payment (1806 HK: -11.73%), however, fell based on final offer, ranking as the worst performing IPO of the week. At least 18 IPOs are lined up to go public this week, with heavy deal flow in VC-backed U.S. biotech/biopharmaceutical firms. Focus abroad is on Japanese tech unicorn, flea market app provider Mercari (4385 JP). The firm priced its shares at the top end of the initial range, ranking as Japan’s largest IPO YTD. In pre-IPO trading, the shares were bid 10% higher.

Select IPOs traded (week: 06/11/2018) Country
Adyen BV Netherlands
Avalara Inc United States
Carel Industries SpA Italy
Charah Solutions Inc United States
Huifu Payment Ltd China
Puxin Ltd China
Tallinna Sadam AS Estonia
US Xpress Enterprises Inc United States
Select IPOs expected (week: 06/18/2018) Country
Aptinyx Inc United States
Autolus Therapeutics Ltd
Avrobio Inc United States
Eidos Therapeutics Inc United States
ElectroCore LLC United States
Essential Properties Realty Trust United States
I3 Verticals Inc United States
Magenta Therapeutics Inc United States
Mercari Inc Japan
VCredit Holdings Ltd China
Xeris Pharmaceuticals Inc 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.

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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