The IPOX® Week, June 25, 2018

  • Sell-off in select high-beta exposure, China weakness pressures IPOX Indexes into quarter-end.
  • IPO Deal-flow Review & Outlook: Deals across global regions jump based on final offer / U.S. IPOs set for busiest week in three years.

Sell-off in select high-beta exposure, China weakness pressures IPOX Indexes into quarter-end. Amid continued geopolitical jitters on trade, profit taking in select high-beta exposure and continued weakness in China-linked stocks pressured the IPOX Indexes after expiration week into quarter-end. Weakness extended across the IPOX Indexes Universe with the IPOX 100 U.S. (IPXO) – benchmark for the performance of U.S. New Listings by applying the IPOX Indexes Technology – dropping by -1.79% to +6.97% YTD, lagging the S&P 500 (SPX) by 90 bps. on the week. Declines extended to select IPOX Indexes tracking non-U.S. domiciled exposure, with the respective IPOX Indexes all following the local market benchmarks lower. In the IPOX 100 U.S. (IPXO), portfolio holdings recording the biggest upside moves included e-commerce firm Stitch Fix (SFIX US: +16.63%), biotech Fibrogen (FGEN US: +10.37%), hard-hit goods retailer Michaels Co. (MIK US: +9.67%) or Conagra (CAG US: +0.10%) Spin-off potato products maker Lamb Weston (LW US: +4.54%), while recently issued software firms Zuora (ZUO US:-20.18%), Smartsheet (SMAR US: -19.32%) or DocuSign (DOCU US: -10.01%) ranked as the worst performing portfolio holdings on the week. We note big strength in consumer staple IPOX 100 U.S. (IPXO) holding Pinnacle Foods (PF US: +3.08%), gaining after reports of a takeover approach by packaged foods maker aforementioned Conagra. While we note weakness in China-linked exposure across size and sectors last week, select European-based specialty technology exposure recorded a strong week, including Dutch-based payment processor Adyen (ADYEN NA: +16.14%) and delivery platform operator Takeaway.com (TKWY NA: +13.78%) or German e-commerce firm Delivery Hero (DHER GY: +6.22%). Amid trade tensions, European-traded auto exposure fell, including German auto parts makers Schaeffler (SHA GY: -7.27%) and Hella (HLE GY: -8.80%).

Select IPOX-linked Investment Products Update: The USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) fell to +7.25% YTD last week, while the IPOX International (IPXI)-linked First Trust International IPO ETF (FPXI) fell to +2.74% 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) -1.88 28.59 2.52
IPOX International (IPXI)* -2.15 37.80 1.14
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* -1.77 33.64 9.15
IPOX 100 U.S. (IPXO)* -1.79 26.04 6.97
IPOX 30 U.S. (IPXT) -1.38 26.63 3.12
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) -0.72 19.27 3.26
IPOX Nordic (IPND) -1.80 17.91 1.21
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) -2.01 23.30 0.96
IPOX China (CNI) -3.44 37.67 12.79

* 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: Deals across global regions jump based on final offer / Significant deal flow lined up, IPOs in the U.S. in focus: At least 21 notable (non-China A shares and non-local India) companies debuted last week, with the average (median) equally-weighted firm adding a strong +19.32% (+16.00%) based on the difference between the final offering price and Friday’s close. Deals surged across global regions with Japan’s first tech unicorn-flea market app operator Mercari (4385 JP: +51.67%) ranking as one of the top performing IPOs based on final offer last week. At least 19 IPOs are lined up to go public this, with U.S. IPO activity set for the busiest week in three years, including retailer MA-based BJ’s Wholesale Club (BJ US). Focus outside the U.S. is on the IPO of Chinese commercial bank Jiangxi Bank (1916 HK) – marking the second largest listing of the year in the Hong Kong Market – and Philippines construction services provider D.M. Wenceslao (DMW PM). Please follow Page 2 and 3 of The IPOX Week for details regarding this week’s deal flow.

Select IPOs traded (week: 06/18/2018) Country
Aptinyx Inc United States
Autolus Therapeutics Plc Britain
Avrobio Inc United States
Eidos Therapeutics Inc United States
Essential Properties Realty Trust United States
I3 Verticals Inc United States
Klingelnberg AG Switzerland
Magenta Therapeutics Inc United States
Mercari Inc Japan
VCredit Holdings Ltd Hong Kong
Select IPOs expected (week: 06/25/2018) Country
Jiangxi Bank Co Ltd China
Neon Therapeutics Inc United States
Uxin Ltd China
BJ’s Wholesale Club Holdings I United States
BrightView Holdings Inc United States
Goodbulk Ltd Monaco
Translate Bio Inc United States
Tricida Inc United States
DM Wenceslao and Associates In Philippines
Sprix Ltd Japan
Wise Talent Information Technology Co Ltd China

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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