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The IPOX® Week, June 26, 2017

  • Ahead of quarter-end, select IPOX Indexes close at fresh all-time highs.
  • IPOX ETFs mirror big gains in underlying indexes.
  • Global deal-flow review and outlook: Week’s largest IPO rises strongly; flurry of global deals lined up.

Ahead of quarter-end, select IPOX Indexes close at fresh all-time highs: On the back of gains in big pharma and China-linked technology, e.g., select IPOX Indexes surged to close the week at fresh records with the IPOX Global (IPGL50) adding +1.61% to +16.70% YTD last week, +143 bps. more than when compared to the global market. Within the IPOX Regional Indexes Universe, notable upside was recorded by the IPOX 100 U.S. (IPXO) which added +1.51% to +11.64% YTD. Moreover, while international markets fell, the IPOX International (IPXI) added a further +1.49% to +24.16% YTD. Upside focus amongst IPOX holdings domiciled in the U.S. was on U.S. pharma/biotech stocks with strong upside recorded by IPOX heavyweights dividend heavy Abbvie (ABBV US: +2.24%) and Shire (SHPG US: +5.01%), while biotech Kite Pharma (KITE US: +14.58%) was the best performing IPOX 100 U.S. holding. Amongst non U.S.-domiciled exposure tracked by the IPOX International (IPXI), specialty consumer/technology stocks traded well, including travel website operator Trivago (TRVG US: +13.99%), China-linked online direct sales firm JD.com (JD US: +12.52%) or Israel-based website developer Wix.com (WIX US: +11.12%). In the aftermath of the Whole Foods Market (WFM US: +0.62%)/Amazon.com (AMZN +1.62%) buy-out news, stocks including retail store operator Burlington (BURL US: -10.21%) and a slew of consumer staples including US Foods Holdings (USFD US: -6.39%) continued to trade under pressure. In that respect, we note with interest Wednesday’s announcement by IPOX heavyweight Chinese e-commerce behemoth Alibaba Group (BABA US: +6.04%) to sell U.S. beef from IPOX holding Tyson Foods (TSN US: +1.92%) on its Tmall virtual shopping mall for Chinese consumers.

IPOX ETFs mirror big gains in underlying indexes: Last week, the US-focused USD million 837 First Trust U.S. Equity Opportunities ETF (FPX) added +1.60% to +12.08% YTD, while the internationally-focused First Trust International IPO ETF (FPXI) added +1.72% to +26.47% YTD.

IPOX Price Returns (%) Last Week Q1 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 1.61 8.33 16.70
IPOX Global (IPGL30) 1.98 7.37 18.53
IPOX International (IPXI)* 1.49 11.49 24.16
Exposure: United States
IPOX Composite U.S. (IPXC)* 2.71 9.26 18.88
IPOX 100 U.S. (IPXO)* 1.51 6.12 11.64
IPOX 30 U.S. (IPXT) 1.92 5.90 12.53
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) -1.10 9.03 17.66
IPOX Nordic (IPND) -0.30 3.84 14.60
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) -0.06 8.32 12.25
IPOX China C. (IPXUCHCHP)* 3.08 11.44 24.68
IPOX China (CNI) 2.62 11.52 18.89

* 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: Week’s largest deal rises strongly, flurry of deals lines up. At least 8 notable accessible global (non-China A shares) firms debuted last week with the average (median) equally-weighted stock adding +2.76% (+1.20%) based on the difference between the final offering price and the week’s. Similar to the previous week, the week’s largest deal (ATUS US: +14.33%) also ranked as the week’s best performing. More IPOs firms are expected across global regions, including Allied Irish Bank (ALBK LN), Germany’s food ordering platform operator Delivery Hero (DHER GR) or restaurant group Vapiano (VAO GR). In the United States, notable deals include meal-kit delivery service Blue Apron (APRN US), infrastructure software developer Tintri (TNTU US) or IL-based Byline Bancorp (BY US), amongst others.

Traded IPOs (week of 06/19/2017) Country
Altice USA Inc United States
Bone Support AB Sweden
Evry AS Norway
Fastighets AB Trianon Sweden
Granite Point Mortgage Trust Inc United States
Guangzhou Rural Commercial Bank Co Ltd China
PCGH ZDP PLC Britain
Safety Income and Growth Inc United States
Upcoming IPOs (week of 06/26/2017) Country
Aeronautics Ltd. Israel
Akcea Therapeutics Inc. United States
Aileron Therapeutics Inc. United States
Allied Irish Banks PLC Ireland
Blue Apron Holdings Inc. United States
Byline Bancorp Inc. United States
Delivery Hero AG Germany
Dova Pharmaceutics Inc. United States
Eris Lifesciences Ltd. India
FFI Holdings PLC Britain
Mersana Therapeutics Inc. United States
Scotgems PLC Britain
Tintri Inc. United States
Vapiano SE Germany
Vodacom Tanzania Ltd. Tanzania
Unicaja Banco SA Spain
Xin Point Holdings 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.

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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