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The IPOX® Week, June 5, 2017

  • Select IPOX Indexes set fresh historic highs.
  • Focus on the IPOX 100 U.S. Index-linked “FPX” ETF as trading volume, AUMs surge.
  • Global deal-flow review and outlook: Sweden’s Boozt rises while Kinder Morgan Canada falls.

Select IPOX Indexes set fresh historic highs: Big Momentum in key holdings underpinned by strong earnings propelled select diversified IPOX Indexes to fresh historic highs last week. On the global level, e.g., the IPOX Global (IPGL50) – the global IPO and Spin-off benchmark which currently pools USD trillion 1.2 of market capitalization tied to the largest, most liquid and best performing global IPOs and Spin-offs using the IPOX Indexes Technology – rose +1.25% to +16.11% YTD, +485 bps. ahead of the global market YTD. Relative strength was significant across the IPOX U.S. (IPXO and IPXT) and IPOX Europe (IXTE), while IPOX Asia-Pacific (IPTA) and IPOX China (IPXUCHCP) traded relatively flat anew. For example, big strength in high-dividend paying stocks recently listed across Continental Europe including EON-Spin-off Uniper (UN01 GY: +6.43%), Italian utility Italgas (IG IM: +6.37%) and Spanish infrastructure play hedge fund heavy Aena (AENA SQ: +6.07%) drove the IPOX Europe (IXTE) to a gain of +2.20% to +19.36 YTD last week, now a massive +1194 bps. ahead vs. the European market YTD. In the U.S., big momentum in stocks which had recently reported strong earnings carried the USD trillion 1.3 IPOX 100 U.S. Index (IPXO) to another strong week, adding +1.30% to +11.42% YTD. Diversification remained key as big losses in IPOX heavyweight Spin-off HP Enterprises (HPE US: -7.59%) or Diamondback Energy (FANG: -6.68%) were more than offset by strong upside in entertainment stock Liberty Media (FWONA US: +14.42%) or payment processor First Data (FDC US: +8.05%), amongst others. We note Friday’s S&P 500 Index (SPX) inclusion of UK-domiciled (!) data provider IHS Markit (INFO US: +1.73%), a long-time IPOX 100 U.S. Index (IPXO) member and heavyweight. In all, 74% of portfolio holdings of the IPOX 100 U.S. Index (IPXO) closed the week in positive territory, with the average (median) equally-weighted stock gaining +1.51% (+1.19%) on the week, in line with the applied market-cap weighted index.

IPOX Price Returns (%) Last Week Q1 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 1.25 8.33 16.11
IPOX Global (IPGL30) 1.06 7.37 15.98
IPOX International (IPXI)* 1.67 11.49 22.67
Exposure: United States
IPOX Composite U.S. (IPXC)* 0.90 9.26 15.64
IPOX 100 U.S. (IPXO)* 1.30 6.12 11.42
IPOX 30 U.S. (IPXT) 1.46 5.90 11.86
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 2.20 9.03 19.36
IPOX Nordic (IPND) 1.69 3.84 13.50
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) 2.00 8.32 12.38
IPOX China C. (IPXUCHCHP)* 0.12 11.44 18.99
IPOX China (CNI) 0.08 11.52 16.69

* 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: IPOM7]).

Focus on the IPOX 100 U.S. Index-linked “FPX” ETF as trading volume, AUMs surge: Featured as one of the most active U.S.-traded equity ETFs last week by Bloomberg, we note another week of heavy trading and strong AUM inflows into the 11-year, USD million 833, IPOX 100 U.S. Index (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX). The fund added +1.37% to +11.83% YTD last week, now +305 bps. ahead of the ETF linked to the broad Russell 3000 (IWV). Amongst other traded IPOX-linked investment vehicles, the diversified First Trust International IPO ETF (FPXI) added +2.28% to +23.16% YTD, closing higher for a ninth consecutive week.

Global deal-flow Review and Outlook: Sweden’s Boozt rises while Kinder Morgan Canada falls: At least five significant accessible (non China A-share) IPOs debuted last week with the average (median) equally-weighted stock adding +22.20% (+3.37%) based on the difference between the final offering price and the week’s close. Interest remained strong for technology and consumer-oriented firms with strong initial upside recorded by Malmo/Sweden-based online retailer Boozt AB (BOOZT SS: +27.42%), while pipeline operator Kinder Morgan Canada (KML CN: -1.65%), the week’s largest global deal, fell based on offer. Ahead of expiration and Q2 re-balancing week, few global IPOs are lined up to debut, including NYSE-traded Plymouth Industrial REIT (PLYM US) and Mexico’s Banco del Bajio (BBAJIOO MM), a provider of commercial banking services.

Traded IPOs (week of 05/30/2017) Country
Boozt AB Sweden
Kinder Morgan Canada Ltd. Canada
The PRS REIT Plc Britain
Saferoad Holdings ASA Norway
Speed Apparel Holding Ltd. Hong Kong
Terranet Holding AB Sweden
Upcoming IPOs (week of 06/05/2017) Country
AEW UK Long Lease REIT Plc Britain
Risecomm Group Holdings Ltd. China
Banco del Bajio SA Mexico
Plymouth Industrial REIT 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.

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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