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The IPOX® Week, March 13, 2017

Ahead of FED and expiration, IPOX Indexes extend relative strength YTD. IPOX 100 U.S. dodges fall in U.S. small caps. The IPOX Indexes continued to trade well vs. the global benchmarks last week, with the IPOX Global (IPGL50) gaining +0.50% to +6.82% YTD, while benchmarks fell. Ahead of a big week for Spanish IPOs, relative strength in the IPOX Global (IPGL50) was driven by strong gains in the IPOX Europe (IXTE) which surged +1.99% to +5.99% YTD, and the IPOX International (IPXI), now a massive +419 bps. ahead of the international benchmark YTD. While the IPOX Asia-Pacific (IPTA) traded relatively flat, the IPOX China (CNI) rose for a second week, benefiting from the jump in some of the recent social media-related offerings after good earnings. In the U.S., the IPOX 100 U.S. (IPXO) – underlying benchmark for the USD million 688, 5-star, 10-year First Trust U.S. Equity Opportunities ETF (FPX) – fell -0.44% to +5.79% YTD, significantly less than last week declines in U.S. small-caps.

IPOX Returns (%) (P) Week 2017 2016
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 0.50 6.82 -2.50
IPOX Intern. (IPXI)* 1.40 8.59 -4.63
Exposure: United States
IPOX Composite U.S. (IPXC)* -0.75 7.67 7.24
IPOX 100 U.S. (IPXO)* -0.44 5.79 5.89
IPOX 30 U.S. (IPXT) -0.48 5.85 8.44
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 1.99 5.99 0.18
IPOX Nordic (IPND) -1.23 3.02 -1.59
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) 0.27 6.32 -1.96
IPOX China C. (IPXUCHCHP)* 0.02 9.46 -3.73
IPOX China (CNI) 0.26 11.02 -10.21

* Basis for Exchange-Traded Products (e.g. FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [commodity trading symbol: IPOH7]).

Individual IPOX Holdings in focus. Most notable were big performance variations amongst global social media stocks: While U.S. social networkers Snap (SNAP US: -18.53%), Twitter (TWTR US: -4.00%) or Facebook (FB US: +1.18%) in aggregate traded mixed at best, big earnings by 12/2016 IPO Hong-Kong social software maker Meitu (1357 HK: +19.24%) and U.S. traded social networking platform operator Momo (MOMO US: +14.55%) pushed the China-domiciled deals sharply higher. In London, a better-than-forecast in sales in online takeaway ordering platform operator IPOX Europe member Just Eat (JE/ LN: +16.28%) propelled its stock towards a fresh all-time high. Ahead of the dual-listing IPO of specialty apparels maker Canada Goose (GOOS US, GOOS CN), incumbent IPOX Europe member Moncler (MONC IM: +2.35%) also extended its all-time high. IPOX 100 U.S. (IPXO) holdings also tracked by Warren Buffet’s Berkshire Hathaway (BRK/B US: -0.40%) traded well supported last week: While Barron’s-featured specialty chemicals maker Axalta (AXTA US: +5.72%) surged, consumer staples Kraft Heinz (KHC US: +0.01%) and Restaurant Brands (QSR US: -0.16%) traded flat. We also note the big week in IPOX-heavyweight IL-based drug maker Abbvie (ABBV US: +4.01%) after a key upgrade.

Initial U.S. IPO sentiment weak. Significant deals lined up across global regions. At least 5 significant global IPOs (excluding Chinese A-shares) commenced trading last week with initial sentiment for U.S. IPOs notably weak: U.S. domiciled specialty store operator J. Jill (JILL US: -0.39%) and NY-based IT services provider Presidio (PSDO US: +1.79%) traded flat, a potential fall-out from heavy selling in social networker Snap (SNAP US: -18.53%) during its first full week of trading. At least 8 (excluding China A shares) accessible global IPOs are set to commence trading this week with significant focus on the EUR million 881 IPO of Spanish security firm high-dividend payer Prosegur Cash (CASH SM), the largest European IPO YTD. We note hedge fund investor George Soros’s participation, who had previously also took part in the IPO of blockbuster Spanish IPO IPOX Holding airport operator Aena (AENA SM: +0.56%). IPOs lined up in the U.S. include aforementioned Canada-domiciled Canada Goose (GOOS US, GOOS CN), application software maker MuleSoft (MULE US) and ProPetro (PUMP US), a Texas-based hydraulic fracturing services provider. More IPOs are also lined up in Hong Kong and Taiwan (8423 HK, 8421 HK and 6533 TT).

Traded IPOs (week of 03/06/2017) Country
Impact Healthcare Reit PLC United Kingdom
J. Jill Inc United States
Microware Group Ltd Hong Kong
Persta Resources Inc Hong Kong
Presidio Inc United States
Upcoming IPOs (week of 03/13/2017) Country
Andes Technology Corp Taiwan
Canada Goose Holdings Inc Canada
Chi Ho Development Holdings Ltd Hong Kong
Hospital Corp of China Ltd China
MuleSoft Inc United States
ProPetro Holding Corp United States
Prosegur Cash SA Spain
Winson Holdings Hong Kong Ltd Hong Kong

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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