The IPOX® Week, May 01, 2017

  • Strong earnings, momentum, political certainty propel IPOX Indexes to strong week.
  • IPOX-linked Funds extend YTD gains.
  • U.S. deals rise, more IPOs lined up.

Strong earnings, momentum, political certainty propel IPOX Indexes to strong week. Last week, the IPOX Indexes continued to zoom higher with the IPOX Global 50 (IPGL50) rising +2.30% to +11.40% YTD, outpacing the global market anew. IPOs and Spin-offs domiciled outside the U.S. as tracked by the IPOX International (IPXI) rose by +2.66% to +16.35% YTD. Amid lowered political uncertainty in Europe, most upside focus within the IPOX Regional Universe was on the IPOX Europe (IXTE): On the back of big gains in EUR billion 28.3 French cable services provider Altice (ATC NA: +10.46%), the benchmark for the performance of European IPOs and Spin-offs rose a massive +4.69% to +14.43% YTD extending the YTD lead vs. the Stoxx Europe 50 (SX5P) to +871 bps. In the U.S., the IPOX U.S. (IPXC, IPXO, IPXT) set fresh all-time highs for most days of the week, however, declined towards month-end, with the IPOX 100 U.S. Index (IPXO) adding +1.83% to 8.00% YTD. Stocks with upside focus included takeover Ohio-based sandwich maker AdvancePierre (ABPH US: +17.50%), car maker Fiat Chrysler (FCAU US: +12.69%) and social networker Twitter (TWTR US: +12.65%), while weak earnings reported by heavyweight GE-Spin-off Synchrony Financial (SYF US: -16.72%) underlined jitters around U.S. consumer financials and weak pricing environment for IPOs in the sector. For stocks traded in the IPOX Asia-Pacific (IPTA), we note renewed gains in Nord Anglia Education (NORD US: +16.29%), operator of British International Schools in the U.S.

IPOX-linked Funds extend YTD gains. The IPOX 100 U.S. Index-(IPXO)-linked, 5-star, 734 million First Trust U.S. Equity Opportunities ETF (FPX) rose +1.83% to +8.33% YTD, the First Trust International IPO ETF (FPXI) gained to +16.13% YTD, while the actively managed Catalyst IPOX Allocation Fund (OIPAX) rose +1.97% +7.25% YTD.

IPOX 100 U.S. Index (IPXO-linked Investing since 2006:ipox-may-01

IPOX Price Returns (%) Last Week Q1 2017 2017 YTD
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 2.30 8.33 11.40
IPOX International (IPXI)* 2.66 11.49 16.35
Exposure: United States
IPOX Composite U.S. (IPXC)* 1.87 9.26 11.85
IPOX 100 U.S. (IPXO)* 1.83 6.12 8.00
IPOX 30 U.S. (IPXT) 1.97 5.90 8.06
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 4.69 9.03 14.43
IPOX Nordic (IPND) 2.30 3.84 8.82
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) 0.57 8.32 9.21
IPOX China C. (IPXUCHCHP)* 1.36 11.44 15.14
IPOX China (CNI) 0.91 11.52 13.62

* 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]).

U.S. deals rise, more IPOs lined up. At least 9 notable global IPOs (non-China A shares deals) commenced trading last week with the average (median) equally-weighted IPO adding +9.95% (+6.67%) based on the difference between the final offering price and the week’s close. U.S. deals traded somewhat uneven, with car vending machine operator USD billion 1.47 Carvana (CVNA US: -26.00%) recording a notable decline based on offer, while China-based online consumer lending platform operator China Rapid Finance (CRF US: +6.67%) saw a ca. 37% cut in valuation into its IPO. Focus this week includes Sydney-traded waste recycler Macquarie-led Bingo Industries (BIN AU), Goldman Sachs-led energy services provider Liberty Oilfield Services (BDFC US) and NZ-traded healthcare facilities operator Oceania Healthcare (OCA NZ).

Traded IPOs (week of 04/24/2017) Country
Carvana Co United States
China Rapid Finance Ltd China
Cloudera Inc United States
Eddie Stobart Logistics PLC Great Britain
Emerald Expositions Events Inc United States
Floor & Decor Holdings Inc United States
NCS Multistage Holdings Inc United States
Verona Pharma PLC Great Britain
Zymeworks Inc Canada
Upcoming IPOs (week of 05/01/2017) Country
Antero Resources Midstream Management United States
Biohaven Pharmaceutical Holding Co. Ltd. United States
Bingo Industries Ltd. Australia
KKR Real Estate Finance Trust Inc. United States
Liberty Oilfield Services United States
Oceania Healthcare Ltd New Zealand

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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