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The IPOX® Week, May 08, 2017

  • Strong earnings, corporate actions leave IPOX Indexes on top of weekly performance rankings.
  • IPOX-linked ETF performance update.
  • Mixed reception to week’s IPO’s, massive deal flow lined up across global regions.

Strong earnings, corporate actions leave IPOX Indexes on top of weekly performance rankings. Driven by strong earnings of key holdings and corporate action activity, the IPOX Indexes continued to zoom higher with the IPOX Global 50 (IPGL50) – benchmark for the performance of the largest and best performing global IPOs and Spin-off over the past four years – gaining +1.07% to +12.59% YTD, outpacing the global market anew. Most upside focus within the IPOX Regional Universe continued to be on the IPOX Europe (IXTE): On the back of strong gains in luxury car maker Ferrari (RACE US: +8.25%) and heavily weighted Dutch banking group ABN Amro (ABN NA: +6.60%) the benchmark for the performance of European IPOs and Spin-offs rose another +2.73% to +17.56% YTD, extending the YTD lead vs. the Stoxx Europe 50 (SX5P) to +978 bps. Strong earnings and takeovers amongst IPOX holdings also propelled the IPOX U.S. Indexes (IPXC, IPXO, IPXT): For example, the IPOX 100 U.S. Index – (IPXO) added +1.28% to +9.38% YTD to close at a fresh all-time high, now +221 bps. YTD ahead of the S&P 500 Index (SPX). Amid earnings and more takeovers, the return distribution within IPOX 100 U.S. Index (IPXO) holdings was large: While life science equipment maker VWR (VWR US: +17.76%), hardware maker Lumentum (LITE US: +15.67%) or social networker Twitter (TWTR US: +13.41%) jumped, communications equipment maker Commscope (COMM US: -14.87%), applications software maker Cotiviti (COTV US: -8.26%) and REIT Uniti Group (UNIT US: -7.72%) plunged. We note another the strong gains in recent IPO Brazilian low-cost airline IPOX Global 50 (IPGL50) holding Azul (AZUL US: +10.48%).

IPOX-linked ETF performance update: Select IPOX-linked ETFs closed the week at record highs: For example, the IPOX 100 U.S. Index-(IPXO)-linked, 5-star, 731 million First Trust U.S. Equity Opportunities ETF (FPX) rose +1.25% to +9.68% YTD, while the First Trust International IPO ETF (FPXI) gained to +17.43% YTD.

IPOX Price Returns (%) Last Week Q1 2017 2017 YTD
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 1.07 8.33 12.59
IPOX International (IPXI)* 0.88 11.49 17.37
Exposure: United States
IPOX Composite U.S. (IPXC)* 0.75 9.26 12.69
IPOX 100 U.S. (IPXO)* 1.28 6.12 9.38
IPOX 30 U.S. (IPXT) 1.26 5.90 9.42
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 2.73 9.03 17.56
IPOX Nordic (IPND) 1.96 3.84 10.95
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) -0.93 8.32 8.19
IPOX China C. (IPXUCHCHP)* -0.67 11.44 14.37
IPOX China (CNI) -1.26 11.52 12.19

* 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]).

Mixed reception to week’s IPO’s, massive deal flow lined up across global regions. At least 9 notable global IPOs (non A-share Chinese deals) started trading last week with the average (median) equally-weighted IPO dropping (gaining) -1.47% (+0.00%) based on the difference between the final offering price and week’s close. While GS-deal Liberty Oilfield Services (BDFC US) was moved and energy firm Antero Resources Midstream (AMGP US) fell amid the big weakness in global commodities, most upside amongst U.S. deals was recorded by KKR Real Estate Finance (KREF US). The respective IPOs in Australia and New Zealand traded lackluster. At least 13 notable IPOs (non-China A-shares) are lined up to go public in the global regions this week: Top of the list rank GS-led Industrial Gardner Denver Holdings (GDI US), Dutch Engineering & Construction services provider KVW (KVW NA), Korean Financial ING Life Insurance (079440 KS) and Canadian application software maker Real Matters (REAL CN). Amid the gains in the IPOX Nordic (IPND), additional firms are also lined up to go public in the region.

Traded IPOs (week of 05/01/2017) Country
Antero Resources Midstream Management United States
Bingo Industries Ltd Australia
Biohaven Pharmaceutical Holding Co Ltd United States
KKR Real Estate Finance Trust Inc United States
Oceania Healthcare Ltd New Zealand
Ovid therapeutics Inc United States
STEP Energy Services Ltd Canada
TPG Pace Energy Holdings Corp United States
UroGen Pharma Ltd United States
Upcoming IPOs (week of 05/08/2017) Country
China Everbright Greentech Ltd China
Five Point Holdings LLC United States
Gardner Denver Holdings Inc United States
ING Life Insurance Korea Ltd Korea
Instalco Intressenter AB Sweden
Instalco Sverige AB Sweden
Kamux Corp Finland
Koninklijke Volkerwessels NV Netherlands
Liberty Oilfield Services Inc. United States
Prodways Group SA France
Real Matters Inc Canada
Solaris Oilfield Infrastructure Inc United States
Yangzhou Guangling District Taihe 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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