The IPOX® Week, May 22, 2017

  • IPOX 100 U.S. back on top of weekly performance rankings, rises as most U.S. equities fall.
  • IPOX-linked ETFs “FPX” and “FPXI” gain on the week, dodge the Brazil bullet.
  • Review of week’s global deals: Amid buyer’s market for IPOs, IPOs show initial strength; Solid deal flow seen.

IPOX 100 U.S. back on top of weekly performance rankings, rises as most U.S. equity fall. With the exception of the consolidating IPOX Europe Indexes (IXTE, IPND), all IPOX Indexes rose last week with the IPOX Global 50 (IPGL50) adding +0.23% to +13.06% YTD. Most notable was the strength in the IPOX 100 U.S. (IPXO) which traded insulated from U.S. political uncertainty. The benchmark for IPO and Spin-off performance added +0.13% to +8.32% YTD, significantly ahead of all other U.S. equity benchmarks. Here, big strength in application software maker Veeva Systems (VEEV US: +7.05%), Chicago-based French fries’ maker Spin-off Lamb Weston (LAMB US: +5.17%) and solid IPOX heavyweights drug maker Shire (SHRD US: +3.59%) and consumer staple Kraft Heinz (KHC US: +1.50%), outweighed big weakness in Financials and Retail. An analysis of the weekly return distribution amongst equally-weighted IPOX 100 U.S. Portfolio holdings underpinned the positive influence of the solid showing in the key IPOX heavyweights last week: 56% of portfolio holdings fell, with the average (median) equally-weighted portfolio holdings declining by -0.32% (-0.40%) on the week. In international markets, the IPOX International (IPXI) dodged the crash in Brazilian stocks and closed higher for an eighth week in a row, driven by another big week for China-linked Technology/E-commerce exposure including Weibo (WB US: +25.24%) and Alibaba (BABA US: +2.39%) and the acquisition offer for IPOX International (IPXI) holding target Dutch drug developing services firm Patheon (PTHN US: +33.12%).

IPOX-linked ETFs “FPX” and “FPXI” gain on the week, dodge the Brazil bullet. The performance of IPOX-linked funds mirrored trading in the underlying IPOX Indexes: For example, the IPOX 100 U.S. (IPXO)-linked, 5-star, 742 million First Trust U.S. Equity Opportunities ETF (FPX) added +0.20% to +8.70% YTD last week, while the First Trust International IPO ETF (FPXI) extended its performance run to +21.17% YTD

IPOX Price Returns (%) Last Week Q1 2017 2017 YTD
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 0.23 8.33 13.06
IPOX Global (IPGL30) 0.16 7.37 13.42
IPOX International (IPXI)* 0.32 11.49 19.79
Exposure: United States
IPOX Composite U.S. (IPXC)* 0.24 9.26 13.26
IPOX 100 U.S. (IPXO)* 0.13 6.12 8.32
IPOX 30 U.S. (IPXT) 0.27 5.90 8.30
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) -1.08 9.03 15.30
IPOX Nordic (IPND) -2.29 3.84 9.61
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) 0.29 8.32 9.75
IPOX China C. (IPXUCHCHP)* 0.71 11.44 18.09
IPOX China (CNI) 0.39 11.52 16.15

* 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]).

Review of week’s global deals: Amid buyer’s market for IPOs, IPOs show initial strength; Solid deal flow seen. At least 8 notable global IPOs, all small-caps, (non A-share Chinese deals) started trading last week with the average (median) equally-weighted stock gaining +15.69% (+16.52%) based on the difference between the final offering price and the week’s close. Firms with most initial upside included Stockholm-traded industrial Munters Group (MTRSB SS: +20.10%) or China-linked educational services provider Bright Scholar Education (BEDU US: +21.14%) which benefited from big strength in recent IPO Laureate Education (LAUR US), as well as bidding activity for firms in the sector, including HK-domiciled Nord Anglican Education (NORD US). Focus during the week is clearly on deals originating the U.S. and the burgeoning Nordic region, including Morgan Stanley and Goldman Sachs-led application software maker VA-based Appian (APPN US), semiconductor maker SMART Global (SGH US) or cable & network services provider WideOpenWest (WOW US), the largest U.S. deal of the week. Deals outside the U.S. include Norway-based transit services provider Fjord1 (FJORD1 NO) and construction firm Saferoad (SAFE NO), as well as Medicover (MCOVB SS), a Stockholm-based operator of ambulatory clinics.

Traded IPOs (week of 05/15/2017) Country
Argenx SE Netherlands
BOCOM International Holdings Co Ltd Hong Kong
Bright Scholar Education Holdings Ltd China
Eve Sleep Plc Great Britain
G1 Therapeutics Inc United States
Indel B SpA Italy
Munters Group AB Sweden
Okura Holdings Ltd Hong Kong
Upcoming IPOs (week of 05/22/2017) Country
Appian Corp United States
Fjord1 AS Norway
FY Financial Shenzhen Co Ltd China
Medicover AB Sweden
Saferoad Holding ASA Norway
SMART Global Holdings Inc United States
VBG International Holdings Ltd Hong Kong
WideOpenWest 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.

Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services provided by any of the above service providers and any service used to execute any trading strategies are solely based on the independent analysis of the user.

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