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The IPOX® Week, May 30, 2017

  • IPOX Indexes extend absolute and relative gains towards month end.
  • IPOX-linked ETFs mirror strength in underlying IPOX Indexes, AUM surge.
  • Global deal-flow review and outlook: Most upside focus on specialty IPOs, more deals lined up.

IPOX Indexes extend absolute and relative gains towards month end. On the global level, the IPOX Global (IPGL50) – the 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 +1.43% to +14.68% YTD, +47 bps. ahead of the global market last week. Relative strength was significant across the IPOX Indexes focusing on firms domiciled outside the U.S. (IPXI), U.S. (IPXO, IPXT) and European-domiciled (IXTE, IPND), while IPOX Asia-Pacific (IPTA) and IPOX China (IPXUCHCP) lagged. For example, U.K. domiciled specialty exposure including payment processor Convatec (CTEC LN: +8.33%) and Just Eat (JE/LN: +7.98%), online marketplace for restaurant delivery, drove the IPOX Europe (IXTE) to a gain of +1.37% to +16.88% YTD last week, now a massive +965 bps. ahead vs. the European market YTD. Moreover, in the U.S., big momentum in stocks which had recently reported strong earnings carried the USD trillion 1.3 IPOX 100 U.S. to another strong week, adding +1.54% to +9.99% YTD. Jack Dorsey-led payment processor Square (SQ US: +12.15%) and applications software maker Veeva (VEEV US: +10.79%) were portfolio holdings trading with most upside, while Markus Simonis’ Camping World (CWW US: -9.57%) and drug maker IPOX heavyweight Shire (SHPD US: -6.32%) sank most on the week. In all, just 27% of portfolio holdings in the IPOX 100 U.S. (IPXO) fell last week, with the average (median) equally-weighted portfolio holding adding +1.68%, more than when compared to the applied market weighted IPOX 100 U.S., weighed by weakness in some heavyweights.

IPOX-linked ETFs mirror strength in underlying IPOX Indexes, AUM surge. We note strong AUM inflows into ETPs tied to the IPOX 100 U.S. last week with the USD million 768, 11 year-old, 5-star First Trust U.S. Equity Opportunities ETF (FPX) being the main beneficiary, gaining +1.48% to +10.31% YTD. Amongst other IPOX-linked investment vehicles trading, the First Trust International IPO ETF (FPXI) added +0.57% to +21.87% YTD, its eight subsequent weekly gain.

IPOX Price Returns (%) Last Week Q1 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 1.43 8.33 14.68
IPOX Global (IPGL30) 1.08 7.37 14.65
IPOX International (IPXI)* 0.73 11.49 20.66
Exposure: United States
IPOX Composite U.S. (IPXC)* 1.19 9.26 14.60
IPOX 100 U.S. (IPXO)* 1.54 6.12 9.99
IPOX 30 U.S. (IPXT) 1.80 5.90 10.25
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 1.37 9.03 16.88
IPOX Nordic (IPND) 1.83 3.84 11.62
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) -0.01 8.32 9.74
IPOX China C. (IPXUCHCHP)* 0.64 11.44 18.84
IPOX China (CNI) 0.79 11.52 17.06

* 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]).

Global deal-flow review and outlook: Most upside focus on specialty IPOs, more deals lined up. At least 8 notable (non China A-share) firms commenced trading last week with the average (median) equally-weighted stock adding a strong +15.37% (+13.02%) based on the difference between the final offering price and week’s close. Most initial upside focus was on specialty IPOs linked to growth industries (tech, health care), including application software makers U.S.-domiciled Appian (APPN US: +42.58%) and U.K.-domiciled Alfa Financial Software (ALFA US: +32.23%), while Stockholm based health care facilities operator Medicover AB (MCOVB SS: +12.95%) underpinned big ECM momentum for deals in Europe’s Nordic Region. Amid the shortened U.S. trading week, more global deals are lined up: Top of the list ranks Sweden’s online merchant Boozt AB (BOOZT SS) followed by Norway-based specialist construction services provider Saferoad Holdings ASA (SAFE NO). Deals in The Americas include energy firms, such as Kinder Morgan Canada Ltd. (KML CN) and re-scheduled U.S.-based services provider Liberty Oilfield Services Inc. (BDFS US).

Traded IPOs (week of 05/22/2017) Country
Alfa Financial Software Holdings PLC Great Britain
Appian Corp United States
Fjord1 AS Norway
FY Financial Shenzhen Co Ltd China
Hao Bai International Cayman Ltd Hong Kong
Medicover AB Sweden
SMART Global Holdings Inc United States
WideOpenWest Inc United States
Upcoming IPOs (week of 05/30/2017) Country
Boozt AB Sweden
Kinder Morgan Canada Ltd. Canada
Liberty Oilfield Services Inc. United States
Saferoad Holdings ASA Norway
Speed Apparel Holding 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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