The IPOX® Week, November 06, 2017

  • IPOX 100 U.S. Index (IPXO) closes week at fresh all-time high as IPOX U.S. heavyweights continue solid showing.
  • Deal-flow Review and Outlook: Amid flurry of deals, significant divergence in initial returns, IPO investors get more selective as number of deals get pulled.

IPOX 100 U.S. Index (IPXO) closes week at fresh all-time high as IPOX U.S. heavyweights continue solid showing. Amid another solid week for most of the IPOX Indexes, the FANG-free, style box agnostic IPOX 100 U.S. (IPXO) finished the first trading week of the month at yet another all-time high, supported by strong post-earnings momentum in select IPOX heavyweights. The benchmark for U.S. New Listings (IPOs and Spin-offs) rose 0.33% to 21.98%, 7 bps. ahead of the S&P 500 Index (SPX), main gauge for U.S. stocks. Indicative of the big return divergence amongst constituents and amid earnings and weak U.S. small-/mid-caps, equally-weighted returns lagged the applied market-cap weighted IPOX 100 U.S. (IPXO) by a large 66 bps. last week. Firms in focus in the U.S. included 04/17 IPO home products retailer Floor and Décor (FND US: 8.80%) or veteran IPOX holding clothing retailer Burlington Stores (BURL US: 7.59%), while online food delivery firm GrubHub (GRUB US: 3.62%) continued to climb alongside UK-based Just Eat (JE LN: 8.84%), re-enforcing deal speculation after strong corporate results. The story of the week belonged to embattled IPOX heavyweight French cable and satellite services provider Altice NA (ATC NA: -21.49%) and its U.S. offspring, 06/21 IPO Altice USA (ATUS US: -4.64%), the largest U.S. IPO YTD as both firms plunged anew on weak quarterly results.

IPOX 100 U.S. Investing with the 5-star FPX ETF since 2006:

IPOX Price Returns (%) Last Week Q3 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 0.56 8.63 27.31
IPOX International (IPXI)* 0.61 9.49 34.90
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 1.01 8.86 32.08
IPOX 100 U.S. (IPXO)* 0.33 7.06 21.98
IPOX 30 U.S. (IPXT) 0.68 7.99 24.04
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) -0.66 5.59 21.60
IPOX Nordic (IPND) 0.86 5.17 20.88
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 1.23 2.85 19.57
IPOX China C. (IPXUCHCHP)* 2.38 12.29 44.07
IPOX China (CNI) 2.31 9.59 34.16

* 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: IPOZ7]).

Deal-flow Review and Outlook: Amid flurry of deals, IPO investors get more selective: At least 18 notable (non-China A shares and non-local Indian) firms started trading last week with the average (median) IPO adding just 3.79% (3.07%) based on the difference between final offer and Friday’s close. The week’s overall take-up of deals was mixed at best as the solid reception to larger firms early in the week was met by the historic first day plunge in U.S. toymaker Funko (FNKO US: -41.67%) and followed by the cancellation of U.K. IPOs, indicative of a more selective initial IPO sentiment ahead. Amid this development, at least 12 accessible companies are lined up to go public across the global regions this week, including the blockbuster IPO of Hong Kong-traded Tencent (700 HK: 5.81%) Spin-off online literature platform operator China Literature (772 HK).

Select IPOs traded (week: October 30, 2017) Country
Allena Pharmaceuticals Inc U.S.A.
Altair Engineering Inc U.S.A.
Aquantia Corp U.S.A.
Befesa SA U.S.A.
Canadian Solar Infrastructure Fund Inc Japan
Crystal International Group Ltd Hong Kong
Evoqua Water Technologies Corp U.S.A.
Footasylum Ltd U.S.A.
Funko Inc U.S.A.
Grande Hospitality REIT Thailand
HelloFresh AG Germany
Hexindai Inc China
Loma Negra Cia Industrial Argentina SA Argentina
Sentinel Energy Services Inc U.S.A.
Spero Therapeutics Inc U.S.A.
IPOs set to debut (week: November 6, 2017) Country
Apellis Pharmaceuticals Inc U.S.A.
Bandwidth Inc U.S.A.
CBTX Inc U.S.A.
China Literature Ltd China
GMexico Transportes SAB de CV México
Komplett Bank ASA Norway
Keppel-KBS US REIT Singapore
Kidsland International Holdings Hong Kong
Metropolitan Bank Holding Corp U.S.A.
Sogou Inc China
TissueGene Inc U.S.A.
Workspace Property Trust U.S.A.

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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