The IPOX® Week, November 13, 2017

  • IPOX 100 U.S. Index (IPXO), other IPOX Indexes, follow Europe, U.S. small-caps lower. Sharp divergence in returns of IPOX portfolio holdings continues.
  • Global Deal-flow Review and Outlook: China Literature (772 HK) sets strong tone for Chinese-linked IPOs / Ahead of U.S. holiday week, more global IPOs lined up.

IPOX 100 U.S. Index (IPXO), other IPOX Indexes, follow Europe, U.S. small-caps lower. Sharp divergence in returns of IPOX portfolio holdings continues. Amid weak Europe, mixed Asia and declining U.S. small-caps (RTY: -1.31%), most of the IPOX Indexes declined last week, with the FANG-free, style box agnostic IPOX 100 U.S. (IPXO) shedding -0.48% to 21.39% YTD, 27 bps. more than when compared to the S&P 500 (SPX) – benchmark for U.S. stocks. Amid earnings triggering big declines in select exposure, the divergence in last week’s returns amongst IPOX 100 U.S. (IPXO) stocks, for example, was massive with the average (median) equally-weighted portfolio holding declining by -1.78% (-0.85%), significantly more than the applied market-cap weighted IPOX 100 U.S. (IPXO). Firms in focus included social networker Snap (SNAP US: -16.44%), U.S. consumer financial One Main (OMF US: -22.28%) or biotech researcher INCR (INCR US: -33.05%). We also note the fresh series of declines in IPOX heavyweight French cable & satellite services provider Altice (ATC NA: -17.67%) and Altice USA (ATUS: -3.05%). Big gains in select exposure helped to offset some of the losses, and included U.S. trading firm Virtu (VIRT US: 22.68%), health club operator Planet Fitness (PLNT US: 12.30%), payment processor Square (SQ US: 6.29%) or IL-based drug maker Abbvie (ABBV US: 3.38%). Amid the first snowfall in the U.S. Midwest, we also note the fresh post-IPO high in high-end Anorak Jacket maker 03/2017 IPO Canada Goose (GOOS US: 23.11%), a portfolio stock tracked in the IPOX International (IPXI).

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) -0.70 8.63 26.42
IPOX International (IPXI)* -0.64 9.49 34.03
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* -0.31 8.86 31.66
IPOX 100 U.S. (IPXO)* -0.48 7.06 21.39
IPOX 30 U.S. (IPXT) -0.29 7.99 23.68
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) -3.26 5.59 17.63
IPOX Nordic (IPND) -2.56 5.17 17.79
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) -0.64 2.85 18.71
IPOX China C. (IPXUCHCHP)* 1.01 12.29 45.53
IPOX China (CNI) 1.50 9.59 36.17

* 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]).

Global Deal-flow Review and Outlook: At least 18 notable (non-China A shares and non-local Indian) firms commenced trading last week with the average (median) equally-weighted IPO adding 12.06% (3.62%) based on the difference between final offer and Friday’s close. The big gain in Tencent (700 HK: 4.73%%) Spin-off China Literature (772 HK: 82.55%) is set to continue to spur demand for (China-linked) deals in H.K. and the U.S. ahead of the U.S. holiday week, such as computer hardware firm Razer Inc (1337 HK) or China’s online car retailer YiXin Group Ltd (2858 HK). Refiled U.K. food manufacturer Bakkavor Group (BAKK LN), personal shopping platform operator Stich Fix (SFIX US), software firm SendGrid (SEND US) or U.S. specialty chemicals maker MPM Holdings (MPMQ US) rank amongst the list of non-China-linked deals set to start trading during this week.

Select IPOs traded (week: 11/06/2017) Country
Apellis Pharmaceuticals Inc U.S.A.
China Literature Ltd China
ContourGlobal PLC Britain
Crayon Group Holding AS Norway
Four Seasons Education Cayman Inc China
Gmexico Transportes SAB de CV Mexico
Keppel-KBS US REIT Singapore
PPDAI Group Inc China
Sogou Inc China
Select IPOs expected (week: 11/13/2017) Country
Bakkavor Group PLC Britain
Bestway Global Holding Inc China
Jianpu Technology Inc China
Molino Canuelas SACIFIA Argentina
MPM Holdings Inc/DE U.S.A.
Orphazyme A/S Denmark
Razer Inc U.S.A.
SendGrid Inc U.S.A.
Stitch Fix Inc U.S.A.
YiXin Group Ltd China
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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