Amid weak U.S. large-caps, IPOX 100 U.S. Index (IPXO) records big jump, starts shortened U.S. trading week at fresh historic record. The style box agnostic large-cap centric IPOX 100 U.S. (IPXO) bucked the weakness in U.S. large-caps during U.S. option expiration week, adding 1.32% to 22.99% YTD, a massive 145 bps. ahead of the S&P 500 Index (SPX) – benchmark for U.S. stocks – last week. As U.S. earnings season winds down, the weekly return variation amongst IPOX 100 U.S. (IPXO) portfolio holdings declined relative to the previous week but remained elevated, with the average (median) equally-weighted constituent adding 1.08% (0.91%), lagging the applied market-cap weighted IPOX 100 U.S. (IPXO) anew. Big gains amongst more heavily weighted stocks in health care and the slew of second generation payment processers led some of the gains, including drug maker Shire (SHPG US: 4.99%), biotech Bioverativ (BIVV US: 4.57%), Jack Dorsey-led payment processor Square (SQ US: 12.68%) or PayPal (PYPL US: 3.23%), while negative post-earnings momentum pressured biotech researcher INC Research (INCR US: -3.45%) or trucker Schneider National (SNDR US: -3.34%). In markets abroad, the jump in electrical components maker Fit Hon Teng (6088 HK: 33.40%) or Chinese social media platform Weibo (WB US: 10.05%) more than offset more losses in IPOX heavyweight Altice NV (ATC NA: -21.36%), with the IPOX International (IPXI) adding to its YTD gains last week.
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)||0.76||8.63||27.39|
|IPOX International (IPXI)*||0.31||9.49||34.49|
|Exposure: United States (USD)|
|IPOX Composite U.S. (IPXC)*||0.39||8.86||32.18|
|IPOX 100 U.S. (IPXO)*||1.32||7.06||22.99|
|IPOX 30 U.S. (IPXT)||1.60||7.99||25.66|
|Exposure: Europe/Nordic Region (EUR)|
|IPOX Europe (IXTE)||-1.48||5.59||15.91|
|IPOX Nordic (IPND)||-1.59||5.17||15.93|
|Exposure: Asia-Pacific/China Region (USD)|
|IPOX Asia-Pacific (IPTA)||-0.73||2.85||18.00|
|IPOX China C. (IPXUCHCHP)*||-0.28||12.29||45.11|
|IPOX China (CNI)||0.65||9.59||37.03|
* 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: Some deals gain strongly, but the average IPO struggles to stay above offer; week’s focus is on deals outside the U.S.: At least 12 notable (non-China A shares and non-local Indian) firms commenced trading last week with the average (median) equally-weighted IPO adding just 0.62% (1.17%) based on the difference between final offer and Friday’s close. Most upside was recorded by oversubscribed Hong Kong-listed gaming stock Razor (1337 HK: 11.08%) and U.S.-traded infrastructure software maker Morgan Stanley-led SendGrid (SEND US: 16.31%), while other deals traded mixed at best, underlying the selective initial IPO pricing environment into the end of the calendar year. Amid the shortened U.S. trading week, focus this week is on several IPOs abroad, including the landmark IPO of real estate developer Emaar Development (EMAARDEV UH) in Dubai and a slew of small IPOs in specialty industries including Australia’s funeral services provider Propel Funeral Partners (PFP AU), Australia’s investment management services provider Netwealth Group (NWL AU), Swedish medical devices maker IRRAS (IRRAS SS) or Danish kitchen and bathroom furnishings maker TCM Group (TCM DC).
|Select IPOs traded (week: 11/13/2017)||Country|
|Bakkavor Group PLC||Britain|
|Bestway Global Holding Inc||China|
|Bluegreen Vacation Corp||U.S.A.|
|Jianpu Technology Inc||China|
|SailPoint Technologies Holding Inc||U.S.A.|
|Stitch Fix Inc||U.S.A.|
|YiXin Group Ltd||China|
|Select IPOs expected (week: 11/20/2017)||Country|
|Netwealth Group Inc||Australia|
|PT PP Presisi Tbk||Indonesia|
|Emaar Development PJSC||U.A.E.|
|Propel Funeral Partners Ltd||Australia|
|TCM Group A/S||Denmark|
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.
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