The IPOX® Week, November 28, 2016

  • IPOX U.S. Indexes extend gains during shortened U.S. trading week. IPOX 100 U.S. Index-linked ETF (FPX US, FPX LN) gains traction on both sides of the Atlantic.
  • Other IPOX Regional Indexes trade mixed.
  • Global IPO focus to remain outside the U.S.

IPOX U.S. Indexes extend gains during shortened U.S. trading week. IPOX 100 U.S. Index-linked ETF (FPX US, FPX LN) gains traction on both sides of the Atlantic. The IPOX U.S. Indexes extended recent gains, with the diversified broad IPOX 100 U.S. Index (IPXO) adding +1.37% to +5.77% YTD, in line with the U.S. benchmarks. Big gains in U.S. domiciled small- and mid-caps after earnings drove the index to near all-time highs with firms including clothing retailer Burlington Stores (BURL US: +14.05%), applications software maker Veeva Systems (VEEV US: +11.36%) or specialty apparel store operator Duluth Holdings (DLTH US: +9.30%) with most upside focus, while infrastructure software maker Palo Alto Networks (PANW US: -12.30%) slumped after missing the earnings mark for a second time in a row. 18/99 firms in the IPOX 100 U.S. Index (IPXO) rose on the week, with the average (median) equally-weighted firm gaining +2.21% (+2.16%), outperforming the index for a third week in a row and reflective of the huge relative strength of U.S. small-caps. We note continued strong trading activity in Exchange-traded products tracking the IPOX 100 U.S. Index (IPXO), including the 5-star USD million 610 NYSE-listed First Trust U.S. IPO Index ETF (FPX) and its London Stock Exchange-traded counterpart, the First Trust US IPO Index UCITS ETF (FPX LN) available to European investors. Other IPOX U.S.-linked investment products extended strong performance, including the actively managed Catalyst IPOX Allocation Fund (OIPAX) which extended its YTD gain by +1.68% to +13.52%.

IPOX Returns (%) (P) Week Q3 16 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 1.02 8.91 -1.81
IPOX Global 30 (IPGL30) 0.59 9.85 1.37
IPOX Intern. (IPXI)* 0.56 11.01 -4.10
Exposure: United States
IPOX Composite U.S. (IPXC)* 1.33 11.33 8.85
IPOX 100 U.S. (IPXO)* 1.37 7.16 5.77
IPOX 30 U.S. (IPXT) 0.98 8.41 7.96
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 0.50 12.02 -5.05
IPOX Nordic (IPND) -0.20 7.45 -4.90
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) -0.05 5.28 -0.60
IPOX China C. (IPXUCHCHP)* 0.87 16.94 0.87
IPOX China (CNI) 2.49 11.59 -4.24

* Basis for Exchange-Traded Products (e.g. FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [IPOZ6]).

Other IPOX Regional Indexes trade mixed. Other IPOX Regional Indexes continued to trade relatively mixed with most notable absolute upside recorded by the IPOX China (CNI) and IPOX Europe (IXTE). Amid the Hong Kong IPO announcement of Chinese Selfie app developer Meitu, big upside was recorded by social media platform USD billion 10.4 Weibo (WB US: +10.77%), while Chinese e-commerce behemoth IPOX heavyweight Alibaba (BABA US: -0.41%) continued to lag for a third week in a row. We also note new weekly highs in Italian sports car maker Ferrari (RACE IM: +3.59%) and German-domiciled specialty chemicals maker Bayer-Spin off Covestro (1COV GY: +3.17%). Amid continued weakness in global utilities on rising rates, the IPOX Nordic (IPND) lagged the market benchmarks last week, with declines in recently issued alternative energy firm IPOX heavyweight Dong Energy (DENERG DC: -2.80%) and communications equipment maker Eltel (ELTEL SS: -12.40%) weighing on index performance.

Traded IPOs (wk.: 11/21) Identifier Return (%)
Alligator Bioscience AB ATORX SS 8.62
Guangdong Adway 6189 HK -1.73
Mengke Holdings Ltd 1629 HK 8.57
Pantronics Holdings Ltd 1611 HK -6.67
RussNeft PJSC RNFT RM 1.45
Serneke Group AB SRNKEB SS -0.91
THQ Nordic AB THQNB SS 41.50
VPower Group International 1608 HK -2.43
Upcoming IPOs (wk.: 11/28) Identifier Sector
Arcus ASA ARCUS NO C. Staples
CMON Ltd 8278 HK Info. Tech.
DNA Oy DNA FH Health Care
Food Wise Holdings Ltd 1632 HK C. Discret.
Goldway Education Group Ltd 8160 HK C. Discret.
Innovative Industrial Properties IIPR US Real Estate
Varta AG VAR1 GY Industrials

Global IPO focus to remain outside the U.S. At least 8 significant firms commenced trading on an accessible (non China A shares and domestic India) stock exchange last week, with the average (median) equally-weighted deal gaining +6.05% (+0.27%) based on the difference between the final offerings price and Friday’s close. Ahead of more significant deal flow (ARCUS NO, DNA FH), IPOs in Europe’s Nordic region remained well bid. With U.S. markets expected to remain quiet, other notable IPOs include German battery maker Varta AG (VAR1 GY).

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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