The IPOX® Week, October 16, 2017

  • Snap, Twitter propel IPOX 100 U.S. Index (IPXO) to strong weekly gain / Record weekly close.
  • IPOX-linked ETF Performance update: FPX ETF gains to 21.56% YTD, FPXI ETF gains to 39.20%.
  • Global Deal-flow Review and Outlook: Initial upside in U.S. deals strong / More IPOs lined up.

Snap, Twitter propel IPOX 100 U.S. Index (IPXO) to strong weekly gain / Record weekly close. The style box agnostic IPOX Indexes extended their record run last week, continuing to lock in significant gains across the Indexes Group. Strong upside, e.g., was recorded by the USD trillion 1.2 IPOX 100 U.S. Index (IPXO). The benchmark for the performance of U.S. IPOs and Spin-offs rose 0.93% to 20.82% YTD, extending the YTD lead vs. the S&P 500 Index (SPX) – main gauge for U.S. stocks – by 78 bps. to 678 bps. Upside was also strong in the IPOX Global (IPGL50) and in the IPOX Asia-Pacific (IPTA) which focus on IPO and Spin-off exposure to companies domiciled in developed Asia-Pacific.

Individual portfolio holdings in focus: Amid muted trading ahead of more earnings with some of the IPOX heavyweights trending relatively flat in aggregate, exposure to select small- and mid-caps, as well as sector momentum contributed significantly to outsized performance. Focus here was on the big weekly gain in U.S. social networkers including SNAP (SNAP US: 11.56%), officially shunned ad hoc by the key index providers on its voting rights structure – but only after it had performed sub-par following its IPO on perceived institutional pressure. While payment processors continued to rally, the announcement of IPOX 100 U.S. Index (IPXO) holding consumer financial OneMain (OMF US: 6.34%) left the index on the winning side of the corporate action trade – yet again. We note one more week of losses for Patrick Drahi’s telecoms firms 07/2017 IPO Altice U.S.A. (ATUS US: -12.00%) and Altice NV (ATC NA: -4.37%).

IPOX-linked ETF Performance update: FPX ETF gains to 21.56% YTD, FPXI ETF gains to 39.20% YTD. FPX and FPXI rose last week, tracking the performance of the underlying benchmarks (IPXO and IPXI). Both products offer a granular and style-box agnostic solution to investing in the largest global New Listings (IPOs and Spin-offs), often a pure proxy for economic growth and innovation.

IPOX Price Returns (%) Last Week Q3 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 0.89 8.63 27.25
IPOX Global (IPGL30) 0.89 7.27 27.63
IPOX International (IPXI)* 0.39 9.49 35.95
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 0.12 8.86 30.53
IPOX 100 U.S. (IPXO)* 0.93 7.06 20.82
IPOX 30 U.S. (IPXT) 1.15 7.99 22.62
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 0.46 5.59 22.40
IPOX Nordic (IPND) -0.05 5.17 19.77
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 1.52 2.85 17.33
IPOX China C. (IPXUCHCHP)* 0.19 12.29 42.59
IPOX China (CNI) 0.54 9.59 33.90

* 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: Initial upside in U.S. deals strong / More IPOs lined up. At least 13 notable (non-China A shares) firms commenced trading last week with the average (median) IPO adding 20.43% (13.00%) based on the difference between the final offering price and Friday’s close. Initial upside continued to be significant across the specialty deals “going public” in the U.S. market and the Nordic region, including online car vendor Cargurus (CARG US: 78.31%) and health care related OrthoPediatrics (KIDS US: 44.23%) or Bioartic (BIOAB SS: 22.50%). At least 12 deals are set to debut during this week, with smaller, growth-focused IPOs in tech industries likely to see most initial upside, including Sequoia-backed NoSQL database provider MongoDB (MDB US), China-based consumer financial Qudian (QD US), Asia-focused shopping platform operator Sea (SE US) or RISE Education (REDU US), a Chinese provider of after-school English lessons.

Select IPOs traded (week: October 09, 2017) Country
Alpha Financial Markets Consulting PLC Britain
BioArctic AB Sweden
Cargurus Inc U.S.A.
Garuda Maintenance Facility Aero Asia PT Indonesia
Glenveagh Properties Plc Ireland
Handicare Group AB Sweden
Henan Jinma Energy Co Ltd China
MCP Master Income Trust Australia
Optinose Inc U.S.A.
OrthoPediatrics Corp U.S.A.
Terveystalo Oyj Finland
TOA Paint Thailand PCL Thailand
Voltabox AG Germany
Webstep AS Norway
IPOs set to debut (week: October 16, 2017) Country
Aedas Home SAU Spain
ERO Copper Corp Canada
Godrej Agrovet Ltd India
Industrial Stars of Italy 3 SpA Italy
Livexlive Media, Inc U.S.A.
Magellan Global Trust Australia
MongoDB, Inc U.S.A.
Qudian Inc China
RISE Education Cayman Ltd China
Springfield Properties PLC Germany
Sea Ltd Singapore
The People’s Investment Trust PLC Britain

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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