The IPOX® Week, October 23, 2017

  • IPOX 100 U.S. Index (IPXO) closes week at fresh record. Other IPOX Indexes finish week mixed.
  • Amid earnings and corporate actions, big divergence amongst returns in individual IPOX portfolio holdings.
  • Global Deal-flow Review and Outlook: Good reception to the weeks deals / Brand-name IPOs lined up.

IPOX 100 U.S. Index (IPXO) closes week at fresh record. Other IPOX Indexes finish week mixed. The style box agnostic IPOX Indexes traded mixed last week, with most absolute and relative upside recorded by the IPOX Indexes focused on Developed Markets (IPXO, IXTE, IPTA). For example, the IPOX 100 U.S. (IPXO), benchmark for the performance of the largest and typically best performing U.S. New Listings by applying the IPOX Indexes Technology, added 0.77% to 21.75% YTD, lagging the S&P 500 Index (SPX) by just 9 bps. on the week. Amid earnings and more corporate actions, trading was characterized by a big divergence in the returns of individual IPOX portfolio holdings. In the U.S., e.g., stocks with big upside changes to last week’s close included payment solutions provider P/E-backed First Data (FDC US: 8.29%), financial GE-Spin-off Synchrony Financial (SYF US: 7.20%) or health care services provider Teladoc (TDOC US: 6.53%), while trading firm Virtu Financial (VIRT US: -15.54%), car maker Fiat Chrysler (FCAU US: -5.80%) or drug maker Shire (SHPG US: -5.72%) fell sharply. Amid the mixed performance of IPOX Indexes focused on markets outside the U.S., exposure in focus included Australian software firm Atlassian (TEAM US: 26.56%), Hong Kong semiconductor maker Hua Hong (1347 HK: 20.83%) or Swedish cable and satellite services provider Com Hem (COMH SS: 8.51%), while German car parts maker Kion (KGX GY: -12.13%), biotech Beigenie (BGNE US: -10.95%) and recent German IPO online food delivery firm Delivery Hero (DHER GY: -9.59%) slumped.

IPOX 100 U.S. (IPXO)-linked Investing since 2006:

IPOX Price Returns (%) Last Week Q3 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) -0.20 8.63 26.99
IPOX Global (IPGL30) 0.47 7.27 28.23
IPOX International (IPXI)* -0.45 9.49 35.33
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 0.33 8.86 30.96
IPOX 100 U.S. (IPXO)* 0.77 7.06 21.75
IPOX 30 U.S. (IPXT) 0.79 7.99 23.58
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) -0.18 5.59 22.18
IPOX Nordic (IPND) 0.38 5.17 20.23
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 0.97 2.85 18.46
IPOX China C. (IPXUCHCHP)* -0.44 12.29 41.96
IPOX China (CNI) -0.73 9.59 32.92

* 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: Good reception to the weeks deals / Brand-name IPOs lined up. At least 9 notable (non-China A shares and local Indian) firms commenced trading last week with the average (median) IPO adding 11.41% (8.40%) based on the difference between the final offering price and Fridays close. While select European deals fell, deals in the U.S. continued to be well received, including database platform operator MongoDB (MDB US: 27.83%) and respective China-linked deals such as consumer financial Qudian (QD US: 37.50%) and educational services provider RISE Education (REDU US: 14.55%). Focus during this week is on energy play BP-Spin-off BP Midstream Partners (BPMP US), infrastructure software maker ForeScout Technologies (FSCT US) and specialty retailer National Vision (EYE US), the U.S. pendant to Europe’s GrandVision (GVNV US). Focus abroad is on Banking Group BAWAG AG (BG AV).

Select IPOs traded (week: October 16, 2017) Country
Aedas Homes SAU  Spain
ERO Copper Corp  Canada
Industrial Stars of Italy 3 SpA  Italy
MongoDB, Inc  U.S.A.
Obuv Rossii OOO  Russia
Qudian Inc  U.S.A.
RISE Education Cayman Ltd  China
Sea Ltd  Singapore
SMCP SAS  France
Varta AG  Germany
IPOs set to debut (week: October 23, 2017) Country
 Ablynx NV  Belgium
 BP Midstream Partners LP  U.S.A.
 BAWAG Group AG  Austria
 ForeScout Technologies Inc  U.S.A.
 Johns Lyng Group Ltd  Australia
 National Vision Holdings Inc  U.S.A.
 Nexa Resources SA  Luxembourg

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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