The IPOX® Week, October 30, 2017

  • IPOX 100 U.S. Index (IPXO), other IPOX Indexes, consolidate towards month-end.
  • Amid earnings and news flow, big divergence amongst returns in individual IPOX portfolio holdings continues.
  • Global Deal-flow Review and Outlook: Attractive, diversified deals set to kick-off November

IPOX 100 U.S. Index (IPXO), other IPOX Indexes, consolidate towards month-end. With earnings driving big gyrations in individual portfolio holdings, the style box agnostic, FANG-free IPOX Indexes traded mixed last week. The IPOX 100 U.S. (IPXO), e.g., benchmark for the performance of the largest and typically best performing U.S. New Listings, declined fractionally to 21.58% YTD, lagging the S&P 500 Index (SPX) for a second week in a row. Weakness extended to other IPOX Indexes, such as the IPOX International (IPXI), IPOX Asia-Pacific (IPTA) or IPOX China (CNI). Individual IPOX portfolio holdings suffering steep losses on the week included cable & satellite service providers such as Liberty Broadband (LBRDA US: -10.25%) or Altice (ATNA NA: -8.42%) and a slew of recent U.S. Spin-offs with security solutions provider Allegion (ALLE US: -8.78%), biotech Bioverativ (BIVV US: -7.27%) or online automotive platform operator Cars.com (CARS US: -6.89%) leading the way. A good week in the Jack Dorsey-led IPOX holdings U.S. traded social networker Twitter (TWTR US: 21.32%) and payment processor Square (SQ US: 8.31%) helped to offset some of these losses. We note the fresh post-IPO high in Chicago-based online delivery service platform operator GrubHub (GRUB US: 14.67%) after earnings, re-enforcing deal speculation including IPOX holding, U.K. based Just Eat (JE/ LN: 5.30%).

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) -0.30 8.63 26.61
IPOX International (IPXI)* -0.92 9.49 34.08
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* -0.16 8.86 30.75
IPOX 100 U.S. (IPXO)* -0.15 7.06 21.58
IPOX 30 U.S. (IPXT) -0.31 7.99 23.20
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 0.19 5.59 22.41
IPOX Nordic (IPND) -0.32 5.17 19.84
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) -0.18 2.85 18.25
IPOX China C. (IPXUCHCHP)* -0.87 12.29 40.73
IPOX China (CNI) -1.35 9.59 31.13

* 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: Attractive, diversified deals set to kick-off November: At least 10 notable (non-China A shares and non-local Indian) firms commenced trading last week with the average (median) IPO adding 6.61% (6.17%) based on the difference between final offer and Friday’s close. Upside focus was on specialty IPOs, including optical retailer National Vision (EYE US: 27.95%) or infrastructure software maker ForeScout (FSCT US: 15.91%), while BP Midstream (BPMP US: -4.17%) and Austrian banking group BAWAG (BG AV: -4.17%) declined. November starts with a line-up of attractive IPOs across the growth/value/dividend spectrum, including online food servicing firm Hello Fresh (HFG GR), toymaker Funko (FNKO US), utility Evoqua Water (AQUA US) or two Asian-traded REITs, including Grande Hospitality (GAHREIT TB).

Select IPOs traded (week: October 23, 2017) Country
BAWAG Group AG Austria
BP Midstream Partners LP U.S.A.
Ferronordic Machines AB Sweden
ForeScout Technologies Inc U.S.A.
Johns Lyng Group Ltd Australia
Merchants Bancorp U.S.A.
National Vision Holdings Inc U.S.A.
Nexa Resources SA Luxembourg
Roots Corp Canada
TI Fluid Systems PLC Britain
IPOs set to debut (week: October 30, 2017) Country
Allena Pharmaceuticals Inc U.S.A.
Altair Engineering Inc U.S.A.
Aquantia Corp U.S.A.
Befesa SA Luxembourg
Canadian Solar Infrastructure Fund Inc Japan
Crystal International Group Ltd Hong Kong
Evoqua Water Technologies Corp U.S.A.
Footasylum Ltd Britain
Funko Inc U.S.A.
Grande Hospitality REIT Thailand
Hello Fresh AG Germany
Loma Negra Cia Industrial Argentina SA Argentina
Mynarik AG Germany
Spero Therapeutics Inc 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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