IPOX 100 U.S. (IPXO) surges while U.S. markets fall; Abbvie (ABBV US: +13.15), Snap (SNAP US: +7.50%) drive big gains. Ahead of quarterly U.S. Futures & Option expiration and re-balancing, select IPOX Indexes continued their drive into uncharted territory to close the week at record highs. For another week, the IPOX U.S. Universe led the way, with the diversified FANG-free IPOX 100 U.S. (IPXO) – benchmark for U.S. IPOs and Spin-off performance – surging by +1.65% to +15.36% YTD, a massive +226 bps. ahead of the falling S&P 500 (SPX), main proxy for U.S. stocks. While the IPOX Europe (IXTE) and IPOX Nordic (IPND) continued to weaken, Asia remained firm with both the IPOX China (IPXUCHCP, CNI) and IPOX Asia-Pacific (IPTA) extending their YTD rallies. We note continued gains in the IPOX International (IPXI), which also finished the week at a record, adding +0.53% to +33.70% YTD.
IPOX portfolio holdings in focus. In the U.S., the story of the week belonged to IL-based U.S. drug maker Abbvie (ABBV US: +13.15%), largest holding in the applied market-cap weighted IPOX 100 U.S. (IPXO). In an upside move reminiscent of the 07/2013 break-out of then-IPOX heavyweight Facebook (FB US: -0.62%) after exceeding earnings expectations for the first time, the drug maker surged after announcing successful results from a phase 2 trial of it eczema treatment and a big win in IP court related to its Humira drug, the world’s best selling drug, ring-fenced with more than 100 patents. IPOX Holding U.S. social networker Snap (SNAP US: +7.50%) – officially shunned by the standard Indexes tracking U.S. stocks – continued to recover on more positive news flow, this time concerning the introduction of Campus Publisher Stories. Big losses in select exposure after earnings weighed on portfolio returns, including family entertainment facilities operator TX-based Dave & Buster (PLAY US: -11.91%), IT services provider HP Enterprises (HPE US: -8.32%), consumer financial Synchrony Financial (SYF US: -7.66%) or content sharing platform operator Box (BOX US: -6.14%). In markets outside the U.S., the announcement of the inclusion to Japans Nikkei 225 Index (NKY: -2.12%) drove IPOX heavyweight human resources firm Recruit Holdings (6098 JP: +7.48%) to a fresh post-IPO high, while strong August contract sales spurred blue chip real estate developer China Vanke (2202 HK: +12.15%). We note renewed weakness in Patrick Drahis European cable and satellite services provider 01/2014 IPO Altice NV (ATC NA: -6.28%), while USD billion 20.8 Altice U.S. (ATUS: -7.57%) – this year’s largest IPO in the U.S. – plunged below initial offer the first time since its 06/2017 IPO amid record post-IPO volume.
|IPOX Price Returns (%)||Last Week||Q2 2017||YTD 2017|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global (IPGL50)||0.76||5.54||23.54|
|IPOX Global (IPGL30)||1.72||8.07||24.25|
|IPOX International (IPXI)*||0.53||9.24||33.70|
|Exposure: United States (USD)|
|IPOX Composite U.S. (IPXC)*||0.05||7.44||24.38|
|IPOX 100 U.S. (IPXO)*||1.65||3.86||15.36|
|IPOX 30 U.S. (IPXT)||1.80||4.62||17.06|
|Exposure: Europe/Nordic Region (EUR)|
|IPOX Europe (IXTE)||-0.86||4.95||17.52|
|IPOX Nordic (IPND)||-1.47||8.64||15.24|
|Exposure: Asia-Pacific/China Region (USD)|
|IPOX Asia-Pacific (IPTA)||1.14||2.99||16.85|
|IPOX China C. (IPXUCHCHP)*||0.24||10.06||36.74|
|IPOX China (CNI)||1.69||4.62||29.17|
* 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: IPOU7]).
IPOX-linked ETFs rise to fresh records; “FPX” ETF displays unique return properties. Last week’s big divergence in favor of IPOX underlined once more the asset allocation benefits of adding IPOX-linked exposure to a broad-based equity portfolio: With U.S. markets in moderate decline ahead of expiration across sectors and size/style segments, the diversified IPOX 100 U.S.-linked First Trust Equity Opportunities ETF (FPX) added +1.21% to +16.05% YTD, closing Friday at the highest level on record. Assets tied to the 11-year old fund rose to USD million 885. In international markets, the younger IPOX International (IPXI)-linked First Trust International IPO ETF (FPXI) added +0.45% to +35.46% YTD. The “FPX” and “FPXI” ETF provide a diversified granular regional solution to investing in the “going public” effect associated with the largest and typically best performing global New Listings, often a pure proxy for growth and innovation.
Global Deal-flow Review and Outlook: Ahead of wave of IPOs, no deal flow seen. No notable accessible global (non-China A shares) firms debuted last week. Ahead of a busy week for U.S. IPOs, no significant accessible IPOs are set to debut during the week of September 11, 2017.
|Select IPOs traded (week: September 4, 17)||Country|
|No notable accessible IPOs traded|
|IPOs set to debut (week: September 11, 17)||Country|
|No notable accessible IPOs scheduled|
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.
Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services nor information provided by any of the above service providers and any service or information used to execute any trading strategies are solely based on the independent analysis of the user.