The IPOX® Week, September 12, 2016

  • Amid jump in volatility ahead of expiration, IPOX Indexes trade mixed.
  • IPOX-linked funds in focus: FPX, FPXI, OIPAX.
  • The wait is over: IPOs line up for trading debut.

Amid jump in volatility (VIX: +46.08%) ahead of expiration, select IPOX Indexes record relative strength. The IPOX Indexes traded mixed last week with the IPOX Global 30 (IPGL30) – benchmark for the performance of the largest and most liquid global IPOs and Spin-offs during the past 4 years – declining by -0.56% to +2.84% YTD, ahead on the world benchmark. Amid broad selling pressure towards the week-end, the mixed relative performance picture extended to the IPOX Regional Indexes level: For example, while the IPOX U.S. Indexes (IPXC, IPXT, IPXO) traded broadly line with the U.S. market benchmarks, IPOX Indexes providing exposure to International Markets (IPXI), Europe (IXTE, IPND), Asia-Pacific (IPTA) and China (CNI, IPXUCHCP) (IPXUCHCP, CNI) outperformed.

IPOX-linked funds in focus: FPX, FPXI, OIPAX. Linked to the IPOX 100 U.S. Index (IPXO), the 5-star, 10-year First Trust IPOX 100 U.S. ETF (FPX) declined to +3.77% YTD last week, in line with the U.S. benchmarks, while the First Trust IPOX International ETF (FPXI) fell to +0.74% YTD and the IPOX-linked Catalyst IPOX Allocation Fund (OIPAX), an actively managed mutual fund, fell to +11.35% YTD. In IPOX U.S., individual stocks in focus were firms which had recently announced disappointing earnings including industrial HD Supply (HDS US: -16.97%), food wholesaler Performance Food Group (PFGC US: -9.22%) and entertainment firm Dave & Buster (PLAY US: -9.10%), while oil and gas explorer Antero Resources (AR US: +4.59%), IT services provider SAIC (SAIC US: +3.74%) or optical products maker Lumentum Holdings (LITE US: +3.38%) traded to the upside. In markets outside the U.S., we note last week’s surge in Chinese Financials, including IPOX heavyweights Cheung Kong Property Holdings (1113 HK: +6.76%), Peoples Insurance Company of China (1339 HK: +6.25%) or utility CGN Power (1816 HK: +6.06%).

Asset Allocation benefits of U.S. IPO and Spin-Off Investing with the IPOX 100 U.S. ETF (FPX) since 2006:

IPOX Returns (%) (P) Week 2015 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) -0.69 0.99 -1.45
IPOX Global 30 (IPGL30) -0.56 -0.96 2.84
IPOX Intern. (IPXI)* 0.42 -5.85 -0.29
Exposure: United States (USD)
IPOX US Composite (IPXC) -1.67 -3.90 7.45
IPOX 100 U.S. (IPXO)* -2.50 1.57 3.19
IPOX 30 U.S. (IPXT) -2.39 4.91 4.17
Exposure: Europe (EUR)
IPOX Europe (IXTE) -0.69 14.41 -4.90
IPOX Nordic (IPND) 0.16 23.88 0.80
Exposure: Asia-Pacific (Developed) (USD)
IPOX Asia-Pacific (IPTA) 3.13 -2.32 4.47
Exposure: China (USD) (x A-Shares)
IPOX China C. (IPXUCHCHP) 2.11 -14.45 4.44
IPOX China (CNI) 3.30 -9.10 -2.69

The wait is over: IPOs line up for trading debut. At least 7 notable IPOs/Spin-offs are lined up to debut across the global regions this week, with focus on deals set for trading in the U.S. Top of the list is Bermuda-based P/E-backed wealth manager Bank of NT Butterfied & Sons (NTB US), followed by high-yielding energy firm Noble Midstream (NBLX US) and regional bank group TN-based FB Financial (FBK US). Focus in Europe is on EON Spin-off utility network Uniper (UN01 GR) which is expected to start trading Monday, while small-cap food supplement retailer Ausupreme (2031 HK) is set to commence trading in H.K.

IPOs (week of Sep. 5): Ticker Return (%)
No significant accessible deal flow traded.
IPOs (week of Sep. 12): Ticker Sector
 Ausupreme International  2031 HK  C. Discretionary
 Bank of NT Butterfield & Son  NTB US  Financials
 CROSSTEC Group Holdings  3893 HK  Industrials
 Everbridge Inc  EVBG US  Info Technology
 FB Financial Corp  FBK US  Financials
 Noble Midstream Partners  NBLX US  Energy
Uniper SE  UN01 GR  Energy

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 provided by any of the above service providers and any service used to execute any trading strategies are solely based on the independent analysis of the user.

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