The IPOX® Week, September 26, 2016

  • IPOX Indexes soar anew after expiration. M&A drives diversified IPOX 100 U.S. (IPXO) to strong week.
  • U.S. IPOs record massive initial gains. More U.S. deals lined up as China Postal (1658 HK) is set to debut.

IPOX Indexes soar anew after expiration. M&A drives diversified IPOX 100 U.S. (IPXO) to strong week. The IPOX Indexes soared for a 2nd week, with the IPOX Global 30 (IPGL30) – USD trillion 1.2 performance gauge for the largest and most liquid global IPOs and Spin-offs – gaining +1.88% to +5.87% YTD, in line with the global market. Big relative performance jumps were recorded by the IPOX International (IPXI) and IPOX 100 U.S. (IPXO), underlying for the First Trust IPOX International ETF (FPXI) and First Trust IPOX 100 U.S. ETF (FPXI). While IPXI surged +3.21% to +2.51% YTD, IPXO rose +1.58% to +6.48% YTD. In IPOX International (IPXI), stocks in focus included heavily-weighted Financial Japan Post Bank (7182 JP: +4.86%) and select European exposure including French cable services operator Altice (ATC NA: +9.04%), sports car producer Ferrari (RACE IM: +8.61%), German Spin-off chemicals maker Covestro (1COV GY: +7.75%) and recent IPOs Japanese social networker Line (LN US: +7.40%) and Dutch pharma maker Patheon (PTHN US: +6.96%). Financials lagged, including Santander Mexico (BSMX US: -2.09%) and asset manager China Huarong (2799 HK: -2.22%). More M&A news propelled the diversified IPOX 100 U.S. (IPXO) beyond market benchmark S&P 500 (SPX) for another week. Stocks in focus here included stock exchange operator 04/2016 IPO Bats Global (BATS US: +22.02%) and embattled U.S. social networker Twitter (TWTR US: +18.37%). SEC action against hedge fund Omega Advisors pressured IPOX heavyweight data processor P/E-backed First Data (FDC US: -4.50%), a key holding of the fund.

IPOX Returns (%) (P) Week 2015 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 2.15 0.99 0.97
IPOX Global 30 (IPGL30) 1.88 -0.96 5.87
IPOX Intern. (IPXI)* 3.21 -5.85 2.54
Exposure: United States (USD)
IPOX US Composite (IPXC) 2.00 -3.90 11.42
IPOX 100 U.S. (IPXO)* 1.58 1.57 6.48
IPOX 30 U.S. (IPXT) 1.19 4.91 7.41
Exposure: Europe (EUR)
IPOX Europe (IXTE) 2.12 14.41 -3.62
IPOX Nordic (IPND) 1.77 23.88 1.90
Exposure: Asia-Pacific (Developed) (USD)
IPOX Asia-Pacific (IPTA) 3.63 -2.32 6.30
Exposure: China (USD) (x A-Shares)
IPOX China C. (IPXUCHCHP) 1.71 -14.45 6.75
IPOX China (CNI) 1.21 -9.10 -2.62

U.S. IPOs record massive initial gains. More U.S. deals lined up as China Postal (1658 HK) is set to debut: At least 11 significant accessible IPOs debuted last week, with the average (median) IPO gaining a massive +28.35% (+21.15%) based on the difference between the final offering price and Friday’s close. All U.S. deals recorded strong gains, with most upside on late stage pharma products maker small-cap Novan (NOVN US: +83.09%). Larger deals including U.S. lubricant maker Spin-off USD billion 4.6 Valvoline (VVV US: +5.00%) and Denmark-based payment processor USD billion 4.5 Nets A/S (NETSTEMP DC: -3.33%) debuted more modestly. Global IPO focus during the upcoming week shifts abroad with Financial China Postal Bank (1658 HK) set to debut Wednesday. The company raised more than USD billion 7 at HKD 4.76, below the mid-point of the initial book building range. Other IPOs during the upcoming week include U.S traded storage infrastructure solutions provider Goldman Sachs-led Nutanix (NTNX US), Tabula Rasa Healtcare (TRHC US), a software provider for the healthcare industry, as well as REIT MedEquities Realty Trust (MRT US). In Europe, Dutch-based online food delivery service loss-making takeaway.com (TKWY NA) adds to the list of recent IPOs in the sector, including US-based GrubHub (GRUB US) and Britain’s Just Eat (JE/ LN).

* Basis for listed products including ETFs (FPX US, FPXI US) and CME Futures (e-mini IPOX 100 U.S. Index Futures [IPOZ6].

IPOs (week of Sep. 19): Ticker Return (%)
AC Immune SA ACIU US 42.36
Apptio Inc APTI US 40.94
Capstar Financial Holdings CSTR US 8.34
elf Beauty Inc ELF US 49.00
Gridsum Holding Inc GSUM US 21.15
Hollywood Bowl Group PLC BOWL LN 5.00
Jacobson Pharma Corp Ltd 2633 HK 6.67
Nets A/S NETSTEMP DC -3.33
Novan Inc NOVN US 83.09
Trade Desk Inc/The TTD US 53.67
Valvoline Inc VVV US 5.00
IPOs (week of Sep. 26): Ticker Sector
Alliance MMA Inc AMMA US Consumer
Fulgent Genetics Inc FLGT US Health Care
MedEquities Realty Trust MRT US REIT
Nutanix Inc NTNX US IT
Postal Savings Bank of China 1658 HK Financials
Quanzhou Huixin Micro Credit 1577 HK Financials
Shun Wo Group Holdings Ltd 1591 HK Financials
Tabula Rasa HealthCare Inc TRHC US Health Care
takeaway.com Holding BV TKWY NA Consumer

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.

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