The IPOX® Week, May 10th, 2021

  • IPOX® Indexes decline sharply on big profit taking in global growth stocks after earnings. Weak China weighs anew. Re-opening trade favors broadly diversified benchmarks as year/year index spreads shrink further.
  • IPOX® SPAC (SPAC) sheds -1.54% as deal announcements disappoint, select consummated SPACs plunge.
  • Initial IPO returns drop as IPO sentiment turns mixed; more deals lined up.

Summary: Amid falling yields and risk (VIX: -10.32%), the IPOX® Indexes started the new month with sharp losses, as the big re-opening trade continued to favor the value-heavy broad benchmarks. Mixed earnings amongst select holdings and more declines across China-linked exposure weighed further. In the U.S., e.g., the IPOX® 100 U.S. (ETF: FPX), benchmark for U.S. IPO performance, dropped -5.20% to -0.56% YTD, well-behind the performance of the broad-based benchmarks. Weak sentiment extended to markets abroad, including the IPOX® International (ETF: FPXI) and IPOX® Europe (ETF: FPXE) which shed -1.97% to -3.66% YTD and -0.71% to +2.56% YTD.

IPOX® Europe Investing (ETF: FPXE) since 2018:

IPOX® StockWatch: U.S.-traded portfolio holdings driving the weak showing included application software marker Cardlytics (CDLX US: -26.79%), life science diagnostics firm 10X Genomics (TXG US: -26.01%), real estate website operator Redfin (RDFN US: -19.53%), mortgage firm Rocket Cos. (RKT US: -19.42%) and biotech Guardant Health (GH US: -14.84% which all fell heavily after reporting disappointing quarterly earnings. Abroad, Japanese accounting software maker freee (4478 JP: -14.33%), Hong Kong-traded hot-pot restaurant operator Haidilao International (6862 HK: -14.30%), Australia’s wealth tech Netwealth Group (NWL AT: -9.81%) and luxury online shopping mall operator Farfetch (FTCH US: -8.63%) ranked towards the bottom. Select IPOX® Portfolio Holdings recording fresh all-time highs included aluminum sheet maker Arconic (ARNC US: +25.42%), tobacco maker Scandinavian Tobacco (STG DC: +23.36%), golf products maker Acushnet (GOLF US: +22.12%), consummated SPAC energy solutions provider Championx (CHX US: +19.90%) and global energy play Abu Dhabi National Oil Co. (ADNOCDIS UH: +4.64%).

Select IPOX® Indexes Price Returns (%) 2020 Last Week YTD
IPOX® Indexes: Global/International
IPOX® Global Super Liquid (IPGL50) (USD) 66.63 -3.63 -2.30
IPOX® International (IPXI) (USD) (ETF : FPXI) 72.15 -1.97 -3.66
IPOX® Indexes: United States
IPOX® 100 U.S. (IPXO)* (USD) (ETF: FPX) 47.32 -5.20 -0.56
IPOX® ESG (IPXT) (USD) 42.29 -6.83 -2.42
IPOX® SPAC (SPAC) (USD)** 48.52 -1.54 -3.36
IPOX® Indexes: Europe/Nordic
IPOX® Europe (IPOE) (USD) (ETF: FPXE) 35.14 -0.71 2.56
IPOX® Nordic Core (IPND) (EUR) 59.89 -0.78 11.84
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) 47.50 -2.07 -1.95
IPOX® China Core (CNI) (USD) 88.02 -4.61 -9.34
IPOX® Japan (IPJP)(JPY) 25.75 -0.23 -0.20

* Basis for CME-traded e-mini IPOX® 100 U.S. Futures (IPOM1).

The IPOX® SPAC (SPAC) fell -1.54% on the week to -3.36% YTD and +43.55% since its 7/30/2020 launch. Disappointing deals (IPOF) and the big decline in consummated SPAC PureCycle (PCT US: -41.21%) weighed on sentiment. SPAC news include: 1) 5 SPACs Announced Merger Agreements include (partially): a) Montes Archimedes with Roivant Sciences; b) ACON S2 with ESS Tech; and c) Live Oak II with Navitas Semiconductor. 2) 4 SPACs Approved Business Combination include (partially): a) Experience Investment with Blade Urban Air Mobility (BLDE: US, 5/10) and b) Vesper Healthcare with HydraFacial (SKIN US). 3) SPACs reportedly in talks include: a) Palihapitiya’s IPOF with gym operator Equinox. 4) 4 new SPACs launched last week.

IPO Deal-flow Review and Outlook: 16 IPOs launched across the global markets last week with the average (median) equally weighted deal adding +6.59% (+3.93%) based on the difference between final offering price and respective Friday’s close. While Jessica Alba’s baby and beauty product retailer Honest Co (HNST US: +19.25%) rose, Tencent-backed Chinese insurtech Waterdrop (WDH US: -19.77%) slumped. Thailand’s “auto-for-cash” loan provider Ngern Tid Lor (TIDLOR TB), Korean SK Innovation’s battery material unit spin-off SK IE Technology (361610 KS), Swiss aerospace components manufacturer Montana Aerospace, Brazilian private healthcare group Athena Saude Brasil (ATEA3 BZ), Genworth Financials’ mortgage insurance unit spin-off Enact (ACT US) rank amongst larger deals on this week’s busy calendar. Other IPO news include: 1) project management software firm Monday.com, payment processor dLocal, doughnut maker Krispy Kreme and fintech unicorn Flywire file for IPO; 2) multiple private equity-backed IPOs in the May pipeline include EQT-backed German enterprise software developer SUSE and KKR-backed Australian non-bank lender Pepper Money; 3) Steinhoff to launch Pepco IPO in Warsaw.

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