IPOX Indexes record strong gains towards month-end. A plunge in global risk (VIX: -13.68%) alongside short-covering in the major benchmarks and strong corporate earnings propelled the IPOX Indexes last week, with the IPOX U.S. Indexes (IPOX US Composite, IPOX 100 US and IPOX 30 US) now all trading in positive territory YTD. In the IPOX 100 U.S. (IPXO) – benchmark for the performance of the largest U.S. IPOs and corporate spin-offs and underlying index for the 5-star USD million 590 First Trust U.S. IPO ETF (FPX). – rose +2.91% to +1.04% YTD, outperforming the S&P 500 Index (SPX), the most significant gauge for U.S. stocks, by +63 bps. Corporate Spin-offs and P/E-backed deals ranked amongst the best performers, with IT services provider spin-off HP Enterprises (HPE US: +15.06%) leading the way, while P/E backed payment services provider First Data (FDC US: +9.55%) and retailer PartyCity (PRTY US: +7.29%) recovered from recent weakness.
It doesn’t need to be tech to make money in IPOs: Mid-market specialty apparel deals beat everything. We note record post-IPO highs in recently issued mid-market specialty apparel stores operator IPOX 100 U.S. (IPXO) holding NJ-based Burlington Stores (BURL US: +12.82%, +42.17% YTD) and WI-based Duluth Holdings (DLTH US: +15.17%, +81.56% YTD), included in the 789-member strong IPOX U.S. Composite (IPXC) and tracked by the Catalyst IPOx Allocation Fund (OIPAX UQ: +4.94%), an alternative mutual fund.
|IPOX Returns (%) (P)||Week||2015||YTD 16|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global 50 (IPGL50)||1.85||0.99||-4.71|
|IPOX Intern. (IPXI)*||1.52||-5.85||-5.08|
|Exposure: United States (USD)|
|IPOX US Comp. (IPXC)||2.76||-3.90||0.52|
|IPOX 100 U.S. (IPXO)*||2.91||1.57||1.04|
|IPOX 30 U.S. (IPXT)||2.80||4.91||1.25|
|Exposure: Europe (EUR)|
|IPOX Europe (IXTE)||2.60||14.41||-5.71|
|IPOX Nordic (IPND)||2.02||23.88||-2.02|
|Exposure: Asia-Pacific (Developed) (USD)|
|IPOX Asia-Pacific (IPTA)||0.97||-2.32||-0.23|
|Exposure: China (USD) (x A-Shares)|
|IPOX China (CNI)||1.96||-9.10||-13.40|
*Basis for Exchange-Traded Products (ETPs)
IPO deal flow momentum extends for another week. At least 10 accessible global IPOs commenced trading last week, with the average (median) equally-weighted IPO gaining +11.41% (+7.99%) based on the difference between the final offering price and the week’s close. For another week, the largest deals all performed strongly: Most focus was on the P/E-backed deal of consumer staple food distributor US Foods (USFD US: +8.83%), Carve-out IPO Philips Lighting (LIGHT NA: +10.00) or French online retailer Maisons du Monde (MDM FP: +5.88%). Deals outside the US dominate the IPO calendar during the week of May 30. These include aircraft leasing firm HK-traded BOC Aviation (2588 HK) and Sydney-traded networking firm GTN (GTN AU). Ahead of the blockbuster IPO of Denmark-based Dong Energy a number of specialty IPOs are also line up in the Nordic region, including Helsinki-traded EU-online car retailer Kamux.
|IPOs (week of May 23):||Ticker||Return (%)|
|Cotiviti Holdings Inc||COTV US||-6.11|
|Directa Plus Plc||DCTA LN||40.67|
|GMS Inc||GMS US||7.14|
|Guscio PLC||GUSC LN||-6.25|
|Joules Group PLC||JOUL LN||22.19|
|Maisons du Monde SA||MDM FP||5.88|
|Midland States Bancorp Inc||MSBI US||1.91|
|Philips Lighting NV||LIGHT NA||10.00|
|Reata Pharmaceuticals Inc||RETA US||29.82|
|US Foods Holding Corp||USFD US||8.83|
|IPOs (week of May 30):||Ticker||Sector|
|BOC Aviation Ltd||2588 HK||Industrials|
|Cancer Prevention Pharma||CPP US||Health Care|
|Chuan Holdings Ltd||1420 HK||Industrials|
|GTN Ltd||GTN AU||Consumer Dis.|
|Kamux||N/A FH||Consumer Dis.|
|Litium Affarskommunikation||LITI SS||IT|
|MediNet Group Ltd||8161 HK||Health Care|
|Paradox Interactive AB||PDX SS||IT|
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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