Think IPO – Think IPOX®

  • Huge moves in U.S. index spreads leaves IPOX-linked U.S. IPO Fund (FPX) amongst week’s best performers.
  • IPOX Asia-Pacific (IPTA) reaches 9-months high.
  • U.S. IPOs debut well, IPO momentum builds.

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.

IPOX U.S.-linked Investing vs. Benchmarks since 2006:

Huge moves in U.S. index spreads leaves IPOX-linked U.S. IPO Fund (FPX) amongst week’s best performers. Amid mixed U.S. corporate earnings and gyrations in the Japanese Yen, outsized moves in U.S. index spreads were the key feature in last week’s trading. The IPOX U.S. Indexes (IPXO, IPXT) traded well and outpaced all benchmarks, with the IPOX 100 U.S. (IPXO)-linked USD million 592, 5-star First Trust U.S. IPO ETF (FPX) gaining +1.49% to -0.05% YTD, e.g., a massive +299 bps. ahead of the ETF linked to the Nasdaq 100 (QQQ). This represents the 8th largest relative performance jump vs. QQQ since fund inception in 2006. Ahead of a big week for IPOX earnings with heavyweight IL-based drug maker Abbvie (ABBV US), U.S. social networker Facebook (FB US), payment processor PayPal (PYPL US) or refiner Phillips 66 (PSX US) set to report, companies with most upside included hard-hit consumer Financial OneMain (OMF US: +18.04%), software maker ServiceNow (NOW US: +15.53%) or alternative energy play ever-volatile Solarcity (SCTY US: +14.81%). Biotech research firm Intrexon (XON US: -23.58%) plunged after blog reports cast doubt about its business model. In all, 59% of portfolio holdings rose on the week, with the average (median) stock adding +0.99% (+0.43%) on the week.

IPOX Asia-Pacific (IPTA) reaches 9-months highs. Big gains in Japan-traded medical equipment maker Cyberdyne (7779 JP: +10.70%), NZ-traded petroleum products maker Z Energy (ZEL NZ: +7.26%) or pork producer WH Group (288 HK: +4.91%) propelled the IPOX Asia-Pacific (IPTA) to the highest level since 08/2015. The index replicates the performance of the largest IPOs and corporate Spin-offs domiciled in developed Asia-Pacific Region by applying the IPOX Indexes Technology.

IPOs (week of April 18): Ticker Performance
American Renal Associates ARA US 20.91
MGM Growth Properties LLC MGP US 4.76
SecureWorks Corp SCWX US 0.00

U.S. IPOs debut well, IPO momentum builds. At least three significant IPOs commenced trading last week with respective deals recording solid gains, building on the positive global IPO momentum for a third week in a row. In the absence of significant deals in markets abroad, respective U.S. deals traded well in aggregate, with the average (median) IPO gaining +8.56% (+4.76%) based on the difference between the final offering price and the week’s close. More stable, higher yielder companies which priced towards the upper end of the bookbuilding range (ARA US, MGP US) performed best, while discounted security software IPO SecureWorks (SCWX US) shared the weak sentiment in Nasdaq. Amid a flood of filings indicating a diversified IPO flow over the coming months, a number of significant IPOs are set to debut during the upcoming week, including casino and entertainment property operator Red Rock Resorts (RRR US), Stockholm-traded consumer Financial Resurs Holding (RESURS SS) or the re-IPO of Spanish restaurant group Telepizza (TPZ SM).

IPOs (week of April 25): Ticker Sector
Red Rock Resorts Inc RRR US Financials
Resurs Holding AB RESURS SS C. Discretionary
Telepizza Group SAU TPZ SM C. Discretionary
Yintech Investment Holdings YIN US Financials

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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