U.S. IPO Index Continues Rally Into March

by: Renaissance Capital IPO Research
The FTSE Renaissance US IPO Index (IPOS) has continued to rally into March and is now up 18.9% for the year, significantly outperforming both the S&P 500 (+11.5%) and the Russell 3000 (+12.4%). With two weeks still to go, the US IPO Index could have its best performing quarter since the second quarter of 2009 in which it generated a 38.2% return.
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Technology and Consumer Services thriving in March

So far in March, the index has generated a 2.1% return, driven by strong performance in the Technology and Consumer Services sectors. The Technology sector contributed 0.8% to overall index performance with an average price return of 3.7% in the first two weeks of March and the Consumer Services sector contributed 0.6% to index performance. However, not all sectors had reason to celebrate in March with an average price return of 3.5%. The Health Care sector has led underperformance in March, detracting -0.2% from index returns.

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Molycorp makes strong comeback; Michael Kors continues to flourish

After finding itself amongst February’s worst index contributors, Molycorp (MCP) has been the strongest contributor to the FTSE Renaissance US IPO Index so far in March. The rare-earths oxide producer made a strong rebound this month with a 17.1% price return after President Obama challenged policy on China’s rare-earth elements export quotas. Michael Kors Holdings (NYSE:KORS) continues to gain momentum and once again found itself amongst the index’s top contributing constituents after generating a 10.2% price return this month. The fashion retailer has recorded a 75% price return year to date.

Best Contributors - US IPO Index
Company Name Industry March Price Return March Weighted Return YTD Weighted Return
Molycorp (MCP) Basic Materials 17.1% 0.2% 0.3%
Michael Kors Holdings (KORS) Consumer Goods 10.2% 0.2% 1.0%
Youku.com (NYSE:YOKU) Consumer Services 12.6% 0.2% 0.8%
Fusion-io (NYSE:FIO) Technology 13.3% 0.2% 0.1%
Sensata Technologies (NYSE:ST) Industrials 7.9% 0.2% 0.7%
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Arcos Dorados and HCA Holdings stand out amongst March’s worst contributors

After generating -0.2% contributions to the index respectively, Arcos Dorados (NYSE:ARCO) and HCA Holdings (NYSE:HCA) stand out amongst March’s worst contributors. Latin America’s largest McDonald’s franchiser Arcos Dorados saw its shares tumble 11.3% after the company reported disappointing fourth quarter results and significantly reduced its 2012 guidance. Private hospital operator HCA Holdings (HCA) generated a -4.7% price return in March as investors ahead of its fourth quarter earnings release.

Worst Contributors - US IPO Index
Company Name Industry March Price Return March Weighted Return YTD Weighted Return
Arcos Dorados Holdings Inc. (ARCO) Consumer Services -11.3% -0.2% -0.2%
HCA Holdings (HCA) Health Care -4.7% -0.2% 0.5%
Pandora Media (NYSE:P) Consumer Services -20.0% -0.1% 0.0%
C&J Energy Services (NYSE:CJES) Oil & Gas -12.0% -0.1% 0.0%
Green Dot (NYSE:GDOT) Financials -14.4% -0.1% -0.1%
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Facebook leads IPO pipeline, which is packed with potential

As the year progresses, the IPO pipeline continues to fill up with promising companies, including leading social network Facebook (NASDAQ:FB), which is expected to be the largest internet IPO ever. Leading toy retailer Toys ‘R’ Us (TOYS), renowned private equity firm Carlyle Group and major telecom equipment provider Avaya (AVYA) have announced plans to go public. Be sure to check the Renaissance Capital US IPO calendar for further listing developments as they arise.

FTSE Renaissance Global IPO Index Series

The FTSE Renaissance Global IPO Index Series is off to a great start in 2012, with all regional indices having posted double-digit returns thus far in 2012. For more information, click here.

FTSE Renaissance Global IPO Index Series
Index Name Ticker Mar Return YTD Return
Global IPO Index IPOSG 0.1% 15.8%
US IPO Index IPOS 2.3% 18.9%
US IPO Investable Index IPOST 1.9% 19.6%
Asia Pacific (ex-Japan) IPO Index IPOAPX -1.5% 15.4%
Hong Kong/China Top IPO Index IPOHKT -1.3% 18.1%
Latin America IPO Index IPOSLM -1.7% 18.8%
EMEA IPO Index IPOSE -0.1% 14.0%
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Note: All returns are through March 15, 2012.