Josef Schuster

Josef Schuster
Contributor since: 2010
The USDm 865 5-star First Trust IPOX 100 ETF (FPX) is a better tool to capture Spin-Offs. Pools IPOs AND Spin-offs, has outperformed CSD is also much better diversified. Huge performance difference vs. CSD over the past 1-2 years in favor of FPX.
Thanks for the coverage of FPX.
Here is the basic comparative formula in terms of how FPX and IPO have shaped up historically:
FPX = IPO *3 (Triple Size) * 0.5 (half of index turnover) * 0.8 (volatiity)* 1.2 (expected performance).
FPX's economic rational involves addressing the skewness issue in U.S. IPOs by applying an applied market-cap weighted index technology to the space and treating it separately for the first four years of trading. The skewness issue means that positive aftermarket returns are driven by few companies (and allocating to these can have substantial asset allocation benefits). Applying a four-year hold optimizes performance and provides the optimal trade-off between index construction issues such as index survivabilty of market cycles, turnover and scale.
Thanks for the article. Any particular reason why you have included the First Trust U.S. IPO Fund (FPX) (that made a historic high today) ?
I think the U.S. IPO Fund ETF (FPX) is a better way to bet on Facebook. Its trading at an ALL-TIME high today and well diversified.
Facebook will be trading as a high beta stock for a while and trade accordingly. A better, diversified way to get into IPOs is the U.S. IPO Fund ETF (FPX). It reached a new ALL-TIME high today !!!
I think chosing the U.S. IPO ETF (FPX) is a much better diversified vehicle for IPO and spin-off exposure. It traded at a new ALL-TIME high today.
The U.S. IPO ETF (FPX) has traded at yet another ALL-TIME high today !!!
Adding a portfolio which tracks IPOs and spin-offs separately can add plenty of return, as shown by the performance of the First Trust U.S. IPO Fund (FPX), an ETF. By focusing on the larger, most liquid IPOs and spin-off with a dedicated U.S. domicile and the long-run buy-and-hold aspect to the "going public effect", FPX has been able to circumvent many IPO failures. Risk-adjusted performance speaks for itself: Five-year, four-star Morningstar rating, up +22.2% over one year (top performer), up 5% YTD, beating all benchmarks (despite a 10% weight in GM). Great vehicle to capture inclusions into the S&P 500 and other benchmarks early as well as takeover activty related to U.S. IPOs (just recenty: big premium for Graham Packaging and Talecris Pharma). Expense Ratio: 0.60%.
Adding a portfolio which tracks IPOs and spin-offs separately can add plenty of return, as shown by the performance of the First Trust U.S. IPO Fund (FPX), an ETF. By focusing on the larger. most liquid IPOs and spin-off with a dedicated U.S. domicile and the long-run buy-and-hold aspect to the "going public effect", FPX has been able to circumvent many IPO failures. Risk-adjusted performance speaks for itself: Five-year, four-star Morningstar rating, up +22.2% over one year (top performer), up 5% YTD, beating all benchmarks (despite a 10% weight in GM). Great vehicle to capture inclusions into the S&P 500 and other benchmarks early as well as takeover activty related to U.S. IPOs (just recenty: big premium for Graham Packaging and Talecris Pharma). Expense Ratio: 0.60%.
Adding a portfolio which tracks IPOs and spin-offs separately can add plenty of return to your portfolio, as shown by the performance of the First Trust U.S. IPO Fund (FPX), an ETF. By focusing on the larger. most liquid IPOs and spin-off with a dedicated U.S. domicile and the long-run buy-and-hold aspect to the "going public effect", FPX has been able to circumvent many IPO failures. Risk-adjusted performance speaks for itself: Five-year, four-star Morningstar rating, up +22.2% over one year (top performer), up 5% YTD, beating all benchmarks (despite a 10% weight in GM). Great vehicle to capture inclusions into the S&P 500 and other benchmarks early as well as takeover activty related to U.S. IPOs (just recenty: big premium for Graham Packaging and Talecris Pharma). Expense Ratio: 0.60%.
By focusing on the larger. most liquid IPOs and spin-off with a dedicated U.S. domicile and the long-run buy-and-hold aspect to the "going public effect", FPX has been able to circumvent many IPO failures. Risk-adjusted performance speaks for itself: Five-year, four-star Morningstar rating, up +22.2% over one year (top performer), up 4% YTD, beating all benchmarks (despite a 10% weight in GM). Great vehicle to capture inclusions into the S&P 500 and other benchmarks early as well as takeover activty related to U.S. IPOs (just recenty: big premium for Graham Packaging and Talecris Pharma). Expense Ratio: 0.60%.
Not enough marketing for FPX, volume and AUMs have picked up recently. It is one of the least well understood ETFs out there. The soundness of the underlying index technology (IPOX-100 U.S. Index) to capture long-run IPO performance speaks for itself: Four-star Five-year Morningstar rating, lots of underlying liquidity, limited turnover, focus on the largest U.S. domiciled deals meeting certain criteria and capture the "going public effect defined as lasting up to four-years into the IPO. Good indicator to add to gauge risk appetite as well. Up a lot vs. benchmarks YTD.
LinkedIn has many of the hallmarks of a late 1990's IPO, such as a small % of equity offered (8.3%) which helped to ascend the stock. If Facebook aims for a USD 100bn valuation, it would need to raise USD 8.3bn in CASH from institutions and retail, assuming LinkedIn's IPO termn. This is a lot of CASH for very little equity, in my opinion, very hard to do. Consider also that large deals (in nominal terms) face a much tougher pricing environment than small deals and investors expect some discount.
Hi
At IPOX, we look at global IPOs trading within four years after their respective IPO to construct long-only and long-short portfolios aimed at capturing the dynamics of the going public effect. As an investment in the long-only and long-short context, GLCH is therefore is not on our eligibilty list.
As for the company, I understand that it is a NY-based US focused niche investment bank offering a variety of value-added services.
Josef
A fund which was allocated shares of LinkedIn at the IPO price is the Direxion Long/Short Global IPO Fund (DXIIX), which gained 1.53% on the day LinkedIn started to trade. A long-only choice for capturing the asset allocation benefits of the "going public" effect of the largest U.S. IPOs and spin-offs over the past four years is the First Trust U.S. IPO Fund (FPX). The fund recently celebrated its 5th year anniversary of real time trading with Morningstar awarding it a four-star rating.
The underlying index to the First Trust U.S. IPO Fund (FPX) - the IPOX-100 U.S. Index - has a rule whereby companies need to float at least 15% and need to be underpriced by less than ca. 55% to be eligible for index membership. Therefore, LinkedIn will not enter the index. Market impact is not an issue because actual constituents are included quarterly and screened for liquidity. Around USD 400m in total has been tied to this underlying index since starting live in 2004. One IPO fund which was allocated stock in LinkedIn at the IPO price is the Direxion Long/Short IPO Fund (DXIIX) which rose 1.53% on the day LinkedIn went public.
Thanks !!!
The A-shares have already been trading in the Chinese domestic market (002336 CH), trading pretty much flat based on their IPO price. Consumer Stocks do have a tougher time to make it to market in HK these days, so I expect the listing earliest Q2 2011 in Hong Kong.
Thank you for the comments. My key top long fund holdings had a tremendous week with casino operator Wynn Macau (+11.19%), cosmetics group L'Occitaine (+9.59%) and car retailer Zhongsheng Group (+12.00%) all amongst the top performers in the Hong Kong Market since publication. Casino Operator Sands China (-1.90%), not a fund holding, was under downside pressure, however, on law suits and a downgrade, helping to propel the IPOX-run Direxion Long/Short Global IPO Fund (seekingalpha.com/symbo...) to rise strongly at a negative correlation to the benchmarks.
ipoxschuster.com
The IPOX Indexes are asset allocation focused, semi-passive vehicles to the "going public" effect in global IPOs and spin-offs issued over a 1000- trading day rotational cylce.
Started live in 2004 and calculated by Standard & Poor's, the IPOX-30 U.S., for example, has outperformed the S&P 500 by 8500 bps since 2004.
Typically captures hedge-fund heavy large IPOs and spin-offs as a group (e.g. PM, V, MA, COV, MJN, H, DG, etc. for the US).
Josef Schuster
IPOX (FPX) is about gaining exposure into the largest IPOs during the past four years: IPOs/spin-offs enter the index by size (if they are large enough at inception of trading) or by momentum (through quarterly re-balancing). This tilts the index towards large-cap stocks and is investable solution to the dispersion of long-run IPO returns whereby many IPOs underperform but exposure into few overperforming ones can have substantial asset allocation benefits.