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Josef Schuster
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Josef Schuster is the founder of IPOX Schuster LLC, a data driven financial technology firm specializing in Financial Products Design related to global IPOs and spin-offs (www.ipoxschuster.com). Our philosophy involves the classification of global IPOs ans spin-offs as a separate asset class.... More
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  • The IPOX Week (05/28/12): IPOX U.S Surges, Accounting Questions Over Facebook’s True Market Cap !!!

    SUMMARY:

    Stocks rose after the recent slump with Asia-Pacific weakness outweighed by gains in U.S. and European equities. Amid a strong week for consumer IPOX stocks and select technology, IPOX U.S. strongly outpaced the market. H.K. IPOs lined up for debut. Questions over Facebooks true market cap.

    HIGHLIGHTS:

    · IPOX Global rises, beat the recovering benchmarks as IPOX U.S. surges: The IPOX Global 50 (IPGL50), key gauge for the performance of the largest and most liquid global IPOs and spin-offs, rose +0.63% to +6.77% YTD, broadly in line with the MSCI World (MXWD). Performance amongst the global regions diverged sharply: In the United States, the IPOX U.S. Strategies surged way beyond the benchmarks with the key IPOX U.S. 100 (ETF: FPX) gaining +3.59% to +11.55% YTD, substantially outpacing all key U.S. benchmarks. For example, the key IPOX U.S. 100 rose +184 bps. vs. the S&P 500 (SPX), +164 bps. vs. the Nasdaq 100 (NDX), +102 bps vs. the Russell 2000 (RUT) and +163 bps. vs. the broad Russell 3000 (RAY). During the week when the takeover of IPOX heavyweight Motorola Mobility (NYSE:MMI) by ex-IPOX holding Google Inc. (GOOG: -1.48%) was consummated, the IPOX heavyweights including Buffett-supported General Motors (GM: +5.95%), Dollar General (DG: +4.23%) or payment processor Visa (V: +5.97%) drove some of the big relative gains. Secondary IPOX constituents including electric car maker Tesla Holdings (TSLA: +8.16%), baby nutrition maker Mead Johnson (MJN: +2.49%) or web portal AOL Inc. (AOL: +5.65%) recorded a strong week. Notable is the continued relative strength of the IPOX U.S. 30 (IPXT) vs. the broader IPOX U.S. 100 . In other global regions, relative performance in the IPOX Europe universe (IXTE, IPXUJPEU) continued to be pressured by exposure to recent Spanish IPOs: While Financials including June 2011 IPO Bankia SA (BKIA: -10.80%) continued to fall, April 2010 IPO travel reservation operator Amadeus IT Holdings (AMS SM: +1.33%) closed the week at a post-IPO high. IPOX Strategies focusing on the Asia--Pacifc fell, but outperformed the benchmarks: Despite a continued slump in the Macau-traded Casino complex including SJM Holdings (880 HK: -6.01%), Sands China (-2.44%) or Wynn Macau (1128 HK: -4.77%), the IPOX 30 Asia-Pacific (IPTA), which provides exposure to IPOs across developed Asia-Pacific, fell -0.75% to +8.37% YTD, remaining +1172 bps. ahead of benchmarks MSCI Asia-Pacific (MXPC). Across defined China-domiciled exposure, the IPOX China 20(CNI: -0.16%) beat the benchmarks.

    Key IPOX Strategies Comparable Returns YTD 2012:

    Ticker (BBG/Reuters)Return

    5-day

    YTD 2012Name
    IPGL50 (NYSEARCA:USD)0.636.77IPOX Global 50
    IPGL300.734.17IPOX Global 30
    MXWD0.690.24MSCI World
    IPXO3.5911.55IPOX U.S. 100
    IPXT3.6211.83IPOX U.S. 30
    SPX1.754.79S&P 500
    IPXUJPEU (EUR)0.57-5.98IPOX Europe 50
    IXTE (EUR)0.54-8.87IPOX Europe 30
    SX5P (EUR)1.57-3.59STOXX 50
    IPTA-0.758.37IPOX Asia-Pacific 30
    MXPC-0.98-3.35MSCI Asia-Pacific
    CNI-0.16-1.06IPOX China 20
    HSCEI-0.40-4.00Hang Seng Enterprse

    Why choose IPOX to close the IPO/spin-off asset allocation gap?
    § Proven: Real-time performance over market cycles

    § Scalable and Stable: Clearly defined Philosophy

    § Patented: Index Technology

    § Best in Practice: Support and Research

    · Most significant IPOs traded (Week 05/21/12):

    CompanyTickerReturn / IPO (%)
    No major  

    12 insignificant global IPOs launched last week with the average (median) IPO gaining +6.34% (+2.66%). IPOs on the Chinese mainland remained in focus with seven IPOs commencing trading.

    · The Week ahead - H.K. focus:

    CompanyCodeCountryLead Manager
    China Yongda Auto3669 HKH.K.UBS, HSBC
    China Nonferrous Mng.1258 HKH.K.JP Morgan

    In the aftermath of the mammoth Facebook (FB: -16.54%) IPO and with the U.S. on holiday, only few notable deals are in the global IPO pipeline: Amongst the list are two IPOs in the hard-hit H.K. IPO market: UBS-led China Yongda Automobiles (3669 HK) buys and sells new and used vehicles and offers automobile rentals on the mainland. The company seeks to raise between HKDbn 2.4-3.4 for a 20% stake in the firm with proceeds partially going to selling shareholders and the firm itself for growth purposes. JP Morgan-led China Nonferrous Mining (1258 HK) seeks to raise between HKDbn 1.8-2.4bn for a 25% stake in the company active in Zambia. With most of the recent larger H.K. IPOs recording insignificant initial returns and poor immediate aftermarket performance, we expect continued pricing pressure for the respective H.K. IPOs.

    What is Facebook's true current number of shares outstanding/market cap? Due to differences of opinion regarding how to treat secondary share offerings not yet consummated (e.g. payment for Instigram), at least three sources (S&P, Bloomberg, YHOO Finance) arrive at differing market caps for Facebook (NASDAQ:FB) as of Friday's close: S&P: USD 68.2bn, Bloomberg: USD 75.9bn, YHOO Finance: USD 87.3bn.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jun 04 3:45 PM | Link | Comment!
  • The IPOX Week (5/21/12): Upon Debut, Facebook (FB) Trails General Motors (GM)

    SUMMARY:

    Stocks plunged as China-linked markets slumped anew, Europe deteriorated, yields fell and the dollar strengthened. Amid rising global risk and a crash in social networking exposure, Facebook's IPO debut left a "bad taste in initial investor's mouths". Key IPOX stocks added by big investors.

    HIGHLIGHTS:

    IPOX Global drops, match or beat the slumping benchmarks, key IPOX stocks added by big investors: The IPOX Global 50 (IPGL50), key gauge to measure the performance of the largest and most liquid global IPO's, recorded the biggest drop YTD, declining -5.32% to +6.10% YTD. While IPOX Global is still solidly positive YTD, benchmark MSCI World (MXWD), measure for global stock, fell -5.34% to -0.45% YTD. As investors fled risk, negative performance extended across all global regions: In the United States, the IPOX U.S. Strategies followed the U.S. benchmarks lower. E.g., the IPOX U.S. 100 (ETF: FPX) fell -5.00% to +7.68% YTD, slightly underperforming the S&P 500 (SPX). With the Russell 2000 (RUT: -5.42%) declining, the large-cap centric IPOX U.S. 30 (IPXT) beat FPX for another week. We note the addition of two key IPOX holdings by big investors with a) Warren Buffet's Berkshire Holding adding the 4th key IPOX holding to its portfolio (GM: -3.73%) and b) S&P announcing the addition of Kinder Morgan (KMI: -4.38%) to the S&P 500 (SPX). In other global regions, the IPOX Europe universe (IXTE, IPXUJPEU) was pressured by massive losses in Spanish Financials including Bankia (BKIA SM: -15.17%) which went public in 2011 and sold mostly to Spanish retail investors. New equity exposure as measured by IPOX in developed Asia-Pacific fared better with the IPOX Asia-Pacific (IPTA) beating benchmarks MSCI Asia-Pacific (MXPC) by +22 bps. and remaining +1157 ahead YTD. While the Macau-domiciled casinos including Wynn Macau (1128 HK: -9.08%), Sands China (1928 HK: -7.96%) and SJM (880 HK: -10.48%) suffered from high-beta, 2012 H.K. spin-off Swire Properties (1972: HK: +1.39%) rose against the trend. IPOX heavyweight and Japanese Financial 2010 IPO Dai-Ichi Life (8750 JP: -5.63%) fell towards its post-IPO low.

    Key IPOX Strategies Comparable Returns YTD 2012:

    Ticker (BBG/Reuters)Return

    5-day

    YTD 2012Name
    IPGL50 (NYSEARCA:USD)-5.326.10IPOX Global 50
    MXWD-5.34-0.45MSCI World
    IPXO-5.007.68IPOX U.S. 100
    IPXT-4.707.92IPOX U.S. 30
    SPX-4.302.99S&P 500
    IPXUJPEU (EUR)-7.19-6.51IPOX Europe 50
    SX5P (EUR)-4.77-5.08STOXX 50
    IPTA-4.529.18IPOX Asia-Pacific 30
    MXPC-4.74-2.39MSCI Asia-Pacific
    CNI-7.10-0.90IPOX China 20
    HSCEI-5.58-3.62Hang Seng Enterprse

    Why choose IPOX to close the IPO/spin-off asset allocation gap?
    § Proven: Real-time performance over market cycles

    § Scalable and Stable: Clearly defined Philosophy

    § Patented: Index Technology

    § Best in Practice: Support and Research

    · Most significant IPOs traded (Week 05/14/12):

    CompanyTickerReturn / IPO (%)
    China City Railway8240 HK-39,00
    FacebookFB UN0.61
    GoldroosterGO8 GR5.00
    Haikui Seafood AGH8K GR0.08

    Four accessible global IPOs priced last week: Notable is the generally positive take-up of the two China-linked IPOs in Germany with fashion group Goldrooster AG (G08 GR) and Haikui Seafood AG (H8K GR) closing the week above their respective IPO price. The plunge in China City Railway (8240 HK) underlines the malaise in the H.K. IPO market where initial IPO returns have vanished, having big repercussion on the IPO subscription dynamics of the important H.K. retail community.

    · Facebook (FB: +0.61%) - Risk not worked in:

    a) Facebook left a "bad taste in investor's mouth", performing worse than General Motors (NYSE:GM) which rose 4% on its first trading day on 11/17/10. Note that General Motors itself was able to raise its pricing range due to strong demand. At a current P/E of 5.85, GM trades -36% from its IPO price.

    b) The fact that FB's initial price range was able to be raised and the size of the offering (going to selling shareholders) increased, underlines the marketing prowess of the FB deal-linked community.

    c) The deal was able to be completed amid a huge increase in global risk, underlined by the 921 bps. decline in the IPOX Global 50 (IPGL50) over the past 10 trading days. With individual IPOs typically perceived to trade at the high-risk end (high beta), related IPOs plunged (e.g. ZNGA). It's not just local: JP-traded networker 2008 IPO Gree Inc. (3632 JP), valuation yardstick for pre-IPO trades amongst U.S. social networkers - fell -36.54% over the past 10 days.

    d) The performance of the highly publicized big fee pre-IPO investment vehicles (GSVC: -26.50%) underlines that there are potentially negative asset allocation benefits by adding pre-IPO exposure.

    As underwriter support will decline over the course of public trading, we expect the above to constitute substantial risk overhang related to Facebook (NASDAQ:FB).

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 29 3:11 PM | Link | Comment!
  • The IPOX Week (5/7/12): Going Public On Top Of The Cyle: The Facebook-Glencore Resemblance !!!

    SUMMARY:

    While China-linked equities traded firm, investors sold Western stocks as weak economic numbers and a "sell on good earnings news" mentality triggered profit taking. Select U.S. stocks experienced Enron type plunges. Amid the pending Facebook IPO, firms set to take a "window of opportunity".

    HIGHLIGHTS:

    Key IPOX Strategies Returns YTD 2012:

    Ticker (BBG/Reuters)Return

    5-day

    YTD 2012Name
    IPGLC (NYSEARCA:USD)-1.9412.12IPOX Global Comp
    IPGL100-1.2913.19IPOX Global 100
    IPGL50-1.4016.59IPOX Global 50
    IPGL30-1.5813.97IPOX Global 30
    IPXO-3.0715.60IPOX U.S. 100
    IPXT-2.3015.22IPOX U.S. 30
    IXTE (EUR)-3.05-1.17IPOX Europe 30
    IPXUJPEU (EUR)-2.971.72IPOX Europe 50
    IPXUEM-1.1313.34IPOX Emerging Mkts.
    IPTA0.8022.57IPOX Asia-Pacific 30
    IPXUBRIC-1.2911.79IPOX BRIC 25
    IPXUCHCP0.1414.12IPOX Chine Compos.
    CNI-0.2912.68IPOX China 20
    IPXUCACP (NYSEARCA:CNY)1.7114.80IPOX China A Shares
    IPXULATT-1.9011.25IPOX LatAm 20
    IPXK30K (KRW)1.22-3.03IPOX Korea 30

    Why choose IPOX to close the IPO/spin-off asset allocation gap?
    § Proven: Real-time performance over market cycles

    § Scalable and Stable: Clearly defined Philosophy

    § Patented: Index Technology

    § Best in Practice: Support and Research

    · Most significant IPOs launched (Week 04/30/12):

    CompanyTickerReturn / IPO (%)
    Carlyle Group LP/TheCG US0.23%
    EverBank Financial CorpEVER US7.90%
    Pacific Coast Oil TrustROYT US-0.75%
    PetroLogistics LPPDH US-2.94%
    Tilly's IncTLYS US8.45%
    Viatron Technologies Inc141000 KS36.48%

    · The Week ahead - Ahead of Facebook (NASDAQ:FB):

    CompanyCodeCountryLead Manager
    Audience IncADNC USU.S.A.CS, DB
    Com. ChoiceCCFI USU.S.A.CS, JEFF
    EastWestEW PMPHPDB, JPM
    Edwards GroupEVAC USU.S.A.DB, GS
    Flying Financial8030 HKH.KGF Securities
    Ignite Rest.IRG USU.S.A.PIP, RWB
    LINC Logistics CoLLGX USU.S.A.Stifel Nicolaus
    Loyalty AllianceLAEC USU.S.A.Needham & Co
    New Source Eng.NSE US EquityU.S.A.KeyBanc
    RIB-X PharmaRIBX USU.S.A.LAZARD, WBC
    TIM w.e. SATMWE USU.S.A.Citi
    WageWorks IncWAGE USU.S.A.Stifel Nicolaus
    Wstn Asset Mtg.WMC USU.S.A.CITI, JEFF

    Notables around the Facebook IPO - eerie resemblances

    a) Last years global IPO cycle (and markets) topped when global miner Glencore Intl. (GLEN LN: -22.64% since IPO) pursued its mega IPO during the third week of May.

    b) With Facebook set to price on Thursday, May 17th, a striking feature is the substantially enlarged float to around 12% (up from an initially envisioned 5%), similar dynamics when compared to Zynga Inc. (ZNGA: -16.70% since IPO).

    Amid market declines und huge declines in some recent small-cap IPOs, a large number of second and third-tier deals are set to take advantage of the Facebook IPO "window of opportunity": Profitable U.K. technology firm Edwards Group (EVAC US) pursues a capital structure event by selling 12.63% its an IPO while U.S. tech micro-cap Audience Inc. (ADNC US) seeks to sell 25.78% with proceeds going to growth. Other notable IPOs include techs TIM w.e. (TMWE US) (mobile advertising in Latin America), WageWorks (WAGE US) and Loyalty Alliance (LAEC US). We note the huge jump in revenues tied to advisory services in Flying Financial (8030 HK), the only H.K. deal lined up this week. Post-IPO liquidity risk is big for the respective deals.

    · IPOX Global beats as U.S., Europe falls, Asian and China--linked exposure rises:Amid worsening U.S. and European macro data, seasonally motivated selling and a Enron-like plunge in select second- and third tier U.S. stocks (e.g. HFL US: -33.40%, GMCR US: -47.60%, UBNT US: -20.03%, INVN US: -19.71%, GRPN: -16.74%), the IPOX Strategies closed the week generally lower. On the global level, e.g., the IPOX Global 50 (IPGL50), fell -1.40% to +16.59% YTD, beating benchmark MSCI World (MXWD) by a large 95bps, and extending its relative YTD to 917 bps. Biggest contributor to relative strength was developed Asia-Pacific (IPTA) and China-linked (NYSE:CNI) exposure: The IPOX Asia-Pacific Strategy (IPTA), e.g., rose 0.80% to +22.57% vs. a drop of -0.78% to +6.95% for benchmark MSCI Asia-Pacific. Strength in pan-Asian property developers including Swire Properties (1972 HK: +1.18%) and the Macau-domiciled Casinos including Sands China (1928 HK: +3.01%) or SJM Holdings (880 HK: +4.30%) contributed to the good showing. The IPOX U.S. Strategies closed the week in line: Amid a big decline in the Russell 2000 (RUT: -4.07%) motivated by a huge plunge in above-mentioned names, the narrower and large-cap centric IPOX U.S. 30 (IPXT: -2.30%) beat the broader IPOX U.S. 100 (ETF: FPX) by 77 bps. We note a new post-IPO high in takeover candidate Teradata (TDC US: +3.19%) after earnings and note another week of big strength in the IPOX China A Share Strategies.

    · Most significant IPOs launched (Week 04/30/12): 11 Global IPOs priced with the average (median) IPO gaining +15.03% (+8.45%), all pricing in line with expecations.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 21 1:27 PM | Link | Comment!
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