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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 Q3 2012 Review: Amid Increasing Deal Flow, IPOX Strategies Beat Benchmarks !!! 0 comments
    Oct 8, 2012 2:37 PM

    SUMMARY:

    All key IPOX Strategies outpaced the major benchmarks during Q3 2012, benefiting most from the central-bank induced policy to increase global risk appetite. With some landmark global IPOs successfully placed, Q4 global IPO activity is set at a solid pace with U.S. P/E backed IPOs in focus.

    HIGHLIGHTS:

    · Key IPOX Strategies outpace benchmarks during Q3 2012: Amid the concerted central bank action during the quarter, the IPOX Global 50 (IPGL50), proxy for the performance of the largest and most significant global IPOs and spin-offs over a four-year rotational cycle, rose +7.31% to +16.13% YTD, +107 bps. ahead of benchmark MSCI World (MXWD). In the cross-section of the IPOX Strategies universe, the IPOX Europe Strategies (IPXUJPEU, IXTE) outpaced the market by most, as European Financials re-bounded sharply. For example, the IPOX Europe 50 (IPXUJPEU) gained +1175 bps, outpacing the STOXX 50 (SX5P) by +599 bps, but still trailing YTD. The Developed IPOX Asia-Pacific Strategies (IPTA) were the second best relative performer on the quarter, outpacing benchmark MSCI Asia-Pacific (MXPC) by +426 bps. to a massive +1654 bps YTD. The IPOX U.S. (IPXO, IPXT) followed, recovering more than the losses suffered during Q2 2012, and closing at the highest quarterly level since inception of the IPOX Strategy in August 2004. The IPOX Strategies focusing solely on emerging markets IPO and spin-off exposure, gained with the IPOX China Composite (IPXUCHCP) leading the way. Amongst the notable performance drivers during the quarter were the U.S. traded refinery spin-offs, such as April 2012 Buffet-backed and hedge-fund heavy USD 29bn Phillips 66 (PSX US: +40.19%) and June 2011 spin-off USD 19bn Marathon Petroleum (MPC US: +21.53%). Further notable stand-outs within the IPOX Strategy universe included Dec. 2012 IPO high-end fashion group USD 10bn Michael Kors (KORS: +27.10%), cloud hosting tech firm USD 9bn Rackspace (RAX: +50.41%), USD 3bn Nationstar Mortage Holdings (NSM US: +54.18%) and private equity backed consulting firm USD 2bn Booz Allen Hamilton (BAH: +40.32%). Ahead of the listing of Mondelez International (MDLZ US), Kraft's (KFT US) international snack-food unit, Japanese snack food maker and March 2011 IPO USD 3bn Calbee (2229 JT: +34.94%) closed the quarter at a new post-IPO high. Notable changes in the IPOX Asia-Pacific universe (IPTA) also included red-hot mid-caps New Zealand's Trade Me (TME NZ: +8.31%) and Australia's Carsales.com (CRZ AU: +30.07%). Gainers also included the slew of recent small-cap Korean IPOs including YG Entertainment (122870 KS: +81.87%), STX Metal (071970 KS: +69.16%) or iNtRON Biotech (048530 KS: +60.48%). Amid IPOX's addition of Facebook (FB US: -27.99%) as a Top Holding, other social networking/gaming IPOs fell sharply, including Nexon (3650 JP: -33.10%), Zynga (ZNGA: -48.16%) and Groupon (GRPN US: -54.93%).

    · IPOX Strategy Returns YTD 2012:

    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 (Q3 2012):

    CompanyTickerReturn/IPO
    Japan Airlines Inc.9201 JP-4.75%
    Banco Santander MexicoBSMX US+13.30%
    IHH Healthcare MalaysiaIHH SP+15.45%
    Palo Alto NetworksPANW US+48.36%
    CITIC Heavy Industries601608 CH-19.49%

    146 significant IPOs launched last quarter, adding USD 96.5bn to global stock market capitalization. The average (median) IPO gained +21.82% (+8.00%) based on the difference between the final offering price and first close. 44 IPOs took place on the domestic Chinese exchanges, adding USD 18bn to local stock market cap.

    · Q4 2012 Start: Strong IPO and spin-off deal flow

    CompanyCodeCountryLead
    Berry PlasticsBERY USU.S.A.BCLY, CITI, DB
    Dave & BusterPLAY USU.S.A.JEFF, PJC
    FleetmaticsFLTX USU.S.A.BAML
    Javelin MortgageJMI USU.S.A.BCLY, CITI, CS
    LifelockLOCK USU.S.A.GS, BAML, DB
    LuxferLXFR USU.S.A.JEFF
    MondelezMDLZ USU.S.A.Spin-Off
    Regulus TherapeuticsRGLS USU.S.A.BMO, COWEN
    TalanxN/A GRGermanyCITI, DB, JPM

    U.S. IPOs are set to continue to dominate the global IPO deal calendar. Well established P/E backed Berry Plastics (BERY US) is a capital structure deal, aiming to sell a 26% stake for USDm 470-530 while Entertainment group Dave & Buster (PLAY US) seeks USD 108m for a 28% stake. Other U.S. deals likely to be well-received are Ireland-domiciled computer services firm Fleetmatics (FLTX US), Javelin Mortgage (JMI US), security service provider LifeLock (LOCK) or miner Luxfer (LXFR US). Analysts also rate the spin-off of Mondelez (MDLZ US), Kraft's (KFT US) international snack-food unit, as attractive.

    Ticker (BBG/Reuters)WeekQ3 12YTD 12
    IPOX Global 50 (IPGL50) (USD)-1.85%+7.31%+16.13%
    MSCI World (MXWD)-1.79%+6.24%+10.71%
    IPOX U.S. 100 (IPXO)-2.40%+7.09%+21.36%
    IPOX U.S. 30 (IPXT)-2.64%+5.39%+19.87%
    S&P 500 (SPX)-1.33%+5.76%+14.56%
    IPOX Europe50 (IPXUJPEU) (EUR)-2.15%+11.75%+4.57%
    IPOX Europe30 (IXTE) (EUR)-2..27%+11.76%+0.72%
    STOXX 50 (SX5P) (EUR)-2.67%+5.76%+6.27%
    IPOX Asia-Pacific 30 (IPTA)+0.15%+6.82%+21.73%
    MSCI Asia-Pacific (MXPC)-1.65%+2.56%+5.19%
    IPOX China 20 (CNI)+1.03%-1.96%-2.48%
    IPOX China Cp. (IPXUCHCP)+1.01%+3.18%+2.20%
    Hang Seng Enprs. (HSCEI)+0.27%+2.68%-1.06%

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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