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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 ( Our philosophy involves the classification of global IPOs ans spin-offs as a separate asset class.... More
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  • The IPOX Week (10/22/12): As U.S. Weakens, China IPOs Build Momentum !!! 0 comments
    Oct 30, 2012 12:04 PM


    Most IPOX Strategies rose during option expiration, with momentum in IPOX U.S. dented by the big underperformance in the Nasdaq-100 after weak earnings. Amid surging mid-caps and relative strength across Asia-Pacific markets, new China-linked IPOs rise strongly.


    · Select IPOX Strategies rise, IPOX U.S. lags for third week: Amid continued relative strength in Asia-Pacific and China-linked markets, the IPOX Global 50 Strategy (IPGL50) rose +1.40% to +17.02% YTD, outperforming benchmark MSCI World (MXWD) by +19 bps. In the cross-section of the IPOX Strategies universe, the IPOX Asia-Pacific Strategy (IPTA) continued its record run, gaining +2.97% to +24.86% YTD. For another week, select IPOX mid-caps recorded fresh post-IPO highs, such as Japanese snack food maker USD 2.9bn Calbee (2220 JP: +2.49%), New Zealand's online marketplace USD 2.2bn Trade Me (TME NZ: +3.41%), USD 4.6bn French cosmetics group and 2010 Hong Kong IPO L'Occitaine International (973 HK: +3.86%) or USD 3.5bn 2011 spin-off Australian Treasury Wine Estates (TWE AU: +5.36%). With the USD 3bn IPO of Telefonica Deutschland (O2D GR) fully subscribed and recent IPOs RBS-linked Direct Line Insurance (DLG LN: +4.56%) trading well, the IPOX Europe Strategies (IXTE, IPXUJPEU) rose, but underperformed the benchmarks. 2011 Spanish spin-off USD 4.1bn Distribuidora Internacional (DIA SM: +2.41%) closed at a post-spin-off high. The big drop in U.S. mega-cap technology (MSFT, GOOG, INTC) after weak earnings with the Nasdaq-100 (NDX: -1.54%) falling sharply, pressured index spreads related to the S&P 500 (SPX) vs. the IPOX U.S. (IPXO, IPXT) for a third week: The IPOX U.S. 100 (ETF: FPX) lost -0.22% to +19.22% YTD, while the narrower and large-cap centric IPOX U.S. 30 (IPXT) gained +0.09%. Renewed weakness in IPOX heavyweight social networker Facebook Inc. (FB: -2.65%) and discount retailer USD 15.5bn Dollar General (DG: -4.22%) was mitigated by a good week in the U.S. refiners, including Phillips 66 (PSX: +1.64%) and Marathon Petroleum (MPC US: +1.18%). Amid weak tech earnings, we denote a high likelihood to the reversal of the multi-year Nasdaq-100 (NDX) leadership vs. the S&P 500 (SPX).

    · IPOX Strategy Returns YTD 2012:

    Ticker (BBG/Reuters) Week Q3 12 YTD 12
    IPOX Global 50 (IPGL50) (NYSEARCA:USD) +1.40% +7.31% +17.02%
    MSCI World (MXWD) +1.21% +6.24% +11.55%
    IPOX U.S. 100 (IPXO) -0.22% +7.09% +19.22%
    IPOX U.S. 30 (IPXT) +0.09% +5.39% +17.98%
    S&P 500 (SPX) +0.32% +5.76% +13.96%
    IPOX Europe50 (IPXUJPEU) (EUR) +1.26% +11.75% +6.75%
    IPOX Europe30 (IXTE) (EUR) +0.89% +11.76% +2.42%
    STOXX 50 (SX5P) (EUR) +1.85% +5.76% +8.57%
    IPOX Asia-Pacific 30 (IPTA) +2.97% +6.82% +24.86%
    MSCI Asia-Pacific (MXPC) +3.14% +2.56% +6.58%
    IPOX China 20 (NYSE:CNI) +2.44% -1.96% +4.25%
    IPOX China Cp. (IPXUCHCP) +3.22% +3.18% +6.87%
    Hang Seng Enprs. (HSCEI) +3.27% +2.68% +7.52%

    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: Portfolio Construction Technology

    § Best in Practice: Support and Research

    · Significant IPOs launched (Week: 10/15/2012 ):

    Company Ticker Return/IPO
    Astro Malaysia Holdings Bhd ASTRO MK 0.00%
    EFG Financial Products AG FPHN SW 4.70%
    Geo Energy Resources Ltd GERL SP 24.29%
    Religare Health Trust RHT SP -10.00%
    Borregaard ASA BRG NO -2.86%
    Seadrill Partners LLC SDLP US 10.77%
    Credito Real SAB de CV CREAL* MM -1.77%
    Sunley Holdings Ltd 1240 HK 30.68%
    Courts Asia Ltd COURTS SP -4.55%
    KFM Kingdom Holdings Ltd 3816 HK 22.06%

    13 companies debuted on the accessible markets with the average (median) IPO gaining +5.12% (0.00%) based on the difference between the week's close and final offering price. European IPOs Swiss small-cap Financial EFG Financial Products (FPHN SW: +4.70%) and Norway's specialized biochemical maker Borregaard (BRG NO: -2.86%) traded mixed. A surge in the small-cap Hong Kong IPOs including KFM Kingdom (2816 HK: +22.06%) and Sunley (1240 HK: +30.68%) cemented the improved momentum for China-linked IPOs whereby we continue to note the big momentum in the last China IPO listed in the U.S. online discount retail VIP Shop (VIPS US: +19.02%) which surged to a post-IPO high. While Russia's Promsvyazbank (14NZ LN) was cancelled, the largest IPO of the week, Astro Malaysia (ASTRO MK: +0.00%) debuted poorly.

    · Upcoming IPOs (Week: 10/22/2012):

    Company Code Date Lead
    AWA Paper Manu. 3896 JP 10/23 Daiwa
    Coal Asia COAL PM 10/23 Abacus Capital
    HESS AG HEAG GR 10/23 Lbk BWberg
    Sanyo Trading 3176 JP 10/23 Mitsubishi UFJ
    Declout DLL SP 10/24 AMFR, CGC
    Gaylin GHL SP 10/25 CIMB Bank
    Lehigh Gas Partners LGP US 10/25 Raymond James
    Marathon Petroleum MPCX US 10/25 UBS
    WhiteWave Foods WWAV US 10/26 BAML, CS

    A number of second-tier firms are set to debut during the upcoming week. Amongst the most notable deals rank three U.S. IPOs: With continued strong asset flows into the high-dividend paying Master Limited Partnerships (NYSE:MLP) asset, Raymond James-led Lehigh Gas (LGP US) and Marathon Petroleum's (NYSE:MPC) pipeline and processing unit (MPCX) are set to go public. USD 4bn U.S. food manufacturer Dean Foods (DF US) is listing some of its key brands via WhiteWave Foods (WWAV US), seeking to raise between USDm 280-320 for 100% of non-voting Class A Share ownership with proceeds going to pay down debt only.

    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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