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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 (07/16/2012): Amid Global Pick-up In ECM Deal Flow, U.S. In Focus !!! 0 comments
    Jul 23, 2012 4:00 PM

    SUMMARY:

    Key equity indexes rose as weakness in China-linked markets and a higher dollar failed to materialize in downside volatility in European and U.S. equities and was subsequently met by big short covering towards week-end. Indonesia beats H.K. in last week's SE Asian IPO race. Big brand U.S. deals in focus.

    HIGHLIGHTS:

    · Key IPOX Indexes mixed, trail benchmarks: With key DM benchmarks such as the S&P 500 (SPX: +0.16%) or DAX (DAX: +2.29%) substantially beating Asian and China-linked exposure, the IPOX Global 50 (IPGL50) fell -1.42% to +7.88% YTD, underperforming benchmark MSCI World (MXWD) by 88 bps on bigger relative China-linked exposure. Weakness was spread amongst the IPOX Regional universe: In the United States (IPXO, IPXT), the IPOX U.S. 30 (IPXT) fell -0.19% to +13.51% YTD substantially beating the broader IPOX U.S. 100 (IPXO) on relative declines in the Russell 2000 (RUT: -0.76%). We note the big jump in electric car maker and IPOX U.S. 30 holding takeover candidate Tesla Inc. (TSLA: +10.52%) amid strong hopes for its Model S and as a 13th mall store opened. Recent IPOs traded most heavily on the notorious pre-IPO exchanges suffered more declines with Facebook (FB: -3.18%), Zynga (ZNGA: -8.58%) or Groupon Inc. (GRPN: -7.70%) slumping news amid relative NASDAQ (NDX: -1.05%) weakness. Key IPOX holding Phillips 66 (PSX: +4.70%), added in April 2012, became another top IPOX stock held by Berkshire Hathaway (BRK/A US). In Europe, big declines in Spanish Financial Bankia (BKIA SM: -23.32%) was mitigated by strength amongst some of the key German IPOs Brenntag (BNR GY: +4.41%) and Kabel Deutschland (KD8 GY: +5.89%). Global miner Glencore International (GLEN LN: +2.03%) continued to recover on Qatar/XStrata (XTA LN: +1.53%) optimism. Developed Asia-Pacific (IPTA) remained jittery on selling in high-end luxury stocks including fashion maker Prada (1913 HK: -4.52%) and key IPOX holding Japanese Financial Dai-Ichi Life (8750 JP: -9.33%). The IPOX Asia-Pacific 30 (IPTA) lost -3.02% to +11.25% YTD, 52 bps. more than benchmark MSCI Asia-Pacific (MXPC). Amid strong H.K. IPO deal flow - in China-linked markets (NYSE:CNI) - the IPOX China 20 maintained its YTD relative gain vs. benchmark Hang Seng Enterprise Index (HSCEI), dropping -4.60% to -1.05% YTD.

    · IPOX Long-only Strategy Returns YTD 12:

    Ticker (BBG/Reuters)WeekQ2 12YTD 12
    IPOX Global 50 (IPGL50) (NYSEARCA:USD)-1.42%-8.13%+7.88%
    MSCI World (MXWD)-0.54%-6.36%+3.30%
    IPOX U.S. 100 (IPXO-0.70%-5.23%+12.94%
    IPOX U.S. 30 (IPXT)-0.19%-3.67%+13.51%
    S&P 500 (SPX)+0.16%-3.29%+7.89%
    IPOX Europe50 (IPXUJPEU) (EUR)+0.64%-10.75%-4.22%
    IPOX Europe30 (IXTE) (EUR)+0.91%-12.33%-8.07%
    STOXX 50 (SX5P) (EUR)+0.68%-3.16%+2.97%
    IPOX Asia-Pacific 30 (IPTA)-3.02%-5.69%+11.25%
    MSCI Asia-Pacific (MXPC)-2.54%-6.89%+1.08%
    IPOX China 20-4.60%-8.97%-1.05%
    Hang Seng Enprs. (HSCEI)-4.57%-10.01%-7.04%

    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

    · The Week ahead - Big Brand U.S. deals :

    CompanyCodeCountryLead
    Durata Therapeutics IncDRTX USU.S.A.CS
    Fender Musical Instr.FNDR USU.S.A.William Blair
    Five Below IncFIVE USU.S.A.BARC, JEFF
    Kayak Software CorpKYAK USU.S.A.DB
    Mastercraft International8146 HKH.K.LUEN, WRLDSC
    Palo Alto Networks IncPANW US EU.S.A.CITI, GS

    Global IPO focus shifts from SE Asia to the U.S. this week as a number of key deals are lined up: William Blair-led leading guitar maker Fender Musical Instr. (FNDR US) seeks to raise USD 160m for a large 40.64% of the firm. Its distribution reliance on Guitar Centers, with its debt rating outlook recently cut to "negative" by S&P, is a concern. Specialty retailer Five Below Inc. (FIVE US) focuses on retailing merchandise for teen- and pre-teen customers. At the mid-point of the range, it seeks to raise USD 134m for an 17.82% stake in the company. Highly anticipated Kayak Software (KYAK US) is an operator of a travel website and should benefit from the strong performance of its stock market traded incumbents such as IPOX member Trip Advisors (TRIP US). Underwriters DB and MS structured the deal to rise sharply, initially. Small-float internet security company Palo Alto Networks (PANW US) should also benefit from the current indiscriminate initial demand for mid-cap specialty technology IPOs. Home furniture maker micro-cap Mastercraft (8146 HK) is the only H.K. deal lined up.

    Most significant IPOs traded (Week 07/09/12):

    CompanyTickerReturn / IPO (%)
    Bank Pembangunan Daerah JawaBJTM IJ3.49%
    Bolina Holding Co Ltd1190 HK7.91%
    China Putian Food Holdings Ltd1699 HK22.86%
    China Yongda Automobiles Services3669 HK0.00%
    Gading Development Tbk PTGAMA IJ51.43%
    Global Teleshop Tbk PTGLOB IJ8.70%
    HomeTrust Bancshares IncHTBI US20.00%
    Inner Mongolia Yitai Coal Co3948 HK-0.12%
    MNC Sky Vision Tbk PTMSKY IJ1.97%
    Qualipak International Holdings Ltd1332 HK-22.64%
    Sheen Tai Holdings Grp Co Ltd1335 HK13.33%
    Silverman Holdings Ltd1616 HK-0.91%
    Tri Banyan Tirta Tbk PTALTO IJ78.57%
    Wanguo International Mining Group3939 HK2.51%

    24 companies commenced trading last week, underlining the big-turnaround in the global IPO market since Facebook (NASDAQ:FB). The average (median) IPO rose a strong +25.61% (+10.35%). Initial IPO sentiment diverged sharply: While the average (median) H.K. deal rose +2.87% (+1.86%), the Indonesian counterpart soared +28.83% (+8.70%).

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

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