U.S. IPO Index Concludes Second Best Month Since 2009

by: Renaissance Capital IPO Research

The FTSE Renaissance US IPO Index (IPOS) is coming off its second best monthly performance since April 2009, generating a 10.1% return in January. The US IPO Index strongly outperformed both the S&P 500 (+4.4%) and the Russell 3000 (+5.0%) and recorded its largest monthly outperformance relative to the US equity benchmarks since March 2009. While the index produced lackluster results in 2011, it is currently demonstrating the powerful rebound potential that has historically been seen after down periods.

One month into the year, index outperformance has been led by three sectors: Consumer Goods, Consumer Services and Technology. The Consumer Goods sector, which currently includes 11 companies with an aggregate index weight of 16.4%, contributed 2.5% to index performance in January thanks to the strong rebound of index heavyweight General Motors (NYSE:GM), which generated an 18.6% price return in January. Other solid performers in the Consumer Goods sector were global auto supplier Delphi Automotive (DLPH; +25.3%) and home carbonation system manufacturer SodaStream International (SODA; +16.7%).

The Technology sector, which currently includes 37 constituents with a combined weight of 14.2%, contributed 2.0% to overall index returns thanks to the strong performance of several companies. After recording a 26.6% loss in 2011, diversified global semiconductor company NXP Semiconductors (NASDAQ:NXPI) gained 38.1% in the first month of 2012. Business intelligence software vendor Qlik Technologies (NASDAQ:QLIK) contributed 0.3% thanks to a 16.7% price return and its sizable weight in the index of 1.8%. The double-digit returns posted by Freescale Semiconductor (NYSE:FSL), iSoftStone Holdings (NYSE:ISS), Zynga (NASDAQ:ZNGA), Convio (NASDAQ:CNVO) and Hi-Soft Technology (HSFT) further contributed to the sector's strong performance so far this year.

Consumer Services, the index's most heavily weighted industry at 19.4%, contributed 1.9% to index performance during the month of the year. The industry greatly benefited from the rebound of several Chinese ADRs, including China's leading internet video portal Youku.com (YOKU; +36.4%), real estate website operator SouFun Holdings (SFUN; +28.2%), and Chinese online retailer E-Commerce China Dangdang (DANG; +67.3%). No Chinese ADRs made more headlines in January than Chinese social network operator Renren (NYSE:RENN), which greatly benefited from news reports surrounding Facebook's imminent IPO and generated a January price return of 55.8%.

However, not all sectors in the index flourished during January. The Oil & Gas sector, comprised of 24 companies with an aggregate index weight of 10.9%, contributed the least to index performance during the month with a weighted return of 0.5%. Driving performance were Oasis Petroleum (OAS; 16.3%), Golar LNG Partners (GMLP; 11.7%), and Bonanza Creek Energy (BCEI; 30.1%). Nearly one-third of the index?s oil and gas constituents have traded down since the end of 2011. Amongst the worst performers in this sector were Amyris Biotechnologies (AMRS; -22.4%), C&J Energy Services (CJES; -20.4%), and Crimson Exploration (CXPO; -5.9%).

The US IPO Index is off to a roaring start this year, and with an IPO pipeline packed with promising companies, including The Carlyle Group, Toys'R'Us, and Facebook, which is expected to file initial paperwork today for what is rumored to be the largest ever internet IPO, the index's best months may be still to come in 2012. Be sure to check the Renaissance Capital US IPO calendar for further listing developments as they arise.

(All returns are as of market close on Tuesday, January 31, 2012. Unless otherwise indicated, all returns are year-to-date.)