Last Week in Global IPOs: IPOX Records Massive Relative Gains On Facebook, Asia-Pacific Strength

by: Josef Schuster

Weekly Summary:

IPOX Strategies record massive relative gains. Best relative performance YTD 2012.

Gains linked to stock selection and APAC momentum.

Jump in volatility not set to disrupt strong week in global ECM deal flow.

IPOX Returns, IPOs Priced and Upcoming:

All IPOX Strategies record massive relative gains:Strong earnings and Asia-Pacific momentum propelled the IPOX Strategies to their best relative week YTD 2012: On the global level, the IPOX Global 50 (IPGL50) rose +0.11% to +17.16% YTD, extending the relative YTD gain vs. the MSCI World (MXWD) by +176 bps. to +745 bps. Performance was driven by the Asia-Pacific IPOX heavyweights including insurer AIA Group (1299 HK: +3.34%) or the Macau-based casino complex including Sands China (1928 HK: 4.17%). Stock selection helped, including a big week for 5/12 IPO U.S. social networker Facebook (FB: +15.67%), added by IPOX just in September. In the cross-section of the 2250 member strong IPOX universe, the IPOX Asia-Pacific (IPTA) led anew, rising +0.66% to +25.67% YTD. Select IPOX mid-caps in the region recorded more fresh post-IPO highs, such as Japanese snack food maker USD 3.0bn Calbee (2220 JP: +4.99%), New Zealand's online marketplace USD 2.2bn Trade Me (TME NZ: +3.54%) or French cosmetics group and 2010 Hong Kong IPO L'Occitaine International (973 HK: +3.28%). Australian Treasury Wine Estates (TWE AU: -11.09%) fell sharply on an earnings warning and subsequent downgrades. IPOX Europe (IXTE, IPXUJPEU) traded well, with the IPOX Europe 50 (IPXUJPEU) leading benchmark Stoxx 50 (SX5P) by +65 bps. The IPOX U.S. universe (IPXO, IPXT) reversed three weeks of underperforming with a big relative jump, closing the week only marginally lower. The broad USD 400bn IPOX U.S. 100 (ETF: FPX) universe now significantly leads key indexes such as the S&P 500 (SPX), Nasdaq-100 (NDX) or Russell 2000 (RUT). Highlights of the week included aforementioned Facebook (NASDAQ:FB) and new post-IPO highs in software firm NetSuite (N: +9.24%) and Buffet-backed refiner Phillips 66 (PSX US: +6.41%). Hedge-fund heavy baby food maker Mead Johnson (MJN: -11.71%) slumped after substantially reducing its forecast.

IPOX Strategy Returns YTD 2012:

Ticker (BBG/Reuters) Week Q3 12 YTD 12
IPOX Global 50 (IPGL50) (NYSEARCA:USD) +0.11% +7.31% +17.16%
MSCI World (MXWD) -1.65% +6.24% +9.71%
IPOX U.S. 100 (IPXO) -0.12% +7.09% +19.08%
IPOX U.S. 30 (IPXT) -0.01% +5.39% +17.98%
S&P 500 (SPX) -1.48% +5.76% +12.27%
IPOX Europe50 (IPXUJPEU) (EUR) -0.79% +11.75% +5.93%
IPOX Europe30 (IXTE) (EUR) -0.90% +11.76% +1.52%
STOXX 50 (SX5P) (EUR) -1.55% +5.76% +6.90%
IPOX Asia-Pacific 30 (IPTA) +0.66% +6.82% +25.67%
MSCI Asia-Pacific (MXPC) -1.64% +2.56% +4.83%
IPOX China 20 (NYSE:CNI) -1.35% -1.96% +2.84%
IPOX China Cp. (IPXUCHCP) -0.29% +3.18% +6.56%
Hang Seng Enprs. (HSCEI) -1.76% +2.68% +5.16%
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: Investment Management Mandates

Significant IPOs launched (Week: 10/22/2012 ):

Company Ticker Return/IPO
Coal Asia Holdings Inc COAL PM 50.00%
Lehigh Gas Partners LP LGP US 4.20%
WhiteWave Foods Co WWAV US -1.47%

Just 7 IPOs commenced trading last week with the average (median) IPO gaining +9.32% (0.00%). While Dean Foods' (NYSE:DF) US) carve-out WhiteWave (NYSE:WWAV) US: -1.47%) disappointed, upside focus in the U.S. remained on the "red-hot" MLP-related issues benefiting from indiscriminant flow into the "MLP-asset".

Upcoming global IPOs (Week: 10/29/2012):

Company Code Date Lead
Shanghai Fosun Pharma 2196 HK 10/30/12 DB, JPM, UBS
Southcross Energy SXE US 10/30/12 JPM, WFS, BCLY
Telefonica Deutschland O2D GR 10/30/12 BAML, C, HSBC
Zespol Elektrowni Patnow N/A PW 10/30/12 CS, ING, JPM
Pegasus Entertainment 8039 HK 10/31/12 CICCHK
Delek Logistics DKL US 11/01/12 GS, WFS
Restoration Hardware RSTO US 11/01/12 GS
Singulex SGLX US 11/01/12 PIPER
Taylor & Martin TMG US 11/01/12 Oppenheimer
Express Transindonesia TAXI IJ 11/02/12 JPM

The recent jump in volatility is not set to disrupt IPO deal flow as firms in all global regions are set to commence trading: The largest deal belongs to the EUR 1.5bn IPO of Telefonica Deutschland (O2D GR). With lead underwriters Morgan Stanley, Deutsche Bank or Goldman Sachs notably absent from the consortium, the Spanish parent is selling up to 23.17% of the moderately growing company at a price range between EUR 5.5 and EUR 6.0 at a firm value of EURbn 6.1 - 6.7 or 1.22x - 1.33x of '11 revenues. The H-share offering of USD 3.2bn drug maker Shanghai Fosun Pharma (2196 HK and 600196 CH) has been priced at the low end, making it the first significant H.K. IPO this month with proceeds earmarked for acquisitions. The IPO may prove attractive to foreign investors seeking access to a key mainland - yet volatile - drug maker. With most proceeds going to pay down debt, growing U.S. luxury home furniture retailer Restoration Hardware (RSTO US) seeks to raise USDm 124 for 13.97%, valuing the firm at around USDm 890. Other U.S. small/mid-caps include MLP Southcross Energy Partners (SXE US), energy logistics firms Delek Logistics (DKL US), biotech Singulex (SGLX US) or Taylor & Martin (TMG US), an operator of a marketplace for pre-owned assets seeking to sell an unusually large 48.39%

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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