July 27th, 2008
Some notable events during last week:
1) IPOX Global Indexes stable as selected Emerging Markets fall sharply: The IPOX Global Indexes tracked the major benchmarks last week, with the IPOX Global Composite Index gaining slightly versus the respective benchmarks. With the exception of the IPOX LatAm 20 Index, the relative performance was relatively even across the IPOX Global Indexes spectrum, with the IPOX U.S. Indexes slightly underperforming, while the IPOX Europe and the IPOX China slightly outperformed.
2) Finally - Putin and the BP saga spook investors in Russian stocks: The IPOX Global Indexes were unable to stay clear from the sharp drop in Russian stocks, after Putins comments initially pressured Mechel Steel Group (-33.77%) and the head of BP responsible for its Russian join venture left the country, alongside 250+ of BPs Russian employees, heavily influencing IPOX heavyweight OAO Rosneft Oil (-10.41%). In other individual stocks, as covered earlier, VM Ware (VMW), largest US IPO last year (with Fidelity recently increasing its holding) and once a USD 110bn behemoth, continued to fall, after the company’s earnings guidance did not meet expectations. A similar fate hit Chipotle Mexican Grill (CMG): The 2006 IPO closed at USD 66, well below the all time high of USD 155. Both companies share abnormal initial returns as a same initial trading characteristic, therefore making it ineligible for IPOX Global Indexes membership.
3) IPOX LatAm Indexes rise as Brazil and Latin American benchmarks plunge: The IPOX LatAm Indexes, including the IPOX LatAm 20 Index (IPXULATT) rose last week, outperforming the MSCI Latin America Index (MXLA) and Bovespa (IBOV) by between 510 and 600 (!!!) basis points. The sharp divergence in performance spreads on a week-by-week basis continues to underline the benefit of the IPOX Latin America Indexes as an asset allocation tool for liquid Latin America growth stocks.
July 25th, 2008
Effective July 27th which is Sunday, 8384 JP (The Tokyo Star Bank) will be delisted from stock exchange due to it’s merger/acquisition.
The respective replacement is 880 HK (SJM Holding) which will assume the same weight until the September Rebalancing.
July 21st, 2008
Despite the due to merger share increase, GDF-Suez applied market cap will stay unchanged by applying a decreased IWF in the respective IPOX Sub-Indexes.
For further information, please contact
Cindy Hickey or Josef Schuster
IPOX Schuster LLC
(312) 264-4410 (office)
(312) 339-4114 (cell)
THINK GROWTH - THINK IPOX.
July 21st, 2008
Some notable events during last week:
1) IPOX Global Indexes fall as global Financials rally: The IPOX Global Indexes retreated last week, driven by weakness in selected large- and mega cap constituents after disappointing earnings (GOOG: -9.83%, PM: -4.97%) and corporate events (EDF FP: -5.25%). Spreads moved against the IPOX Global Indexes, reversing last weeks positive performance, as a rally in Global Financials lifted the S&P 500 (SPX) and MSC World Index (MXWO). The weakness in the IPOX Global Indexes was broad, with the average and median equally-weighted constituent losing -1.04% and 1.13%, respectively. Losing stocks exceeded winning stocks by a ratio of 1.3.
2) Brazilian IPO malaise continues as OGX retreats: Latin American IPOs and spin-offs tracked by in the IPOX Latin America 20 Index continued to underperform, amid renewed weakness in OGX Petroleo (OGXP3 BZ) driven by police raids on its offices, negative analysts comments (JP Morgan’s “Underweight”) and sharply lower energy prices. The USD 15bn company has seen its share price plunge by almost 50% since its Friday, June 13th IPO. On June 9th, Merrill Lynch (MER) had dropped plans to help to manage the OGX IPO on concern the shares were overvalued.
3) First IPOX-linked investment product celebrates 3rd year anniversary with 3000 basis point outperformance: We are pleased to announce the 3rd anniversary of the launch of the first IPOX-linked SEC registered investment product distributed in the United States by Van Kampen Investment (www.vankampen.com), a subsidiary of Morgan Stanley Inc. Since product launch, the underlying index – the IPOX-30 U.S. Index (IPXT) - has recorded an annualized three-year price performance of 12.53%, while large-cap (growth) benchmarks such as the S&P 500 (SPX) and the Russell 1000 Growth Index (RLG) have recorded an annualized three-year price performance of 0.99% and 2.50%, respectively. The outperformance has been systematic, extending across years and market cycles, underlying the benefits of using IPOX for asset allocation into U.S. (and global) growth stocks.
July 16th, 2008
Mining group Cleveland-Cliffs Inc. (CLF) has agreed to buy coal producer Alpha Natural Resources (ANR) in a cash and stock deal the companies said is worth around $10 billion, a 35% premium to yesterdays closing price. ANR has been a consituent of the IPOX Global Indexes, including the IPOX US 100 (ETF Ticker: FPX) and IPOX Global 100 Indexes, since going public in February 2005 at US 19.00. The takeover value is estimated at USD 128.12.
July 13th, 2008
Some notable events during last weeks trading:
1) IPOX Global Indexes Rise: Spreads move strongly in IPOX’s favor: The IPOX Global Indexes strongly outperformed last week, driven by substantial outperformance of the IPOX U.S. Indexes and strong performance in the IPOX China Indexes. The large/mega cap IPOX-30 Global (All Markets) Index (IPGL30) outperformed the S&P 500 Index and MSCI World Index by 211 and 248 basis points, respectively. While the ever volatile Chinese H shares saw a strong bounce from last weeks weakness with China Shenhua Energy and Bank of Communications recording double digit gains, continued strength came from recently added US consumer staples spin-offs (and S&P constituents) Philip Morris International (PM) and Lorrilard (LO) which gained 369 and 482 basis points on the week. In the cross-section of IPOX Global Indexes Returns, the picture was mixed: The IPOX Europe and IPOX Latin America Indexes remained under strong pressure. 1072 companies out of the 2298 company strong IPOX Global Composite Index closed in positive territory with a large divergence in equally versus market-cap weighted performance: While the average (median) equally-weighted IPOX constituent lost 37 and 51 basis points, the IPOX Global Composite Index rose 48 basis points, indicating the weakening relative and absolute performance of the mid- and small-cap IPOX constituents, and underlying the strengths of the dynamic applied maket-cap weighted IPOX approach.
2) IPOX U.S. rises as S&P 500 enters bear market – safe haven from credit crises: The continued strength in relative performance of the IPOX U.S. Indexes is stunning, considering the current stock market climate of broad uncertainty which have typically hurt relative spreads versus blue-chip indexes: For example, the IPOX-30 U.S. has moved 1526 basis points in favor of the S&P 500 Index since March 2008 Options Expiration, a large move considering the broad exposure of the IPOX-30 Index to the S&P 500 intself: Currently, 40.00% (by number) and 53.03% (by applied market capitalization) of the IPOX-30 U.S. Index is held in companies that are also S&P 500 Index constituents. In light of this recent weakness of the S&P 500 – driven by huge falls in Financials and selected industrials - a broad shake-up in the S&P 500 Index looks increasingly likely which is set to particularly benefit the IPOX Global Indexes in general and the IPOX U.S. Index in particular: Prime candidates for S&P 500 inclusions remain blue chip global growth companies with US domicile: Visa (V), MasterCard (MA), Continental Resources (CLR) or First Solar (FLSR).
3) IPOX dodges the VM Ware (VMW) bullet – Fidelity, largest VM Ware holder, doubles up as prices plunge: We observed with strong interest the renewed plunge of VM Ware (VMW) (-53.67% YTD) , one of the largest global information technology IPOs in recent years, alongside Las Vegas Sands (LVS) (-66.92% YTD) , the global gaming behemoth, Chipotle Mexican Grill (CMG) (-50.63% YTD), the Soros Fund Management-backed Mexican Fast Food Chain which was once controlled by McDonalds, or the New York Mercantile Exchange (NMX) (-48.14% YTD), the exchange operator pursued by the Chicago Mercantile Exchange (CME) (-55.32% YTD). While the CME – a constituent of the S&P 500 - was an IPOX Global Indexes constituent and exited 16 months ago, the other names mentioned above do share the characteristic of “abnormal initial returns”, making the respective company ineligible for IPOX Global Indexes membership. (Institutional) Investors beware!!!
July 9th, 2008
VM Ware (VWM), one of the largest US IPOs in recent history, plunged to
new lows yesterday, after the company revised downward sales expectations.
The 2007 IPO, once a IT behemoth with a market cap surpassing USD 100bn,
is not an IPOX Global Indexes constituent as its initial return, defined
as the difference between final offering price and first close, surpassed
the IPOX entrance requirements. The company falls into the category of
large cap IPOs which have seen its shares soaring the first day, therefore
becoming ineligible for consideration. Similar companies are suffering
VMWs fate of high initial returns and strong underperformance in the
aftermarket: Examples include Las Vegas Sands (LVS), the global casino
company, or Fortress Investment Group (FIG).
July 6th, 2008
Some notable events last week:
1) IPOX Global Indexes fall as relative spreads narrow with higher downside volatility in growth stocks in emerging and developed markets: The IPOX Global Indexes fell sharply last week, underperforming the major benchmark by between 150 and 300 basis points as weakness in standard blue chips starting during the previous week spread into large-cap global growth stocks in emerging and developed markets. As signs of stagflationary tendencies increase, recent runner ups in the global mining/resources sector were particularly affected with Brazilian IPO OGX (-20.34%), speculative Eurasian Natural Resources (-19.18%) and Alpha Natural Resources (-16.49%) falling sharply. With the average weekly return (-4.60%) underperforming the median weekly return (-4.11%), the breath in the 2300 member strong IPOX Global Composite Index remained decidedly negative with just 20.13% of the companies recording positive returns. While the IPOX China Indexes continued to trade with the market, focus on the negative side remained on the weakening IPOX Europe Indexes, which substantially underperformed the benchmarks for a second week in a row, giving back most or all of the outperformance from earlier in the year.
2) Consumer Staples support IPOX U.S.: The IPOX U.S. Indexes remained relatively firm versus the benchmarks, driven by a solid weak in recently added defensive constituents such as Philip Morris (+3.29%), Lorrilard (-1.06%) and selected technology companies relatively immune to the economic slowdown such as Google (+1.69%) or Dolby (+4.12%). For the second week in a row, selected mid/large-cap Japanese IPO rose on the week. Focus here was on Seven Bank (+5.19%), Electric Power Development (+2.84%) and Aozora Bank (+1.08%). Ahead of the listing of SJM Gaming in Hong Kong, global gaming stocks continued to slide with IPOX Constituent Melco PBL Entertainment losing another 16.35% on the week, alongside heavyweight Las Vegas Sands (-20.10%). The sentiment in Global Exchange Operators CME (-11.50%), NYSE Group (-10.48%), BM&F (-8.43%) and Bovespa Holding (-9.54%) remained depressed, amid declining volumes in fixed income trading.
3) Mexico stable, Brazilian IPOs fall, manage to outperform Bovespa on the week: The IPOX Latin America Indexes continued to fall on the week, however, outperforming local benchmarks Bovespa and MSCI Latin America. With Brazilian energy stocks (OGX and MRV) and takeover candidate Banco Nossa Caixa particularly strongly underperforming, recently added Mexian spin-off Telmex International (-0.19%) and Fresnillo (+0.78%) provided strong support.