SchusterWatch #763 (12/2/2024)
IPOX® biggest beneficiary of strong earnings, AI & U.S. polictical Momentum.
IPOX® 100 U.S. has 3rd best month since 2004. Far exceeds benchmarks.
Big gains extend to our exposure to firms domiciled outside the U.S.
Global listings raise $13B in November. Uber-backed Pony AI largest in U.S.
IPOX® INDEXES: November was a historic month for many IPOX® Index Strategies, as we benefitted most from 1) the big risk shifting rally in global equities away from conventional benchmark/technology exposure to unseasoned equities tracked by IPOX® as the outcome of the U.S. election resolved political overhang (VIX: -41.67%), 2) select IPOX® portfolio holdings reporting explosive earnings and sales growth and 3) U.S. government yields stabilizing. Big (Relative) gains extended to non-U.S. domiciled IPOX® exposure.
IPOX® 100 U.S.: In the U.S., the MAG7-free diversified IPOX® 100 U.S. - tracked by the world’s largest New Listings IPO-focused ETF (Ticker: FPX) and CME listed IPOX® 100 U.S. emini Futures (IPOZ4) – had the 3rd best month since live inception in 08/2004, adding a massive +14.54% to +33.98% YTD, far exceeding the U.S. equity benchmarks, including the S&P 500 (+881 bps. beat), Nasdaq 100 (+931 bps. beat) and Russell 2000 (+370 bps. beat). 80/100 portfolio holdings rose on the month, with the average (median) equally-weighted stock adding +11.54% (+8.13%), significantly less then when compared to the applied market-cap weighted IPOX® 100 U.S. AI exposure drove some of the big gains, including AppLovin (APP US: +98.80%), Palantir (PLTR US: +61.41%) and Tempus AI (TEM US: +44.99%). Notable movers amongst non-tech exposure included Dutch Bros (BROS US: +62.23%), Kodiak Gas (KGS US: +26.85%) and Healthequity (HQY US: +19.11%). Marketing tech firm Zeta Global (ZETA US: -23.05%), reproductive pharma Organon (OGN US: -15.50%) and Parsons (PSN US: -11.33%) fell most, while PACS Group (PACS US: -62.96%) was ejected from the index.
RETURNS OF NON-U.S. DOMICILED IPOX® PORTFOLIOS: Equity exposure linked to international markets pooled in IPOX® also recorded strong gains during November, far outpacing the benchmarks. On the international level, the IPOX® International - underlying for the “FPXI” ETF - added +2.92% to +18.16% YTD last month, extending the YTD lead vs. benchmark MSCI World (ex. US) by +285 bps. to +1323 bps. YTD. By pursuing our European Equity mandate with the view of also including European firms exclusively listed in the U.S., we were also able to dodge the big weakness in the European benchmarks last month. While the benchmark STOXX 50 shed -2.41% to +1.10% YTD, the IPOX® 100 Europe – underlying for the “FPXE” ETF – added +3.09% to +19.93% YTD. In the cross-section, we note the fresh all-time high in the IPOX® Nordic, our bespoke portfolio of firms domiciled in the Nordic region and which have pursued a corporate action, including an IPO, Spin-off and IPO M&A in the past. The semi-active portfolio added +6.28% to +26.68% YTD to close out November towards the highest level on record.
Individual stocks in focus included Amer Sports (AS US: +47.51%), sport data firms Genius Sports (GENI US: +46.57%) and Sportsradar (SRAD US: +39.73%), Siemens Energy (ENR GY: +35.94%), toy firm Pop Mart (9992 HK: +27.45%), Spotify (SPOT US: +23.85%) and shoe maker On (ONON US: +23.01%). Companies trending down during last month included chip designer Arm (ARM US: -4.96%), video game maker Krafton (259960 KS: -5.74%), logistics firm Inpost (INPST NA: -7.53%), web hoster Ionos (IOS GY: -8.78%), cancer biotech Merus (MRUS US: -10.19%) and fintech Nu (NUS: -16.96%).
IPOX® SPAC INDEX (SPAC): The Index soared +12.32% in November, bringing its year-to-date performance to +8.45%. Nvidia-backed voice AI company SoundHound AI (SOUN US: +85.09%) almost doubled with better-than-expected sales, lifted guidance, and AI agent deployment-related customers’ productivity improvement. Verra Mobility (VRRM US: -8.89%) fell on in-line earnings and analysts’ lowered price targets. Little activity in merger announcement with only one SPAC announced definitive agreement this month. 5 SPACs completed business combinations this month. 9 new SPACs launched in the U.S. in November. Mediaocean announced to acquire 2021 deSPAC Innovid (CTV US) at 94.44% premium compared to previous close before announcement.
GLOBAL ECM REVIEW AND OUTLOOK: A total of 107 new listings launched globally during November, raising $12.84 billion.
Internationally we noted a return of large listings in several markets. The largest IPO was Lulu Retail (LULU UH: -12.25%), which raised $1.72 billion in Dubai - biggest 2024 listing in Dubai so far, set to be overtaken by delivery firm Talabat’s $2b raise on 12/10. India continued its strong deal flow, highlighted by the $1.35 billion IPO of delivery service Swiggy (SWIGGY IN: +20.71%) and $1.18 billion raised by NTPC Green Energy (NTPCGREE IN: +15.59%). The $452m offer of retailer Boxer (BOX SJ: +24.07%) was South Africa’s biggest debut since 2017. Canada launched its largest IPO since 2021, the $215m listing of fast fashion retailer Groupe Dynamite (GRGD CN: -3.43%). Australia’s largest 2024 listing Cuscal (CCL AU: -4.00%, $214m, fintech) and Hong Kong’s second-largest IPO this year, logistics giant SF Holding (6936 HK: 0.00%, $749m) also debuted last month. In contrast, the U.S. market saw just 11 non-SPAC IPOs in November on election-induced hesitancy, collectively raising $412m. The largest was Chinese self-driving firm Pony AI (PONY US: -7.69%), backed by Uber at an offer size of $260m.
In the latest IPOX® Update, upcoming IPOs feature U.S. HVAC firm ServiceTitan, and Swedish online pharmacy Apotea, set to debut in Stockholm on 12/6, with a valuation of $550 million. Indonesian retailer Mr DIY's subsidiary will also launch a $297 million IPO on December 19. Looking ahead to early 2025, notable listings include Spanish gambling operator Cirsa, targeting up to $1.1b, and AI cloud firm CoreWeave in the U.S., aiming for a $35bvaluation. Additionally, U.S. biotech firms Odyssey Therapeutics and Aktis Oncology are preparing listings, while Germany’s Thyssenkrupp's Marine Systems spins off under fresh leadership.
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