In July, Creative IPO Fund participated in 8 Initial Public Offerings. It was a busy month when compared with the only 3 deals traded the same month last year. Once again, our global sourcing network afforded us access to IPOs in several markets: one was listed in Hong Kong, 3 in the US, and 4 in Japan.
The month’s best performers were Refinverse, a Japanese waste processor (6531.JP), which brought us a staggering return of +50%(!), and Talend (TLND), a French software company that listed on the Nasdaq and gave us an amazing +40% profit. The worst, and only negative result, was with the Chinese broker DFQZ (3958.HK) at -0.37%.
Overall in terms of profit, we had the best month since October 2013, with a monthly ROI of +7.02%. The 2016 Year-to-Date Total Return is now sitting at a robust +25.44%.
We also invested in shares of Line, the Korean-owned Japanese messaging app company, and it’s a case worth highlighting. Line opted for a cross listing, which consists in listing the company’s common shares on two different Stock Exchanges. The main benefit being a lower cost of capital, as shares become more accessible to global investors.
Dual listed IPOs in the US were popular among Chinese companies between 1999 to 2004 when 12 companies cross-listed in the US and Hong Kong during this period of time. But this all stopped in March 2004, when the disastrous IPOs of TOM Online and Semiconductor Manufacturing closed on their first day of trading down -0.4% and -11.3% respectively from their IPO price.
Dual listings are considered risky for US investors as these investors are not accustomed to the Asian system of several-days-of-delay between the IPO pricing day and the IPO trading day. In comparison, US IPOs are usually priced the evening before the first day of trading.
In times of high volatility, the Asian method potentially leaves the IPO vulnerable to market conditions.
Undaunted, we were allocated in Line’s shares listed on the New York Stock Exchange (LN) as well as its shares listed on the Tokyo Stock Exchange (3938.JP), and both did great, bringing us a profit of +27.89% and +21.21% respectively.
One noteworthy item: For technical reasons, we were not able to sell our Line allocation in Tokyo on the first day of trading, as we normally do. However, we were able to complete the sale the next business day.
August is traditionally a slow month, but unlike the past years, we see noticeable action as several deals are coming into the pipeline. We are happily working on them indeed.