September’s US IPO activity was everything we were waiting for. After a rough 12-month period, which started with the China stocks turmoil, it was good to welcome back two sectors that at one time delivered superlative performances for the US IPO market: Tech and Oil.
In particular, the return of Tech IPOs came with lots of fanfare. We succeeded in participating in 4 US tech IPOs this month, and we were glad to once again hear the sweet sound of first-day trading pops: The Trade Desk (TTD), an advertisement technology company, gave us a return of +60.78%, Apptio (APTI) the technology business management provider +44.50%, and Everbridge (EVBG), the software company, brought us a more modest +6.25%. But the real fireworks were left for the last day of the month: Nutanix (NTNX), a cloud services provider, returned a whopping +87.50%. This impressive performance beat out our previous US-IPO-top-return record, held by Twitter all the way back on November 2013.
September ushered in the first oil IPO of 2016, and for Texas-based Noble Midstream (NBLX), it was literally a comeback as the company had scrapped a planned offering last November due to a drop in oil prices. This time, the IPO process was completed without any hurdles and provided us a solid +18.22% profit.
It is almost hard to believe that through the first nine months of 2015, there were 59 IPOs in the U.S. energy sector that raised $10 billion. Noble’s IPO is a major breakthrough from the long drought in 2016, and we now have about a dozen planned IPOs from this industry in our pipeline, including Exploration Oil & Gas (XOG), which will go public in October. If needed, this upcoming surge is another sign that this sector braces for a strong recovery in oil price.
Besides Tech and Oil, our investment managers were able to secure allocations in two Biotech/Healthcare companies: the Swiss AC Immune (ACIU) and the American Tabula Rasa Healthcare (TRHC). These IPOs generated profits +45.00% and +22.17% respectively for our Fund.
It is interesting to note that out of the 54 total IPOs we’ve participated in 2016, 13 have come from the Health sector, making this industry one of our primary sources of deals.
Even the brick and mortar sectors were on fire. The cosmetic company e.l.f Beauty Inc. (ELF) got us another staggering return of +53.71%, while the lubricants supplier Valvoline (VVV) brought home a +9.09% profit.
Among the 9 total IPOs we participated in last month, 5 deals returned more than +40%, a record for our Fund. September 2016 has now become the second most profitable month since the inception of the Fund. Our Year-to-Date Total Return on Investment stands at +38.86%.