The Renaissance ETF, IPO Is Winning In 2020
Lemonade Inc. provides various insurance products to customers in the United States and Europe. Its insurance products cover stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property.
On Friday the company went public and after the first day of trading, the stock was up 140%. Now the description above under promotes their service because the company is looking to digitize the insurance industry. For example, Lemonade claims that its average customer can buy a Lemonade policy in three minutes and uses artificial intelligence and bots to pay out claims in not minutes, but seconds.
Thus, Lemonade was the strongest IPO in the US in 2020 as many think this fintech company is going to disrupt the insurance industry. Just along, the property, casualty, and life insurance premiums total $5 trillion globally and account for 11% of the U.S. gross domestic product.
Initial public offerings came to a sudden halt in March as stocks plummeted further into bearish territory and economists forecasted the worst recession in nearly a century.
After a month of near-complete silence, IPO activity roared back to life. Newly tradable firms - and their investors -paid little mind to coronavirus risks and weakened consumer demand. While the IPO landscape mirrored the stock market in its sharp rally, experts think different factors revived IPOs.
Others see a time crunch driving the market into a frenzy. Several companies put off their debuts in 2019 after seeing massive IPOs falter in their first days of trading. The pause generated "pent-up demand for IPOs and pent-up supply of companies that delayed theirs," Kelly Rodriques, CEO of private-equity platform Forge, said.
Many of those same firms are now racing to go public before the 2020 presidential election. A change in leadership could usher in new tax regimes and quash investors' risk-on attitudes.
With an estimated value of around $19 billion, Albertsons is the second-largest supermarket operator in the country, and it owns both the Safeway and Jewel-Osco grocery chains, also went public recently.
Online used-car marketplace Vroom just went public earlier this month as well. The stock is up 35% in just a couple of weeks.
ETF investors who want exposure to these newly listed companies can invest in Renaissance IPO ETF (IPO). The Renaissance IPO ETF usually incorporates new issues within 90 days of listing and kicks out older ones after two years of public trading. The Renaissance IPO ETF IPO provides diversified exposure to newly public companies before they join other core US equity indexes. Top holdings include:
And despite the ETF selling off with the overall Market in March, the ETF has outperformed the SPY by more than 30% year-to-date.
Look for IPO to continue to outperform the broader market as some of the companies in the ETF are the stay at home stocks to own as the US economy limps along. Thus, the chart suggests pull backs to the weekly demand at $37 is an opportunity to go long.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
