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Success algorithm – IPO Market

From 30% in foreign currency | 6 months | Medium risk

Investment goal and strategy

  • Target investment period: from 6 months.
  • Target annual return: 30%
  • Minimum capital on Exante account: €10 000.

Amaday — a subsidiary of Raison Asset Management, specializing in the IPO Market strategy. Trust management using algorithmic strategies is implemented on the client’s brokerage account with Exante.

IPO Market — stock purchase of a company that recently went public. Unlike IPO Book, when investors participate directly in the public listing. Since the beginning of 2021, the strategy was enlarged with a purchase of the most promising SPACs (Special Purpose Acquisition Companies) — a corporation listed on a stock exchange to acquire a private company, thus making it public without going through the traditional IPO process.

Companies for the strategy are selected based on the fundamental analysis of each issuer. Our in-house analytics examine the company’s strategy, its sales volume, and profitability, the company’s multipliers in comparison with competitors and the industry as a whole, the industry itself, the demand from investors when forming the order book, etc.

Amaday has developed its own stock trading algorithm based on computer modeling and historical data on issuers who have gone public from the beginning of 2015 to the present day.

Strategy historical return

  • +28,4% — from October 2020 to June 2021
  • +37,2% — annualized

Historical performance of IPO Market strategy

Comparison of Amaday returns with IPO and SPAC market indices 

Amaday IPO
Raison Asset Management

Renaissance IPO ETF (IPO) — publicly traded fund. Tracks all IPO companies and buys them to its balance within a maximum of 90 days after they go public. The shares remain on the fund’s balance sheet for two years after the IPO and are then sold. Defiance Next Gen SPAC Derived ETF (SPAK) — publicly traded fund. Tracks the listed SPACs and the stocks of the companies they invest in. To be included in the index, companies must meet a minimum market capitalization of $250 million and have a 10% free float.

The process of selecting a company and buying / selling its shares

  • Amaday experts analyze the company by fundamental indicators
  • Potentially attractive companies are added to the asset portfolio
  • Trading is carried out strictly according to the developed algorithm

Strategy advantages

  • The algorithm takes into account such trading parameters as the holding time of the position and the levels of exit from the position both during its growth and during its fall.
  • There are no Lock-Up periods. Lock-Up — a period after the IPO during which investors cannot sell their shares
  • A wide range of hedging instruments, including hedging of the entire exposure in the portfolio by derivatives on volatility, a reverse fund for the biotechnology sector, and several others (depending on the composition of the portfolio)
  • The volume of the order is not limited due to access to market liquidity and margin trading
  • Own portfolio management methodology
  • The strategy is implemented on an individual brokerage client account

Investment opportunities 

Investment ideas examples:

C3.ai — an active participant in the markets for enterprise AI, machine learning, data analytics, cloud computing, and digital transformation.

Vivos Therapeutics, Inc. — develops and commercializes technologies that offer a clinically effective non-invasive, non-pharmaceutical and low-cost solution for patients with sleep-related breathing disorders.

Roblox Corporation — a multiplayer online gaming platform that spans a wide range of genres, from traditional racing and RPG games to simulation games.