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Direxion Launches Long/Short IPO Fund (DXIIX)

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By Douglas A. McIntyre Published

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Direxion is launching a new mutual fund to cover IPOs.  This is not an ETF and is not one of the leveraged instruments out there you have seen from Direxion.  The company is launching the Direxion Long/Short Global IPO mutual fund (DXIIX) and is meant to offer institutional-style access to investment opportunities in the global Initial Public Offering market.  On top of that, the fund includes active long/short management through the distinctive early stages of the new-issue life-cycle. Direxion noted, “The result is a non-correlating, liquid fund that offers potential diversification to any portfolio.”

IPOX Capital Management, LLC will be the Fund’s sub advisor and its goal is to seek capital appreciation through a risk-controlled portfolio by investing in IPOs and spin-offs using a combined long/short strategy.

This one is a buy-and-hold managed tactical fund best suited for investors who value a tactical approach, yet are unable to manage an active strategy on their own.

The long portion of the Fund’s portfolio holds stocks that are within their first year of public offering and are expected to deliver short-run outperformance.  The short portion of the portfolio holds stocks that are within their second-through-fourth year of public offering and are expected to underperform. The Fund will be managed through three distinct parts of the IPO Life cycle:

  • Initial Offerings, held in long positions. The fund will participate in IPOs to take advantage of potential under-pricing in the market. IPOs can often be priced significantly below market expectations, providing the potential for capital appreciation on the first trading day and throughout the first few weeks of a new issue’s public offering.
  • Year-1 New Issues selected to over perform, held in long positions.
  • Year 2-through-4 New Issues selected to under perform, held in short positions.

Jon C. Ogg

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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