ETF Exchange Traded Funds
August 26, 2014 - Biotech ETFs Surge on InterMune-Roche Deal by Zacks Investment Research
InterMune (ITMN) was a star performer in Monday trading session, as the stock skyrocketed more than a third on the day. The massive gain for this biotech firm came after the Swiss drug maker Roche Holding (RHHBY) agreed to buy InterMune for $8.3 billion.
As per the deal, Roche will pay $74 per share in cash, which represents 38% premium to the ITMN closing price as of August 22 and 63% premium to the price on August 12 when the potential takeover of InterMune was initiated. The deal is expected to close by the year end.
The acquisition would broaden and strengthen Roche’s portfolio of medicines for respiratory ailments. The most promising new drug is pirfenidone, which is used for the treatment of a progressive and ultimately fatal scarring condition of the lungs. Pirfenidone is already approved for idiopathic pulmonary fibrosis (IPF) in Europe and Canada, and is currently under regulatory scrutiny in the U.S.
About 70,000 to 200,000 Americans suffer from IPF, according to the various sources. The disease has no known cause. Scaring starts in the lungs, and patients eventually lose the ability of breathing. Death often occurs two to five years after diagnosis.
Given this, Pirfenidone would be the first drug in the U.S. for a rare lung disease and could act as a lifesaver. The approval of the drug is expected by November 23. Roche, the world’s largest maker of cancer drugs, expects the takeover to boost earnings from 2016.
InterMune’s acquisition by Roche was well received by investors and the stock added more than $19 per share on the day to close at record high of above the $73 per share mark. The stock crushed its average volume figures, as nearly 51.5 million shares moved hands compared to just 2.8 million on average (read: Healthcare ETFs Leading the Pack This Q2 Earnings).
The news led to a surge in the broad biotech ETF space on the day. First Trust NYSE Arca Biotechnology Index Fund (FBT) led the way higher gaining 4.2%, followed by gains of 3.2% for SPDR S&P Biotech ETF (XBI) and 2.9% for PowerShares Dynamic Biotechnology & Genome Portfolio (PBE - ETF report). In fact, FBT is the top non-leveraged performing fund of the day.
FBT in Focus
This fund follows the NYSE Arca Biotechnology Index and holds about 20 securities in its basket. Of these firms, ITMN takes the top spot with 5.95% of assets. The ETF is spread across various market caps – 39% in large caps, 34% in small caps and the rest in mid caps with a tilt toward growth stocks at 79%. The fund manages a $1.4 billion in its asset base and charges 60 bps in annual fees. Average daily volume is good as it exchanges 174,000 shares a day (read: Last Week's ETF Highlights: MLP and Biotech Funds Soar, Volatility Sinks).
XBI in Focus
This fund follows the S&P Biotechnology Select Industry Index and holds about 80 securities in its basket. It is well spread out across its components with InterMune having 1.54% share and holding the eight position. The ETF puts more focus on small- and micro-cap stocks at 71%, while mid and large caps account for the rest. The product has nearly $1.1 billion in AUM and sees solid volume of 659,000 shares per day. It charges 35 bps in annual fees.
PBE in Focus
This fund provides exposure to 29 firms by tracking the Dynamic Biotech & Genome Intellidex Index. ITMN occupies the ninth position with 4.57% allocation. The ETF is spread across various market caps – 31% in large caps, 25% in mid caps and the rest in small caps. The product has amassed $386.6 million in its asset base while trades in lower volume of 96,000 shares per day. Expense ratio came in at 0.63% (see: all the Healthcare ETFs here).
The upward trend in the above-mentioned products is likely to continue given their Zacks ETF Rank of 2 or ‘Buy’ rating, suggesting their outperformance in the coming months as well. In fact, these ETFs have clearly been outpacing the other products in the biotech space over the trailing one-month period.
Click Here for a Free Trial of Zacks Investment Research
Click the Links Below to Review ETF Exchange Traded Fund Trade Alert Software and Advisory Services
Free Trial Zacks ETF Rank
Our Zacks ETF Ranking system was designed specifically for Exchange-Traded Funds in order to help you pick the best product for your investing needs. Not only does this system take into account asset class forecasts, but it looks at several ETF specific factors, such as expense ratios and bid-ask spreads, to give investors a comprehensive account of a funds investment profile. This Ranking method is built for a one year outlook and seeks to find ETFs that are likely to outperform. The funds are ranked on the traditional Zacks Rank scale of #1 (Strong Buy) to #5 (Strong Sell), and we currently evaluate a variety of funds across asset classes including equities, commodities, fixed income and currency.
ETF, Exchange Traded Funds Research, ETF Investing
ETF Screener with Lowest Price-to-Fair Value, Most Heavily Traded, and YTD Top Performers. ETF Tools with ETF Performance Table, ETF Analyst Picks, ETF Valuation Quickrank, Cost Analyzer ETF, and ETF Analyst Reports. ETF Discussion Boards and Free ETF Newsletter.
Portfolio Prophet Exchange Traded Funds Trade Alert Software
The Portfolio Prophet is our premium trade alert software for quickly & easily adding Exchange Traded Funds (ETFs) to your trading portfolio. The Portfolio Prophet alerts you whenever a new trade is setting up; then, it follows the trade to completion, so you'll know exactly when to change your stop orders which "lock in" profit. You can even customize it based on your risk tolerance - aggressive, moderate, or conservative.
Feel the Power of TD Ameritrade and Trade Free for 60 Days
Committed to providing one of the highest levels of service since 1975. For over 35 years we’ve prided ourselves on providing our clients with industry leading customer service and resources.
Three Reasons to Choose TD Ameritrade for ETF Trading
1. Over 100+ Commission-free ETFs - We offer a curated selection of commission-free ETFs selected by Morningstar Associates.
2. ETF Knowledge Center - Leverage the ETF Knowledge Center and arm yourself with greater information and education on ETFs. Explore video tutorials, articles, and announcements on a range of topics, from ETF basics to in-depth subjects like accessing commodities, risks associated with leveraging, and measuring ETF liquidity.
3. Powerful Trading Platforms - Trade Architect® and thinkorswim® help you to seize opportunities with real-time ETF quotes, market insight and streaming news to give you new trading ideas.
What Is An Exchange Traded Fund?
An exchange-traded fund or ETF is an investment vehicle traded on stock exchanges, much like stocks or bonds. An ETF holds assets such as stocks, bonds, or futures. Institutional investors can redeem large blocks of shares of the ETF (known as "creation units") for a "basket" of the underlying assets or, alternately, exchange the underlying assets for creation units. This creation and redemption of shares enables institutions to engage in arbitrage and causes the value of the ETF to approximate the net asset value of the underlying assets. Most ETFs track an index, such as the Dow Jones Industrial Average or the S&P 500.
An ETF is Like a Mutual Fund and a Closed End Fund
An ETF combines the valuation feature of a mutual fund or unit investment trust, which can be purchased or redeemed at the end of each trading day for its net asset value, with the tradability feature of a closed-end fund, which trades throughout the trading day at prices that may be substantially more or less than its net asset value. Closed-end funds are not considered to be exchange-traded funds, even though they are funds and are traded on an exchange. ETFs have been available in the US since 1993 and in Europe since 1999. ETFs traditionally have been index funds, but in 2008 the U.S. Securities and Exchange Commission began to authorize the creation of actively-managed ETFs.
Stock Option Forex Futures Training Seminars Webinars Workshops
Click Here For The Complete 2014 Schedule
Professional investors traders teaching successful low-risk high-reward
trade strategies. Power profit secrets for stocks, options, forex, futures
investing trading success. Or avail of Home Study Courses and or
Trading Softwares available to improve your investment returns.