Is Twitter Owned by Your ETF? - ETF News And Commentary
November 20 2013 - 1:00PM
Zacks
With a few days of trading under its belt,
Twitter
(TWTR) is finally starting to stabilize around the
$41/share level. Still, this is a bit of a disappointment from its
price on its opening day, as shares of the social media giant hit
$50/share before slowly sliding back to their current level.
Yet even with this slump, many investors remain relatively
optimistic on the company and their future growth opportunities.
After all, the firm has only begun to scratch the surface of its
revenue potential, and it still has plenty of room before it
reaches universal adoption (see all the Technology ETFs here).
ETF approach
But if you are still feeling a little uncertain about Twitter—and
who can blame you after their lackluster start—an ETF approach may
be a better way to go. Fortunately, now that Twitter has been
trading for a few days, a couple of ETFs have started to add
allocations to the social media company, and we have highlighted
those select few in greater detail below:
Global X Social Media Index ETF (SOCL)
SOCL focuses in on companies that are engaged in some aspect of the
social media industry, taking a broad international look at this
market. The fund was allowed to add Twitter after its fifth trading
day, and TWTR currently makes up about 4.2% of the SOCL assets, and
it translates into roughly 110,635 shares of Twitter held by the
ETF (see 3 Sector ETFs Crushing the Market in 2013).
This fund might be appropriate for those who want some exposure to
Twitter, but are really banking on the overall social media trend
instead. It is especially helpful if you are a believer in
international social media growth, as close to 45% of the portfolio
is invested outside the U.S.
In particular, China is well represented, as 26% of the fund is
devoted to that nation, while another 6% goes to Japan. In terms of
the top holdings, a company that owns the ‘Twitter of China’
Sina (SINA), is actually #1, followed by
LinkedIn (LNKD), and Tencent, all of which receive
10% weights.
Renaissance IPO ETF (IPO)
IPO—as you might be able to guess from its ticker and its
name—zeroes in on initial public offerings for its exposure. The
fund holds newly-listed companies for a maximum of two years, and
it can add important firms in as little as five days after their
debut.
This is what happened with TWTR, and now this stock is in the top
ten holdings of IPO, making up 2.4% of the assets. The fund doesn’t
have any particular sector focus though, and it should be
considered by those who want to get in on the solid IPO trend as of
late, and for those who believe this can continue into the future
(see Track Initial Public Offerings with this New IPO ETF).
The fund’s top holdings include
Michael Kors (KORS),
Facebook (FB), and
Zoetis (ZTS), all of
which make up more than 9% of assets. So unlike SOCL, this ETF has
a decidedly U.S. focus, while it currently has a tilt towards
consumer and technology stocks, though this will likely change as
the IPO crop shifts as well.
Bottom Line
If you want some exposure to Twitter, but don’t want to make a big
bet on the firm, either of the two ETFs outlined above might be
interesting picks. They both offer modest exposure to the company,
while giving broad access to some of the key trends—IPOs and social
media—that are at work in this company’s shares.
And if these don’t really suit you, consider that a number of other
ETFs are likely to add the company, either at their quarterly
rebalancing date, or when the stock inevitably becomes a part of
tech-focused indexes. This includes a likely addition into funds
like the
First Trust IPOX-100 ETF (FPX) by the end
of the year, and some specialized technology funds too (read
Twitter IPO Puts These ETFs in Focus).
After all, Twitter is a $22 billion company, and if it follows in
the path of other social media companies lately, it could shift
further into focus over the next few months as well. But if you are
looking for just a touch of TWTR exposure right now, you should
definitely consider IPO and SOCL at this time.
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FT-IPOX 100 (FPX): ETF Research Reports
RENAIS-IPO ETF (IPO): ETF Research Reports
SINA CORP (SINA): Free Stock Analysis Report
GLBL-X SOCL MDA (SOCL): ETF Research Reports
TWITTER INC (TWTR): Free Stock Analysis Report
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