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ETF Trends reported that healthcare exchange-traded funds (ETFs) could receive a boost if “some heavily shorted health care stocks” rally as the year draws to a close, prompting short covering.
ETF Trends reported that healthcare exchange-traded funds (ETFs) could receive a boost if “some heavily shorted health care stocks” rally as the year draws to a close, prompting short covering. Biotechnology ETFs in particular could benefit.
As quoted in the market news:
Although pharmaceuticals stocks and ETFs have … been stellar performers, short interest at the end of last month for Bristol-Myers Squibb (NYSE: BMY) and Pfizer (NYSE: PFE) was $1.9 billion apiece, according to FactSet. For Johnson & Johnson (NYSE: JNJ) and Eli Lilly (NYSE: LLY) short interest at the end of October was $2.7 billion and $1.8 billion, respectively. Short interest in Merck (NYSE: MRK), like J&J and Pfizer a Dow component, was $1.7 billion, according to FactSet.
Those pharmaceuticals stocks combine for 23% of the PowerShares Dynamic Pharmaceuticals Portfolio (NYSEArca: PJP), one of this year’s top-10 sector ETFs. PJP, which is up 26.2% this year, also features solid biotech exposure, meaning it could benefit from potential short covering of those stocks.