ETF Spotlight on Index IQ Merger Arbitrage (NYSEArca: MNA), part of a weekly series.
Assets: $28.2 million
Objective: Tracks the IQ Merger Arbitrage Index
Holdings: Some of the top companies in the ETF are Qwest communications, Allegheny Energy and Sybase, Inc.
What You Should Know
- The top sectors are energy (32.3%), communications (15.5%), information technology (14.5%) and materials (14.2%)
- The United States is the primary country in the fund, but Australia and the United Kingdom have small weightings
- MNA invests in global corporations for which there has been an announcement of a takeover or acquisition
- Because it doesn’t invest until that point – it doesn’t speculate on deals – it won’t capture the initial big rallies a target’s stock often sees after a takeover announcement
The Latest News
- Year-over-year, M&A activity has surged 79%
- CNBC reports that in merger news, the Genzyme (NASDAQ: GENZ) board rejected a $18.5 billion offer that translated into $69 per share of Sanofi-Aventis (NYSE: SNY). [Why Biotech Is Feeling the Winds of Change.]
- Intel (NASDAQ: INTC) recently bought the wireless unit of German chipmaker Infineon (NYSE: IFX), for $1.4 billion.
- BHP Billiton (NYSE: BHP) is still after Potash (NYSE: POT) for about $12 billion and Reuters reports that word is the sale is focused on nitrogen and phosphates. [6 Ways to Access The Potash Bids With ETFs.]
- Add to all this activity the fact that S&P 500 corporations are sitting on about $1.8 trillion in cash right now. They’ll be looking to deploy it in one way or another, and M&As may be a way to do it.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.