Investors are liking XPH’s exposure to hedge fund darling stocks and takeover candidates as the ETF has added almost $20 million in new assets in just the past week.
The $695.6 million iShares U.S. Pharmaceuticals ETF (NYSEArca: IHE) is another ETF with good exposure to hedge fund faves. IHE has a combined weight of 12.5% to Actavis and Allergan. The fund allocates another 9.5% to Perrigo, Salix and Jazz, according to iShares data.
XPH and IHE have another potential catalyst in the form of Mallinckrodt (NYSE: MNK). Not only has the Ireland-based specialty pharma maker spent time as one of the most heavily shorted stocks this year, giving it exposure to the potential of a short-covering rally, but hedge funds are also stepping into Mallinckrodt from the long side.
Hedge funds, including John Paulson’s Paulson & Co. and Jana Partners, increased their long exposure to Mallinckrodt by 19.4% from the end of the first quarter through the end of the second. The stock has a weight north of 3.5% in both XPH and IHE.
SPDR Pharmaceuticals ETF
ETF Trends editorial team contributed to this post.