A Sector ETF To Capitalize On An M&A Boom

The media industry is consolidating as big names jockey for position in an increasingly digital entertainment environment. As large media companies go on a acquiring spree, a media exchange traded fund could capitalize on the activity.

Over the past year, we’ve witnessed AT&T (NYSE: T) acquiring DirecTV, Chartered buying Time Warner Cable & Brighthouse, and Altice buying Cablevision (NYSE: CVC), writes Dan Niles, founding partner of AlphaOne Capital Partners and senior portfolio manager of the AlphaOne Satori Fund, on CNBC.

“We believe many of the smaller content players are likely to be acquired over the next 12 months to 24 months,” Niles said. “The interesting thing is that the buyers for media companies are broadening from just other large media companies to Internet providers and telecom-service providers.”

Niles and AlphaOne Capital Partners anticipates that companies like Softbank, Googlel (NasdaqGS: GOOGL), Netflix (NasdaqGS: NFLX), Verizon (NYSE: VZ) and AT&T will be acquirers or at least take significant positions in media companies ahead.

On the other end, “as for possible takeover targets, I view any company with a market cap under $50 billion as a potential target,” Niles added. “EVERY SINGLE ONE.”

To gain exposure to the media space, ETF investors can take a look at the PowerShares Dynamic Media Portfolio (NYSEArca: PBS), which tracks U.S. media companies. PBS includes exposure to some previous takeover targets like CVC 3.4% and Time Warner (NYSE: TWX) 3.4%.