The struggling biotechnology group and exchange traded funds such as the iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB), which tracks the Nasdaq Biotechnology Index, are leaving investors wondering when this once hot corner of the market will rebound.
The biotechnology sector has been among this year’s worst performing areas of the market as investors shifted out of high-flying growth stocks in face of increasing market uncertainties for more value plays.
However, a potential catalyst for biotech stocks and ETFs looms as traders that previously heavily shorted some of these names move to take profits and cover these winning bearish bets.
According to the NASDAQ, on the settlement of September 30, 2015, IBB short interest surged 23.82% to 11.54 million shares, since Hillary Clinton sent out a tweet on September 21, 2015 saying, “Price gouging like this in the specialty drug market is outrageous. Tomorrow I’ll lay out a plan to take it on. -H “.
The tweet was in response to then CEO of Turing Pharmaceuticals Martin Shkreli, after Turing raised the cost of an older antibiotic drug, Daraprim, by more than 50-fold and said the drug was still a bargain at $750. Since then, IBB’s short interest has dropped to 5.7 million shares, as of settlement on June 15, 2016, or about 22.89% of shares outstanding,” according to a Seeking Alpha analysis of biotech short interest.[related_stories]