Genentech Causes Flurry of ETF Buying (DNA, BBH, XBI, IBB)

Posted in block volume, General 
March 6th, 2009

There is a hidden twist in the increased merger price that Genentech Inc. (NYSE: DNA).  Sure, Genentech shares spiked huge on the news.  But what is interesting here is that the BIOTECH ETF’s which track the sector are spiking on the news:

  • Biotech HOLDRs (AMEX: BBH) is up 3.8% at $62.45 on 344,000 shares at 1:39 PM EST (Avg. Volume is 102,000).  Keep in mind that HOLDRs can only be traded in 100 share blocks.  Genentech is or was 40% of this ETF, so the component weighting has to change when they decide to buy others.
  • SPDR S&P Biotech (NYSE: XBI) is up 0.8% at $43.64 on almost 290,000 shares (Avg. Volume is 253,000 shares).
  • iShares Nasdaq Biotechnology (NASDAQ: IBB) was in negative territory late-morning.  This does not have any components which are involved in the merger, but these do all tend to run at least somewhat in tandem.  The key today is “somewhat.”  At 1:39 shares were barely positive on the day at $59.25 on over 1.2 million shares (Avg. Volume 1.12 million shares).

Jon C. Ogg
March 6, 2009

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