Greetings!
Below please find the ETF Spotlight newsletter for
the week of April 19th, containing highlights of the research and
data on www.etfresearchcenter.com
as well as a recap of the past week's action in the ETF market. The focus of this week's edition is owners' equity, or book value, one of the most important investment metrics in our opinion. Feel free to share it with others who may be interested. |
In this week's issue
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 By the book- Chart of the week: Funds with the highest price-to-book value multiples
- Fund Focus: iShares NASDAQ Biotech (IBB)
- Revisions, asset flows & short interest
- Book value estimates, growth rates & multiples for major ETFs
- Market monitor - movers & categories
To download the full newsletter click here. |
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Chart of the week
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Highest P/BV multiples | ETFs with the highest price-to-book value multiples
The stock of any firm with a reasonable expectation of profits over the long term should trade somewhat higher than its book value, since investors are willing to pay now for value likely to be created in the future. However, the higher the current stock price in relation to book value, the more incredible future growth must be in order for investors to break even. Thus stocks (or ETFs) with very high P/BV multiples should be viewed with utmost caution, or considered as potential "short sales." Indeed, all of the funds on this week's chart have low or non-existent ATLAR Scores, our measure of an ETF's overall investment merit. One area where this analysis is less meaningful, however, is with early-stage companies such as with the many Biotech funds on the chart. We examine the largest of these, the iShares NASDAQ Biotech ETF (IBB), in this week's Fund Focus. To download the full newsletter, click here.
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Fund Focus |
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 iShares NASDAQ Biotech (IBB)
Exciting advancements are being made in Biotech leading to the creation of real therapies--witness the meteoric rise in sales over the past 5 years. That said, investors here are like venture capitalists (see ROE chart): after breaking through to profitability last year firms in IBB are likely to see rapid growth in earnings this year and next, but our valuation methodology doesn't work in these cases due to the history of sustained losses.
To download the full newsletter, click here.
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