Profit Booking Hobbles the SPDR S&P Biotech ETF’s Large-Caps on December 17



Large-caps of XBI suffer from profit bookings

On December 17, 2015, the large-cap stocks of the SPDR S&P Biotech ETF (XBI) collectively lost 1.5% and was on par with the SPDR S&P 500 ETF (SPY). These stocks, in fact, underperformed the fund itself. We should note that XBI provides limited exposure to large-caps as it has only 12 large-cap companies in its portfolio of 101 stocks.

XBI’s large-caps account for approximately 13% of the XBI’s total portfolio. On December 17, all the large-caps were seen under pressure, and all of them ended up in the red. The large-cap of XBI includes stocks like Alexion Pharmaceuticals (ALXN) Vertex Pharmaceuticals (VRTX), and Alkermes (ALKS), which gave returns of -1.65%, -0.5%, and -1.2%, respectively.

The above graph reflects the performance of XBI large-caps stocks in comparison with SPY and XBI. Since the beginning of December 2015, XBI large-caps have outperformed XBI and SPY, with a return of 1.65%, compared to SPY’s return of -1.75% and XBI’s return of -4.25% on the same date.

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Celgene and Incyte lost the most

Celgene Corporation (CELG) and Incyte Corporation (INCY) were the hardest hit among large-caps that went down by 3.05% and 2.55%, respectively, on December 17. Celgene closed at $112.17 and was trading below its 100-day moving average price of $118.89. YTD, (year-to-date), CELG has given a return of 0.3%. CELG has a TTM (trailing-12-month) PE (price-to-earnings) of 56.36x. The book value of the stock is $6.83. With its current price, the stock is trading at a PBV (price-to-book value) of 16.43x. CELG has a weight of approximately 1% in XBI’s portfolio.

On the same day, Incyte (INCY) closed at $114.81 and was trading above its 20-, 50-, and 100-day moving averages. YTD, INCY has returned 57%. INCY has a book value of $0.48 per share, and with its current price, the stock is trading at a PBV of 240.6x. INCY also has a weight of approximately 1% in XBI’s portfolio.

Now let’s look at the performance of XBI’s mid-caps on December 17, 2015.


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