Is Twitter Inc (TWTR) Owned by Your ETF?

reminiscences of a stock operator pdf

With a few days of trading under its belt, Twitter (TWTRSnapshot Report) is finally starting to stabilize around the $41/share level. Still, this is a bit of a disappointment from its price on its opening day, as shares of the social media giant hit $50/share before slowly sliding back to their current level.

Yet even with this slump, many investors remain relatively optimistic on the company and their future growth opportunities. After all, the firm has only begun to scratch the surface of its revenue potential, and it still has plenty of room before it reaches universal adoption (see all the Technology ETFs here).

ETF approach

But if you are still feeling a little uncertain about Twitter—and who can blame you after their lackluster start—an ETF approach may be a better way to go. Fortunately, now that Twitter has been trading for a few days, a couple of ETFs have started to add allocations to the social media company, and we have highlighted those select few in greater detail below:

Global X Social Media Index ETF (SOCLETF report)

SOCL focuses in on companies that are engaged in some aspect of the social media industry, taking a broad international look at this market. The fund was allowed to add Twitter after its fifth trading day, and TWTR currently makes up about 4.2% of the SOCL assets, and it translates into roughly 110,635 shares of Twitter held by the ETF (see 3 Sector ETFs Crushing the Market in 2013).

This fund might be appropriate for those who want some exposure to Twitter, but are really banking on the overall social media trend instead. It is especially helpful if you are a believer in international social media growth, as close to 45% of the portfolio is invested outside the U.S.

In particular, China is well represented, as 26% of the fund is devoted to that nation, while another 6% goes to Japan. In terms of the top holdings, a company that owns the ‘Twitter of China’ Sina (SINAAnalyst Report), is actually #1, followed by LinkedIn (LNKD), and Tencent, all of which receive 10% weights.

Renaissance IPO ETF (IPOETF report)

IPO—as you might be able to guess from its ticker and its name—zeroes in on initial public offerings for its exposure. The fund holds newly-listed companies for a maximum of two years, and it can add important firms in as little as five days after their debut.

This is what happened with TWTR, and now this stock is in the top ten holdings of IPO, making up 2.4% of the assets. The fund doesn’t have any particular sector focus though, and it should be considered by those who want to get in on the solid IPO trend as of late, and for those who believe this can continue into the future (see Track Initial Public Offerings with this New IPO ETF).

The fund’s top holdings include Michael Kors (KORS), Facebook (FB), and Zoetis (ZTS), all of which make up more than 9% of assets. So unlike SOCL, this ETF has a decidedly U.S. focus, while it currently has a tilt towards consumer and technology stocks, though this will likely change as the IPO crop shifts as well.

Bottom Line

If you want some exposure to Twitter, but don’t want to make a big bet on the firm, either of the two ETFs outlined above might be interesting picks. They both offer modest exposure to the company, while giving broad access to some of the key trends—IPOs and social media—that are at work in this company’s shares.

And if these don’t really suit you, consider that a number of other ETFs are likely to add the company, either at their quarterly rebalancing date, or when the stock inevitably becomes a part of tech-focused indexes. This includes a likely addition into funds like the First Trust IPOX-100 ETF (FPXETF report) by the end of the year, and some specialized technology funds too (read Twitter IPO Puts These ETFs in Focus).

After all, Twitter is a $22 billion company, and if it follows in the path of other social media companies lately, it could shift further into focus over the next few months as well. But if you are looking for just a touch of TWTR exposure right now, you should definitely consider IPO and SOCL at this time.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)

About the Author

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were audited and attested by Baker Tilly, an independent accounting firm.

Be the first to comment on "Is Twitter Inc (TWTR) Owned by Your ETF?"

Leave a comment