If stocks could sport emotions, one that would be going stir
crazy with the market closed the past days is Facebook (NASDAQ:
FB
). Yes, the largest social media company is still down 42.3
percent since its May initial public offering and yes, plenty of
investors remain cautious on the name.
In other words, some left Facebook for dead not long after it
went public. On the other hand, the shares surged 15.5 percent
last week as the S&P 500 and the Nasdaq tumbled. Hence why
those that are long the stock are eagerly the return of normal
market action on Wednesday.
The cautionary tale here is that one week does not necessarily
make a trend. However, one week can help start a new trend and if
last week says anything about Facebook, it might just be that
some investors see value at current levels. Perhaps there is
value. Morningstar says
fair value for the stock is $32
. It closed below $22 on Friday.
Even if the darkest clouds hanging over Facebook have passed,
conservative investors may opt to gain exposure to the stock
through ETFs rather than direct ownership of the shares. These
are the best ETF avenues for Facebook exposure.
Global X Social Media Index ETF (NYSE:
SOCL
)
The $13.5 million Global X Social Media Index ETF is still the
only ETF devoted exclusively to the social media space. Now
almost a year old, SOCL is about far more than Facebook. The
stock is the ETF's fifth-largest holding with a weight of 6.2
percent, but that is well behind the almost 13 percent allocation
given to LinkedIn (NYSE:
LNKD
) and not much more than the weights garnered by search engine
firms Yandex (
YNDX
) and Google (NASDAQ:
GOOG
).
There have been times when SOCL and Facebook have not
performed inline with each other, but the perception by some
investors is that the
ETF and the stock are joined at the hip
.
SOCL is the answer to the trivia question "What was the first
ETF to hold Facebook?" However, SOCL is not the largest ETF with
Facebook exposure. That honor goes to the...
First Trust Dow Jones Internet Index Fund (NYSE:
FDN
)
Though the First Trust Dow Jones Internet Index Fund did not add
Facebook as quickly as SOCL did, it was easy to see FDN would be
a likely home for the social media company at some point. FDN is
the king of the Internet ETF space with over $488 million in AUM.
Facebook is the fund's seventh-largest holding with a weight of
3.63 percent as of October 26.
FDN has a larger weight to Facebook than it does LinkedIn and
Netflix (NASDAQ:
NFLX
), among others. While FDN is the largest ETF with decent
Facebook exposure (there are large ETFs with scant exposure to
the stock), it is not the ETF with the largest weight to the
stock. The answer to that trivia question is the...
First Trust US IPO Index Fund (NYSE:
FPX
)
The First Trust US IPO Index Fund's name implies it is an IPO
ETF, but it tracks an index that "is a rules based value-weighted
index measuring the average performance of U.S. IPOs during the
first 1000 trading days,"
according to First Trust
.
What that means is not all of FPX 100 holdings are new. For
example, top holdings such as Visa (NYSE:
V
), General Motors (NYSE:
GM
) and Dr. Pepper Snapple Group (NYSE:
DPS
) are well removed from their IPOs. FPX did make room for
Facebook at last rebalancing. Now the stock is the ETF's
second-largest holding with a weight of almost 8.4 percent.
FPX rebalances quarterly and assuming the last rebalance
occurred in late September, that is a case of good timing.
Facebook is up 6.4 percent since September 27.
For more on Facebook and ETFs, click
here
.
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