Facebook Finds Another ETF Home
For most of Facebook's (NASDAQ: FB) young (and controversial) life span as a public company, the stock's primary ETF residence has been the Global X Social Media Index ETF (NASDAQ: SOCL). For better or worse, SOCL's fortunes have often been tied to Facebook.
The ETF added Facebook after the stock completed its fifth day of trading. As of Wednesday, Facebook is SOCL's seventh-largest holding with a weight of 5.58 percent. That is still the largest weight to the social media giant of any ETF, but as was previously expected, Facebook is starting to find new residences in other ETFs.
On the sly, the newly minted Market Vectors Morningstar Wide Moat Research ETF (NYSE: MOAT) has made room for Facebook. The stock was added to MOAT's index, the Morningstar Wide Moat Focus Index, on September 21.
MOAT, which debuted in late April, is proving to be one of the more successful new ETFs to debut this year and one of the impressive hyper-focused ETFs on the market. Since its late April debut, MOAT has hauled in almost $69 million in assets under management and risen five percent along the way.
MOAT is home to just 20 stocks and the ETF is basically equal-weighted. The fund's largest holding, Lowe's (NYSE: LOW), accounts for 5.73 percent of the ETF's weight. Facebook receives a weight of 4.82 percent, meaning MOAT is the ETF with the second-largest allocation to the stock after SOCL. Facebook's weight in MOAT puts it slightly ahead of Cisco Systems (NASDAQ: CSCO).
Morningstar considers various factors before including a stock in MOAT's index, chief among them being a company's competitive advantage. No, Facebook has not thrilled investors since going public, but there is little denying the company has a wide competitive moat.
Importantly, Morningstar's fair value price on Facebook is $32, according to Market Vectors. That implies upside of about 35 percent from where the stock currently trades. Should that forecast prove accurate, MOAT and SOCL shareholders will probably be "liking" Facebook all the more.
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