Dell Going Private Rumor Provides Modest Boost to Tech ETFs
Shares of personal computer maker Dell (NASDAQ: DELL) surged on speculation CEO and founder Michael Dell is mulling a plan to take his company private. While Texas-based Dell would not comment on the rumor, the corresponding headlines were enough to lift other technology stocks including Microsoft (NASDAQ: MSFT) and Dell rival Hewlett-Packard (NYSE: XLK).
Despite Dell having a market capitalization of nearly $22 billion, the stock does not receive significant allocations in many marquee ETFs that track the technology sector. However, when the likes of Dell, Microsoft and Hewlett-Packard are combined, the resulting number is often a decent portion of some of the most popular technology sector ETFs.
For example, the Technology Select Sector SPDR (NYSE: XLK) rose to near its highest levels of Monday's session following the Dell headlines. The aforementioned trio of old school technology giants combine for 8.4 percent of XLK's weight.
The often overlooked SPDR Morgan Stanley Technology ETF (NYSE: MTK) soared to its high of the day after the Dell news broke. MTK, which has $170.45 million in assets under management, features a 2.94 percent weight to Dell, one of the largest weights to that stock among ETFs, and a 3.16 percent weight to Hewlett-Packard.
The iShares S&P Global Technology Sector Index Fund (NYSE: IXN) rose modestly following the Dell news, but like XLK and the PowerShares QQQ (NASDAQ: QQQ), IXN is still in the red today. IXN features only modest weights to Dell and HP, but does have almost 6.3 percent weight to Microsoft.
The iShares Dow Jones U.S. Technology Sector Index Fund (NYSE: IYW) also pared its intraday losses on the Dell headlines even though the stock represents just 0.69 percent of the ETF's weight.
IYW, QQQ and XLK feature some of the largest weights to Apple (NASDAQ: AAPL) among all ETFs and a 3.3 percent slide in that stock is proving to be too much for those ETFs to overcome today.
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