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Don Dion's Weekly ETF Blog Wrap

Stocks in this article: IGW XSD UDN

Here is some of what Don Dion blogged about on RealMoney this past week.

Lessons From an ETF 'Crossover' Stock

Posted 12/17/2009 2:35 p.m. EST

The presence of Cree (CREE) in a variety of semiconductor and green ETFs means the stock is drawing investors from diverse market segments.

One of the driving factors behind a stock's performance is investor demand, and stocks that achieve high growth often have support from multiple sectors or multiple "stories." A company that can market itself to different groups of investors will be able to tap more investor dollars. ETFs facilitate sector investing and "story" investing to a degree that wasn't as readily available a few years ago, and this year we have seen the effects with semiconductors and clean energy.

American Semiconductor (AMSC) is found in many alternative-energy ETFs but not the semiconductor ETFs, while Cree is found in both. AMSC is involved with wind power, while CREE makes energy-saving LEDs.

Year to date, AMSC is up 145.7% and CREE is up 229.6%. Both returns are stellar, but it helps that CREE is pulling in dollars from semiconductor ETFs in addition to a slew of alternative-energy funds. According to NSX data, iShares S&P North American Tech Semiconductors (IGW) has seen inflows of $43 million in the 11 months through Nov. 30, and SPDR S&P Semiconductor (XSD) has taken in $44 million. Compare that $87 million total with the $120 million that has flowed into the eight clean-energy funds listed on the table below.

It would take a lot more money flowing into these ETFs to really move these stocks, though. The total holdings in AMSC in the above ETFs amounts to only about 2% of its market capitalization of $1.8 billion, while the holdings in CREE come to about 1% of its $5.4 billion market cap.

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