Investing

5 Stocks That Will See Big Selling on Huge ETF Rebalance

All of the major money management firms that run exchange traded funds (ETFs) have to do regular quarterly rebalances to reset their portfolios to the proper allocation levels. When they rebalance their holdings, it can introduce some big volatility to some of the stocks in the portfolio.

On the close Friday, First Trust will rebalance nine of its AlphaDex portfolios, which cover all the major market sectors. A research note from the analysts at Cowen highlights the top rebalance names by liquidity. We screened those stocks for the companies that would see the greatest amount of selling on a share basis.

Alkermes PLC (NASDAQ: ALKS) is a stock that many top biotech analysts like, but that won’t keep the selling away. The Cowen team says that 823,800 shares will be sold on the close. That is more than a full day’s volume, which has been running at 807,000 shares a day over the past 50 days. The Thomson/First Call consensus price target for the stock is $50.92. Alkermes closed Thursday at $40.21.

ALSO READ: 5 Very Oversold, Well-Known Technology Stocks to Buy

Bruker Corp. (NASDAQ: BRKR) is a small-cap stock that will see some intense selling pressure. Cowen says that 1,708,400 shares will be sold, and that is more than twice the amount that traded per day over the past 50 days. Usually, Bruker sees about 790,000 shares a day change hands. The consensus price target is $24.86. The shares closed Thursday at $18.55.

ConAgra Foods Inc. (NYSE: CAG) will see a sizable amount of stock on the sell-side when the market closes Friday. The food giant will have a sell of 1,741,200 shares. While this may seem like a very large amount, it is actually a little over a half day’s normal trading volume. The 50-day average for the stock is $3.2 million shares. With the market volatility high though, it could exacerbate normal selling. Investors are paid a 3.3% dividend. The consensus price target is $33.60. Shares closed Thursday at $32.57.

Herbalife Ltd. (NYSE: HLF) has been a very controversial stock over the last year as a tug-of-war battle between Bill Ackman and Carl Icahn produced an epic CNBC argument and lots of bad blood. Ackman maintains that Herbalife is nothing more than a gigantic Ponzi scheme. He will like Friday’s action, as the Cowen analysts say that 800,700 shares will be sold. That is far below the 50-day average of 2.38 million shares, but it will add to the overall volatility in the stock. The consensus price target is a whopping $80.67. Shares ended Thursday at $43.04.

Hologic Inc. (NASDAQ: HOLX) is a health care stock that will see a large block on the sell-side. The Cowen team expects 1,191,000 shares to be sold. The 50-day average for the stock is 1.97 million shares. Analysts on Wall Street are generally positive on Hologic, but that won’t help stop the selling. The consensus price target is $27.12, and shares closed Thursday at $23.48.

ALSO READ: Analyst Semiconductor Stocks to Buy After the Sell-Off

While the selling will be intense for these stocks, investors that own them don’t necessarily need to panic and sell their shares. ETF rebalances are part of the process and don’t change the original thesis for owning a specific company.

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