Bullish On Biotech


As we’ve been telling you for a while, Karen Finerman as well as the other Fast Money traders are fairly bullish on biotech right now.

Their trading thesis is simple – they anticipate M&A in the space.

“You have potential buyers (Big Pharma) who have billions of dollars on the balance sheet and aging pipelines -- and potential targets that have been trading lower than they have in years,” explains Karen Finerman on CNBC’s Closing Bell.

In other words if Big Pharma has their eye on an acquisition, there’s no time like the present. Takeover target are cheaper now than they have been in years.

“And Big Pharma doesn’t need as much financing because they have so much cash, so the deals should be more likely to get done,” adds Finerman.

What's the trade?

Finerman does not recommend stock picking in this space. “I can’t evaluate each drug at each drug company,” she says. That’s too complicated.

So she recommends gaming the space with ETF’s; either the SPDR S&P Biotech or the iShares NASDAQ Biotechnology Index .

Both, she says, should move in sympathy if and when a deal happens.

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