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High U.S. share prices are pushing Lipper Award-winning equity fund managers into the shares of beaten-down healthcare companies, retailers and emerging-market stocks that they say offer a greater chance for outsized gains. Fund managers from Poplar Forest, Parnassus Investments and Brandes Investment Partners are among the 2017 Lipper Award winners who are concerned about the high valuation of the benchmark S&P 500 index.
These bearish sentiments first started with Valeant Pharmaceuticals, then Gilead and Turing Pharmaceuticals, and are now adversely affecting ETFs that hold any of these or their peers/competitors. It is my contention that the market is accustomed to common arbitrage opportunities, and when an even-driven opportunity emerges masking itself as a headwind, investors flee.
This week is a potentially troublesome one for biotechnology stocks and the related exchange traded funds. Not only are there a spate of big-name biotech earnings scheduled to roll in, but the Democratic National Convention is taking place in Philadelphia.