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Fighting Ebola though investing: one firm’s approach

A month ago, few people would have thought of investing in companies that specifically made products for fighting the spread of the deadly Ebola virus. Now, one idea-oriented online broker has put together an investment product that targets these frontline stocks.

On Tuesday, Motif Investing — co-founded by former Microsoft executive Hardeep Walia — made available a basket of “Fighting Ebola” stocks to investors. The online broker operates a concept-driven trading platform, where investors buy into thematic baskets, or “motifs,” of stocks.

The “Fighting Ebola” motif was created last week: Individual stocks were equally weighted at about 3.5%, and the market hedge of the ProShares UltraShort Russell2000 TWM, -3.24% was weighted at 33%. At the end of the quarter, the fund gets rebalanced.

Many of the stocks that rallied heavily from the spread of the virus, like hazmat-suit makers Lakeland Industries Inc. LAKE, +0.07% and Alpha Pro Tech Ltd.APT, +6.09% peaked last week and have cooled off with the lack of new U.S. cases reported.

Walia said demand from his customers to create an Ebola investing motif rose sharply over the past month.

“We didn’t launch the motif earlier because we didn’t feel comfortable,” Walia said. He changed his mind when he decided to donate money Motif made off the basket to Doctors Without Borders, which has already lost several doctors to Ebola after working with patients infected with the virus.

Motif Investing’s “Fighting Ebola” stock basket as of Oct. 21
Company/TickerSegmentWeight at Oct. 21 closePerformance MTD
NewLink Genetics NLNK, +9.73% Drug & Vaccines5.66%61.1%
Sarepta TherapeuticsSRPT, -1.49% Drug & Vaccines4.26%6.6%
BioCryst PharmaceuticalsBCRX, -1.98% Drug & Vaccines3.90%16.3%
Amgen AMGN, +4.79% Drug & Vaccines3.90%2.6%
Inovio PharmaceuticalsINO, -5.25% Drug & Vaccines3.78%17.3%
Chimerix CMRX, -1.37% Drug & Vaccines3.72%9.5%
Johnson & Johnson JNJ, +1.17% Drug & Vaccines3.70%-5.9%
Neogen NEOG, +2.24% Drug & Vaccines3.67%7.4%
GlaxoSmtihKline GSK, +0.05% Drug & Vaccines3.57%-5.1%
NanoViricides NNVC, +2.81% Drug & Vaccines3.55%22%
Tekmira PharmaceuticalsTKMR, -3.39% Drug & Vaccines2.73%-17%
Ecolab ECL, +2.50% Protective Equipment3.77%-1.9%
3M MMM, +2.42% Protective Equipment3.76%-0.5%
DuPont DD, +1.49% Protective Equipment3.74%-4.1%
Kimberly-Clark KMB, +2.95% Protective Equipment3.74%3.4%
Cantel Medical CMN, -0.55% Protective Equipment3.54%10.2%
Lakeland IndustriesProtective Equipment2.49%115%
Alpha Pro TechProtective Equipment2.29%44.6%
Luminex LMNX, +1.28% Diagnostics3.34%1.1%
ProShares UltraShort Russell2000Market Hedge30.90%-3.1%

Other stocks that have seen volatility with Ebola developments that didn’t make Motif’s list include Versar Inc. VSR, -1.13% (up 9% month to date) and iBio Inc.IBIO, -20.18% (up 183% month-to-date).

Recently, MarketWatch found 35% of readers polled were bullish on Ebola-related stocks on the basis that efforts to fight the virus will likely be around for a while. Meanwhile, about 16% of readers polled saw Ebola-related stocks as overvalued and said they were likely to take short positions.

On Tuesday, the Centers for Disease Control and Prevention released new guidelines on using protective equipment for health-care workers dealing with Ebola cases. Meanwhile, several patients in the U.S. being monitored for the virushave been cleared.

Also, the Department of Homeland Security said all passengers coming from Liberia, Sierra Leone or Guinea would be screened at five U.S. airports.

In another development Tuesday, the nursing aide who was infected in Spain while treating two Ebola patients was declared free of the virus after being diagnosed Oct. 6.

The potential for investing in a cure or vaccine has not diminished. A lack of a vaccine against Ebola has the potential to become a hot-button political issuebefore the U.S. midterm elections, given recent funding concerns at the National Institutes of Health.

By

WALLACE WITKOWSKI

REPORTER