Why This Fund Cashed Out of a $3.6 Million Biotech ETF Bet
Key Points
Kentucky-based Aristides Capital sold 28,467 shares of IBB in the third quarter.
The shares were worth an estimated $3.60 million.
The move marked a full exit from the position, which was previously about 1.18% of the fund's AUM.
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Kentucky-based Aristides Capital fully exited its position in the iShares Biotechnology ETF (NASDAQ:IBB), reducing its portfolio by approximately $3.60 million, according to a November 13 SEC filing.
What Happened
According to a filing with the Securities and Exchange Commission on November 13, Aristides Capital sold all 28,467 shares of the iShares Biotechnology ETF (NASDAQ:IBB) previously held in its portfolio. The estimated transaction value, based on quarterly average pricing, was approximately $3.60 million, fully liquidating the fund’s stake in the biotechnology-focused exchange-traded fund.
What Else to Know
Top holdings after the filing:
- NYSEMKT: SPY: $53.02 million (15.9% of AUM)
- NASDAQ: IBIT: $25.17 million (7.6% of AUM)
- NASDAQ: GOOGL: $15.19 million (4.6% of AUM)
- NYSE: CRC: $11.29 million (3.4% of AUM)
- NASDAQ: ITRN: $10.02 million (3.0% of AUM)
As of Friday, IBB shares were priced at $171.88, up 28% over the past year and well outperforming the S&P 500, which is up about 15% in the same period.
ETF Overview
| Metric | Value |
|---|---|
| AUM | $8.68 billion |
| Price (as of Friday) | $171.88 |
| Yield | 0.2% |
| 1-year total return | 14.49% |
ETF Snapshot
- IBB provides investors with exposure to a broad basket of U.S. biotechnology stocks.
- It operates as a non-diversified exchange-traded fund tracking a biotechnology sector index.
- The ETF serves institutional and individual investors seeking targeted biotechnology sector participation.
The iShares Biotechnology ETF (IBB) is designed to replicate the performance of a biotechnology sector index, offering investors a way to access the growth and innovation of U.S.-listed biotech companies. The fund’s strategy emphasizes index replication and disciplined portfolio construction to manage sector-specific risk.
Foolish Take
Exiting a broad biotech ETF amid a strong run is very different from trimming a single stock. It is a deliberate choice to step away from sector beta at a moment when optimism has already returned.
The iShares Biotechnology ETF finished the quarter up sharply, with year-to-date gains north of 30% and a trailing one-year return well ahead of the S&P 500. Its rebound has been driven by large-cap biotech leadership, improving risk appetite, and renewed interest in profitable platforms rather than speculative pipelines. But with an expense ratio of 0.44% and exposure to more than 250 names, IBB is a blunt instrument once valuations reset.
This portfolio is not abandoning growth broadly. Its largest positions remain tied to market beta through SPY, selective crypto exposure via IBIT, and individual equities where conviction can be expressed more precisely. In that context, exiting a sector ETF looks like capital rotation rather than caution. Ultimately, broad sector ETFs work best during recoveries. Once dispersion returns, alpha often comes from selectivity, not baskets. In other words, walking away after a strong rebound is not bearish; it is disciplined.
Glossary
ETF (Exchange-Traded Fund): An investment fund traded on stock exchanges, holding assets like stocks or bonds.
Portfolio: A collection of financial assets held by an individual or institution.
Assets Under Management (AUM): The total market value of investments managed by a fund or firm.
13F: A quarterly SEC filing required from institutional investment managers disclosing their equity holdings.
Liquidating: Selling all holdings in a particular investment, reducing the position to zero.
Sector-specific exposure: Investment focused on a particular industry or sector, such as biotechnology.
Dividend yield: Annual dividends paid by an investment, expressed as a percentage of its price.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Non-diversified ETF: An ETF that invests primarily in a single sector or group of related securities, increasing concentration risk.
Benchmark index: A standard index used to measure the performance of an investment fund.
Index replication: A strategy where a fund aims to match the performance of a specific index by holding its components.
Portfolio weight: The proportion of a specific holding relative to the total value of the portfolio.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Ituran Location And Control, and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.
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