The Edwards' Real Nanotech Index
It is time to put up or shut up. On this blog, I have complained repeatedly that so-called nanotech indexes, like those from Lux Research or Merrill Lynch, do not really reflect the nanotechnology industry as I know it. There are good reasons for this; most nanotech companies are small, under-capitalized, and do not have much liquidity. As a result, their stocks are difficult to use in exchange-traded funds or index options. On the other hand, the inclusion of large cap companies, like GE or Toyota, that do not depend on nanotech products for their revenues, destroys the ability any such index to measure the value placed on nanotech by the stock market. My approach is to build an index without an ulterior motive. You can invest in these stocks, or not, as you please. I am not recommending them or panning them. I am not planning to launch an exchange-traded fund on the AMEX. The sole purpose of the Edwards' Real Nanotech Index is to measure the progress of nanotech stocks in the market. I have selected only companies that derive a large percentage of their revenues from nanotech or would do so, if they had revenues. There are only 14 stocks in this index; that is because there aren't very many decent publicly traded nanotech companies. Hopefully, this will change, and as it does, the index will be expanded.
Structure of the index
The index is divided into 5 segments: Nanomaterials, Pharmaceuticals, Electronics, Nanotools, and Venture Capital. Each segment is weighted at 20% of the total. The stocks within each segment are given equal weight, thus the total of the 4 stocks in the Nanomaterials segment, for instance, add up to 20% of the total portfolio. No adjustment is made for market cap. The stock prices given below are at the close of trading on February 17, 2006. which will serve as the initiation date of the index. Through the use of a calculated fudge factor, the Edwards Real Nanotech Index stands at 100.00 as of this post. Performance will be monitored on a weekly basis at this site.
Structure of the index
The index is divided into 5 segments: Nanomaterials, Pharmaceuticals, Electronics, Nanotools, and Venture Capital. Each segment is weighted at 20% of the total. The stocks within each segment are given equal weight, thus the total of the 4 stocks in the Nanomaterials segment, for instance, add up to 20% of the total portfolio. No adjustment is made for market cap. The stock prices given below are at the close of trading on February 17, 2006. which will serve as the initiation date of the index. Through the use of a calculated fudge factor, the Edwards Real Nanotech Index stands at 100.00 as of this post. Performance will be monitored on a weekly basis at this site.
The Edwards Real Nanotech Index, 2/17/2006
(click to expand)DISCLAIMER AND DISCLOSURE: Inclusion in this index does not imply a buy recommendation from myself or from Nanotechnology.com. At any given time, I may be long,short or hold no position in any of these stocks.
Some of the stocks listed above have been discussed previously on this blog, including American Pharmaceutical Partners, Nucryst Pharmaceuticals and Harris & Harris. I will be profiling the others in the days to come.
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