Hyman Roth ETFs to Consider for Steel M&A Rumors

By The ETF Professor Aug 19, 2010 12:45 pm

The talk is that Arcelor Mittal could make Potash an offer, and there are ETFs worth looking at as long as this rumor persists.

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Editor's Note: This content was originally published on Benzinga.com.

These are go-go days for the materials sector. Okay, it's not the first half of 2008, but the mergers and acquisition (M&A) drama is reaching blissful heights. BHP Billiton (BHP) got the ball rolling with what's now become a hostile bid for Potash (POT), and now investors and traders that love the materials sector have a new rumor to track.

On Wednesday, there was plenty of chatter that Arcelor Mittal (MT) may offer up to $80 a share for US Steel (X), the largest US steel producer.

The reality is Mittal, much like the Corleone family, in the words of Hyman Roth, is bigger than US Steel, but regardless of movie trivia, there are several ETFs that are worth looking at if this rumor persists.

1. Market Vectors Steel ETF (SLX):
Yes, SLX is an obvious choice, but US Steel and Mittal are both found among the ETF's top-10 holdings and that isn't an easy combination to find among materials ETFs. SLX is the big kahuna of pure-play steel ETFs.

2. PowerShares Global Steel Portfolio (PSTL):
PSTL is the "other" steel ETF and it really doesn't get the attention that SLX does, but PSTL also has exposure to Mittal and US Steel.

3. iShares Dow Jones US Basic Materials ETF (IYM):
This one is more of a derivative play on the rumor because IYM offers only slight exposure to US Steel, but it could be be worth a look anyway.

4. SPDR S&P Metals and Mining ETF (XME):
US Steel is the No. 8 holding in this ETF and with exposure to other big steel names, XME will be in play.

5. iShares S&P Global Materials ETF (MXI):
One day, someone will realize what a good ETF MXI is. That day should be now because investors can play both Mittal and BHP Billiton with this fund.

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