Portnoy Street - BUZZ ETF Analysis

The tech “dip” which started last week has continued to dip.

Some are calling it a valuation reset, and some are calling it the start to a bear market. The only thing I know is that you can’t predict what direction we are going in the short term.

If I could I would be charging a lot more for this email lol.

That said I’ve been patient this week and have not added to, or initiated any new positions. My plan is continue with regular ETF contributions, and sit on my hands a little longer before touching any tech.

And speaking of ETFs, we have a new kid coming to the block this morning.

*BZZZZZZZ noise

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“I think I’m a fairly smart person.” - Dave Portnoy

Dave Portnoy. You might know him as the Barstool CEO, you might know him for his pizza reviews, or you might recognize him as the man screaming at his computer while trading stocks during the pandemic.

He is also responsible for the Barstool Fund which has helped out hundreds of small businesses affected by COVID.

Now he is making his move into the world of Wall Street.

On Monday, Mr. Portnoy posted the tweet below where he announced a new ETF he is putting his “face and reputation” behind.

Background

The ETF, BUZZ, will be known as The VanEck Vectors Social Sentiment ETF. Portnoy is not actually the creator of the fund but is said to be “part owner of the company that created the algorithm and licenses the strategy - Buzz Holdings ULC.” (Motely Fool)

According to the video above, the algo has existed for over five years. With everyone and their dog now becoming involved in the stock market I guess they figured it is their time to shine.

On their site it is stated that the BUZZ index has returned 73% over the last year and has a five year annualized return of 25%. Clearly it has outperformed the S&P 500…for now.

BUZZ Approach

Below is a screenshot from investwithbuzz.com that covers the general approach of the ETF.

Reading over this it seems like a good idea.

Identify the 75 most popular stocks with a $5B+ market cap, decide if the talk is bullish or bearish, and then buy into said companies accordingly. Easier said than done.

One thing that Dave has been sure to point out is that the fund will not be focused on stock fads like GameStop. This is likely a good thing, as by the time you hear about these hot stocks on social media you have most likely missed the move. Been there. Done that.

Here are sources that the index monitors.

Holdings

No single holding will be allowed to become greater than 3% of the index and if so will be rebalanced on “adjustment day” which is the third Thursday of each calendar month.

When I initially looked over the holdings I was honestly surprised by the quality of companies I saw. Solid names like Apple, Amazon, Facebook, Disney, and Microsoft account for a respectable percent of the portfolio.

Of course this is mixed with speculative names such as Plug Power, Virgin Galactic, and Nikola (really Dave, Nikola?!?!)

Here is an image of the top 20 holdings. If you want to view the full 75 companies click here.

Conclusion

While Dave may not be the best investor/trader, or whatever you want to call him, he is a great business man.

He knows the in and outs of marketing and how to get people’s attention. This without a doubt is going to help the fund see large amounts of inflow.

Now for the actual validity of the BUZZ algorithm, I think the historical returns speak for themselves. Whether it can maintain returns through flatter markets is what I will be interested to see.

With a price of $25 bucks per share I will likely pick some up just for grins.

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Now what you all actually came here for.

Who thought we would be talking about boomer stocks again…

Thanks for reading, if you have any questions, comments, suggestions, etc. about the email send me a DM on twitter. See you next week!