Do the top hedge funds professionals outperform the market? A new index proves their top positions do… thus far.
Direxion is launching the iBillionaire Index ETF
Direxion is launching the iBillionaire Index ETF, which tracks 30 stocks in which the wealthiest professional investors have invested.
Since its founding 15 months ago, the iBillionaire index is up 15.3 percent compared to the S&P 500, which is up 11.43 percent over a comparable period.
To develop their portfolio of 30 stocks, the iBillionaire index selects the top 30 long only positions based on the weighting of the world’s best investors based on their wealth, assets managed and trading history.
“We contemplate billionaires who have built their fortunes through investments and hedge funds – people like Warren Buffett, Carl Icahn and Daniel Loeb,” said Raul Moreno, co-founder and CEO of iBillionaire in a ValueWalk interview. “From that pool, individuals are selected based on net worth, assets under management, portfolio turnover ratio and filing history with the SEC. We then rank and select the top performers.”
The selection process for index inclusion is based on a quantitative principle, not discretion. “The iBillionaire Index is a rules-based index, meaning no manager discretion,” Moreno said. The 30 holdings are determined based on the hedge funds investor’s – the 30 U.S. equities in which the investors have allocated the most funds are selected.
Top holdings in tech sector
The top holdings in the company are largely technology based. Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT), Verizon Communications Inc. (NYSE:VZ) and QUALCOMM, Inc. (NASDAQ:QCOM) dominate the top six holdings.
Financials are well represented in the portfolio. Citigroup Inc (NYSE:C), fresh off its victory over the Department of Justice in which no individuals were prosecuted for fraud, is the fifth largest holding and only one of two stocks in the portfolio to deliver a loss over the past 15 months. Also in the top ten are Mastercard Inc (NYSE:MA) and American International Group Inc (NYSE:AIG).
Micron generally recognized by hedge funds
The portfolio includes an eclectic mix of old line firms, such as the well-connected Halliburton Company (NYSE:HAL), an old school energy play, beside tech winners eBay Inc (NASDAQ:EBAY) and Priceline Group Inc (NASDAQ:PCLN). Micron Technology, Inc. (NASDAQ:MU), in an industry generally recognized by hedge funds to have consolidated with additional profits to come, is the 17th largest allocation and its best performer, up 157 percent over the period. Cognizant Technology, another stock that seems to get a fair amount of behind the scenes attention, is up 37 percent over the same period.
When compared to the S&P 500, the portfolio is overweighed technology, consumer discretionary stocks and financials.
To calculate the hedge fund master’s results, they utilize public filings with the SEC to monitor billionaire investments. Much of our information is drawn from 13F forms, filed on a quarterly basis by the hedge funds. The index also considers filings such as 13D and form F, which often come up intra-quarter – for example, when a billionaire buys or sells shares of a company of which he owns more than 5%, is a corporate officer or considered an “insider.”
“What’s interesting here is that we can alert investors and app users to these more recent transactions via push alerts and email, therefore making them aware of potential opportunities,” Moreno noted. “When these investors take big positions in a company – especially when they’re activists – it’s worth noting and could indicate big things to come.”
Moreno notes a recent example with Carl Icahn and Family Dollar Stores, Inc. (NYSE:FDO). “(Icahn) initiated a big position in May, made an activist play for the company’s sale, and when the acquisition deal with Dollar Tree, Inc. (NASDAQ:DLTR) went through, he sold off a number of his assets. Anyone following Icahn’s Family Dollar buy could have made money, and our technology allows us to alert investors to these sorts of potential opportunities and investment ideas.”
Below is the full press release
iBillionaire Takes Hedge Fund Hack One Step Further with Direxion-Licensed ETF
Just 15 months after its launch, iBillionaire is headed to Wall Street. The hedge fund-hacking startup that taps into billionaire investment portfolios is partnering with Direxion for the launch of a new investment vehicle, the Direxion iBillionaire Index ETF.
New York – August 1st, 2014 – iBillionaire came onto the scene in April 2013 with a mission to democratize Wall Street by tapping into the investment strategies of billionaire investors. In November, it unveiled the iBillionaire Index (NYSE:BILLION). And now, the company has licensed the index to leading investment solutions provider Direxion Investments, which will launch the Direxion iBillionaire Index ETF – trading under the ticker IBLN – today.
Hacking Hedge Funds
While tools like Betterment and Wealthfront are aimed at aiding investors to emulate the market, iBillionaire helps them beat the market. How? By letting them in on the secrets of those who historically have – billionaires.
iBillionaire is hacking the hedge fund industry, a lucrative market that moves billions of dollars in investments each year. Its disruptive technologies tap into billionaire stock picks to bring to the masses hedge fund strategies and opportunities at a fraction of the cost. The company provides unique and exclusive data on trading activity and investment trends, all packaged into an easy-to-use, intuitive website and mobile app.
With the iBillionaire Index, the company uncovers where the smart money is going and identifies which 30 companies billionaires think are the best bets each quarter. In other words, it reveals where Wall Street magnates believe opportunity lies – and produces some impressive results as well, having outperformed the S&P 500 since inception.
The iBillionaire Story
iBillionaire offers a comprehensive suite of tools that enable anyone to follow billionaire investment holdings, build and update their own portfolios, and receive real-time news and alerts.
The company originated with an iPhone app that unlocks the investment strategies of Wall Street billionaires who have amassed their fortunes through investment. A few months after getting started, it released iBillionaire for Android and the web.
The startup soon recognized the potential of the information harnessed and, in turn, unveiled the iBillionaire Index (NYSE:BILLION) in November 2013. Culled from 13F filings with the Securities and Exchange Commission, the iBillionaire Index curates the 30 U.S. stocks in which a select pool of billionaires has allocated the most assets.
iBillionaire has now licensed its index to Direxion for the Direxion iBillionaire Index ETF (IBLN), a diverse, transparent and low-cost investment vehicle that can be accessed by anyone.
ETF a Major Milestone
Named by Bloomberg as one of the most anticipated upcoming ETF launches, the Direxion iBillionaire Index ETF is poised to make quite an impact.
“This launch marks a major milestone for iBillionaire, which has gone from a mobile app to the New York Stock Exchange in record time,” remarked Raul Moreno, co-founder and CEO of iBillionaire. “We are excited to be the first index in the world with such an extensive mobile community.”
The Direxion iBillionaire Index ETF trades under the ticker IBLN. Find out more at www.direxioninvestments.com.
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Founded in 2013 by Raul Moreno and Alejandro Estrada, iBillionaire taps into the investment strategies