There’s always too much to get to during the week. Continuing with the weekend feature that we started last weekend, we’re once again taking the opportunity to interrupt your usual programming. Here’s our key thought for the week and a little bit extra.
Our Activist Strategy, which is our super premium product is still in feedback mode. Read up on it and sign up for the free trial.
Then there’s our Top Weekly Ideas. The first edition will go out tomorrow, but we’re offering the first two weeks for free as we work out the kinks. Sign up for those 2 weeks here.
Dan Loeb's Third Point returned 11% in its flagship Offshore Fund and 13.2% in its Ultra Fund for the first quarter. For April, the Offshore Fund was up 1.7%, while the Ultra Fund gained 2.3%. The S&P 500 was up 6.2% for the first quarter, while the MSCI World Index gained 5%. Q1 2021 hedge Read More
Here’s the weekend feature: A New Activist Focused ETF
We refrained from talking about it last week, saving it for this weekend. But there’s a new activist-focused ETF out by Global X called the Guru Activist Index ETF (ACTX). A lot of these portfolios are doing it wrong. The Guru Activist is doing it better than some. Here are its top 10 holdings:
It’s tracking what it calls the top 50 activist investors in the U.S., using size, successes and frequency to judge which activist are the best. It then picks the 50 stocks with the largest amount of activist dollars invested.
The entire ETF owns 50 stocks, but when you look at an Icahn or Ackman portfolio, the portfolio “alpha” is really generated when you can run a concentrated portfolio.
But in truth, it’s the Carl Icahn and Bill Ackman portfolio. Six of Icahn’s top 10 positions are in the ACTX and half of Ackman’s there. The other problem is that it still owns large, too big to grow businesses like McDonald’s and Apple (hate if you will). Apple is owned in some 250 ETFs and close to 2,000 mutual funds.
Since its Apr. 30 launch, the ACTX has underperformed the S&P 500 by 50 basis points.
We still think you can do better running a concentrated portfolio, sticking to stocks where the activist has had success in the industry/thesis before. As well, you’ll do much better in the smallcap space where these ETFs can’t play.
I’d be willing to make a Warren Buffett type bet that a concentrated portfolio of active selected activist-targeted stocks will outperform the ACTX.
Notable new activist campaigns from the week –
- Starboard Value went active on Brink’s Co. [thoughts here, more to come via Activist Strategy later]
- Mangrove Partners is active at Atlantic Power [more here]
- Cove Street is an activist at Comverse [overview]
The rockstar posts of the week on Activist Stocks were –
- Ahead of Sohn, A Look At Loeb’s Yum! Thesis
- Jana Partners’ Breakup Can’t Save Qualcomm
- Unredacted thoughts on Sohn – Big disappointment?
- SALT Conference Activist Roundup
- Rovi Pleas With Shareholders: We Need One More Shot