SURE: 4th Quarter 2024 Portfolio Review
Portfolio Review
The fourth quarter of 2024 witnessed another tsunami in stock buybacks, with U.S. companies authorizing $270 billion in new repurchases. This pushed the annual total to a record-breaking $1.2 trillion, surpassing the previous high of $1.1 trillion set in 2022. The technology sector led the charge with $360 billion in new buyback authorizations, followed by Communication Services at $226 billion and Financials at $189 billion. This trend underscores the continued preference for buybacks as a means of returning value to shareholders, despite the implementation of a 1% excise tax imposed since 2023. The robust buyback activity suggests that companies remain confident in their financial positions and see their own shares as attractive investments.
Source: Qubed Capital, LLC. As of 12.31.2024.
The Federal Reserve has entered a holding pattern after implementing rate cuts in the previous three meetings. Current consensus suggests that the next rate cut may not materialize until the second half of 2025, contingent on the pace of inflation deceleration. As we transition into the new Trump administration, market participants are likely to shift their focus from monetary policy to potential fiscal and regulatory changes.
The financial sector stands to gain significantly from the incoming administration’s policies. Anticipated regulatory easing could spark a wave of mergers and acquisitions, particularly among regional banks. The potential for a more permissive regulatory environment may lead to reduced compliance costs and increased operational flexibility for financial institutions. Additionally, the administration’s focus on lowering interest rates could improve bank earnings through increased net interest margins.
The energy sector is expected to thrive under President Trump’s “America First” energy policy. The administration’s pledge to “unleash American energy” includes encouraging exploration and production on federal lands and waters. This, coupled with potential rollbacks of environmental regulations, could boost domestic oil and gas production. The sector may also benefit from streamlined permitting processes and increased support for fossil fuel infrastructure.
The industrial sector is also poised for a resurgence under Trump’s policies. Proposed corporate tax cuts, particularly the reduction to 15% for companies producing goods domestically, could significantly boost profitability. The administration’s focus on infrastructure spending and potential tariffs on imports may also benefit domestic manufacturers. Additionally, the promise of regulatory rollbacks could reduce compliance costs and stimulate investment in the sector.
Source: Qubed Capital, LLC. As of 12.31.2024.
These three sectors comprise 41.6% of SURE’s portfolio. This allocation, as a result of our quantitative model, significantly outweighs the 25.5% representation of these sectors in the S&P 500 Index. We expect SURE to capitalize on these potential sector trends and continue to evolve as we see more actions from the new administration.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| SEIC | SEI INVESTMENTS COMPANY | 1.21% |
| DRI | DARDEN RESTAURANTS INC | 1.19% |
| JBL | JABIL INC | 1.17% |
| LNG | CHENIERE ENERGY INC | 1.16% |
| BYD | BOYD GAMING CORP | 1.15% |
| MAR | MARRIOTT INTERNATIONAL -CL A | 1.15% |
| CSCO | CISCO SYSTEMS INC | 1.14% |
| GOOGL | ALPHABET INC-CL A | 1.14% |
| WH | WYNDHAM HOTELS & RESORTS INC | 1.13% |
| HLT | HILTON WORLDWIDE HOLDINGS IN | 1.12% |
As of 12.31.2024. Subject to change.
Respectfully,
Minyi Chen
Qubed Capital, LLC
AdvisorShares Insider Advantage ETF (SURE) Portfolio Strategist
Past Commentary
– A buyback (or repurchase) occurs when a company repurchases its own shares from the marketplace, reducing the number of shares outstanding.
– An insider is an officer, director, executive, entity, or individual that owns more than 10% of a publicly traded company’s shares.
– Insider buying is the legal purchase of shares in a firm by a corporate insider that is not based on non-public, material information and follows the U.S. Securities and Exchange Commission’s rules and reporting requirements.
– The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks. One cannot invest directly in an index.
*On September 1, 2022, the AdvisorShares DoubleLine Value Equity ETF (the “Predecessor Fund”) was renamed the AdvisorShares Insider Advantage ETF. The Predecessor Fund had different portfolio managers and investment strategy than the AdvisorShares Insider Advantage ETF. Performance prior to September 1, 2022 reflects the Fund’s performance prior to the change in manager and investment strategy and may not be indicative of the Fund’s performance under the new manager and revised investment strategy. Performance since September 1, 2022 reflects actual AdvisorShares Insider Advantage ETF performance.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus or summary prospectus, a copy of which may be obtained by visiting the Fund’s website at www.AdvisorShares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, Distributor.
The Fund’s investment focus follows a core philosophy that corporate insiders know their companies best. The Advisor believes that insider buying and stock buyback programs not only show that corporate insiders see relative value in investing in their own company’s equity securities, but also create favorable market conditions by reducing public equity float (i.e., the share supply available to investors on the public secondary market). The Advisor allocates the Fund’s portfolio using research from a disciplined and quantitative proprietary model, the U.S. Insiders Edge Model, developed by Qubed Capital, LLC. In utilizing the model, the Advisor seeks to remove emotion from day-to-day decision-making by following a systematic process.
The Fund is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective by primarily investing in a portfolio of U.S. traded companies selected from a universe of the largest 3,000 U.S. equity securities based on market capitalization. When models and data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. In addition, the use of predictive models has inherent risk.
The views in this commentary are those of the portfolio manager/strategist and may not reflect his views on the date this material is distributed or anytime thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.