BEDZ: 3rd Quarter 2023 Portfolio Review
Performance
After two positive quarters, BEDZ had a negative return in the third quarter of 2023. BEDZ’s net asset value (NAV) was down 3.47%. The Fund’s performance barely trailed that of the S&P 500 which was down 3.27% for the quarter.
Portfolio
The hotel sector plays a crucial role within the worldwide travel and tourism industry. It comprises a diverse range of lodging options, spanning luxury hotels, resorts, budget-friendly accommodations, boutique hotels, and beyond. This sector’s dynamics are significantly shaped by factors like economic conditions, evolving travel patterns, advancements in technology, and global occurrences. The industry has sustained its expansion, driven by the strong desire to travel in the post-pandemic era and a rise in corporate travel, even in the face of concerns about an economic downturn.
Winners/Losers
The portfolio’s leaders for the quarter were Target Hospitality Corp. (TH), up 18.33% and Booking Holdings Inc. (BKNG), up 14.21%. The portfolio’s quarterly laggards were MGM Resorts International (MGM), down 16.30%, and GreenTree Hospitality Group (GHG), down 15.83%.
Holdings Changes
During the 3rd quarter, several trades were made, including the removal of Choice Hotels International Inc. (CCH), Red Rock Resorts Inc. (RRR), and Service Properties Trust (SVC). There was a reduction of 2,000 shares of Host Resorts & Hotels Inc. (HST) and 6,000 shares of Playa Resorts & Hotels (PLYA). Our positions were increased in Target Hospitality Corp. (TH) by 3,000 shares, Expedia Group Inc. (EXPE) by 1,000 shares, and VICI Properties Inc (VICI) by 1,000 shares. Other trades involved smaller tactical adjustments to the portfolio. BEDZ added a new position in Trip.com Group (TCOM) with 6,700 shares.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| BKNG | BOOKING HOLDINGS INC | 6.56% |
| MAR | MARRIOTT INTERNATIONAL -CL A | 6.25% |
| TCOM | TRIP.COM GROUP LTD-ADR | 5.80% |
| TH | TARGET HOSPITALITY CORP | 5.78% |
| IHG | INTERCONTINENTAL HOTELS-ADR | 5.63% |
| BVH | BLUEGREEN VACATIONS HOLDING | 5.37% |
| HLT | HILTON WORLDWIDE HOLDINGS IN | 5.10% |
| ABNB | AIRBNB INC-CLASS A | 5.01% |
| BYD | BOYD GAMING CORP | 4.89% |
| EXPE | EXPEDIA GROUP INC | 4.80% |
As of 09.30.2023. Cash is excluded. Subject to change.
Please see our complete Fund holdings at advisorshares.com/etfs/bedz. The holdings details are updated each market day.
Market Update
The demand for domestic travel has somewhat softened, while international travel remained strong as consumers opt for vacations abroad. Hotel occupancy fell slightly, while TSA Checkpoint Data and Global Commercial Flights remained above pre-pandemic levels. Hotels continue to adapt to changing customer preferences, such as an increased focus on hygiene, flexible booking policies, and digital experiences.
Cheers,Definitions: 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.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.
Investing involves risk including possible loss of principal. The hotels, restaurants & leisure industry is highly competitive and relies heavily on consumer spending for success. The prices of securities of companies in the industry may fluctuate widely due to general economic conditions, consumer spending and the availability of disposable income, changing consumer tastes and preferences and consumer demographics, in addition may be affected by the availability and expense of liability insurance. Legislative or regulatory changes and increased government supervision. Companies in the hotels, resorts & cruise lines sub-industry may be affected by unique supply and demand factors that do not apply to other sub-industries. Weak economic conditions in some parts of the world, changes in oil prices and currency values, political instability in some areas, and the uncertainty over how long any of these conditions could continue may have a negative impact on the lodging industry. As a result of such current economic conditions and uncertainty caused by the COVID-19 pandemic, the lodging industry may continue to experience weakened demand for occupancy in some markets.
Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times.
Holdings and allocations are subject to risks and to change.
The views in this commentary are those of the portfolio manager 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.