CWS: April 2020 Portfolio Manager Review

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. For the fund’s most recent standardized and month-end performance, please click

Performance Review

After a terrible March, April turned out to be the best month for the S&P 500 in more than 33 years. All told, the index added $2.8 trillion in market value.

For the month, the AdvisorShares Focused Equity ETF (NYSE Arca: CWS) saw its Net Asset Value (NAV) climb by 10.72% while the traded shares gained 10.83%.

What stood out in April was the disconnect between the economy and the stock market. Most of the economic news was quite dire but the stock market did very well. The explanation is simple. The stock market tries to look forward and guess what the economy is about to do. The economic stats, however, are backward-looking. They usually tell us what just happened.

For example, the last few jobless claims report have been very bad. They’ve been several times worse than the worst ones on record. We don’t have precise numbers just yet, but it seems that tens of millions of Americans have lost their jobs.

With the economy on lockdown, shoppers can’t go out to stores. That means businesses can’t make a profit. In turn, businesses lay off workers who are shoppers that can’t go out to stores. The cycle repeats itself. While the response to the coronavirus is needed, the economic impact is very unpleasant.

Over the next few weeks, and possibly months, we’re going to see a debate about how and when to reopen the economy. I suspect that it will vary depending on the locality. Some areas have been hit hard, while other parts of the country have been mercifully spared.

In late April, we learned that the U.S. economy shrank by 4.8% in Q1 2020, only part of which was affected by the stay-at-home orders. Digging into the numbers shows, not surprisingly, that the consumer was the big drag. At the end of May, we’ll get the Q2 2020 GDP report, and it may show a decline of 30% or 40%. Maybe more.

The economic policy response has been unprecedented. The Federal Reserve’s balance sheet now stands at $6.7 trillion. In the post-war era, the U.S. federal government has borrowed, on average, 2.1% of its GDP each year. This year, Uncle Sam will borrow 20.6% of GDP—ten times the average.

During April, the S&P 500 gained 12.82% and there have been signs that the spread of the coronavirus is slowing. Getting exact numbers is still tricky and there’s a lot we don’t understand. The important takeaway for investors is that our ETF continues to hold up in a difficult environment. Now let’s look at the some of the stocks that helped drive our big returns in April.

Portfolio Review

Our biggest winner in April was Broadridge Financial Solutions (BR) which is a bit of a surprise. Frankly, this stock usually doesn’t move around that much, but in April, shares of BR gained over 22% for us.

This is interesting because Broadridge’s last earnings report was a dud. The company earned 53 cents per share which was 18 cents below estimates. As with the buy-and-hold philosophy of our fund, we held on and that helped us a lot in April.

What caused the bad Q4 for Broadridge? The CEO said, “Event-driven activity came in significantly below our expectations, leading to a 5% decline in adjusted EPS in a seasonally small quarter. We now expect a lower level of event-driven activity to persist into the second half of fiscal 2020.”

Broadridge stood by its forecast for this fiscal year (ending in June) for EPS growth of 8% to 12%, although now they confess it will be “at the low end.” That range had worked out to $5.03 to $5.22 per share. Now let’s say it’s $5.03 to $5.10 per share. I expect to improved performance from Broadridge.

Without almost anyone noticing, Silgan Holdings (SLGN) became our top performer this year. Through April, it gained over 8% for us in 2020. On April 22, the company reported Q1 earnings of 57 cents per share. That beat expectations by seven cents per share. Net sales rose 0.3% to $1.03 billion.

For Q2, Silgan sees earnings between 55 and 70 cents per share. For the whole year, Silgan estimates earnings will range between $2.30 and $2.50 per share. That’s an increase from the previous range of $2.28 to $2.38 per share. Not many companies are raising guidance in this environment. Silgan is.

CEO Tony Allott noted that Silgan has been declared “essential” by many government agencies. In February, the company raised its dividend by 9%. Silgan has raised its dividend every year for the last 16 years in a row. The shares just touched a new 52-week high. I continue to like Silgan a lot.

Another big winner for us was Trex (TREX). The deck-maker gained close to 19% during April. In early May, Trex reported Q1 earnings of 73 cents per share.

Trex’s earnings easily beat Wall Street’s forecast of 61 cents per share. Quarterly sales rose 12% to $200 million. I was especially pleased to see Trex’s gross margin increase by 620 basis points to 44.8%. For last year’s Q1, Trex made 54 cents per share.

Trex said it expects Q2 sales between $180 million and $190 million, although the company withdrew its full-year guidance. They’ve also stopped share repurchases. Once the economy gets back to something like normal. I expect big things from Trex.

Portfolio Attribution

Here’s how all 25 positions performed during the month of April:

Company Symbol 3/31/2020
Broadridge Fin Solutions BR $94.83 $116.00 22.32%
Silgan SLGN $29.02 $34.50 18.88%
Trex TREX $80.14 $95.22 18.82%
Danaher DHR $138.41 $163.46 18.10%
Sherwin-Williams SHW $459.52 $536.37 16.72%
Eagle Bancorp EGBN $30.21 $35.08 16.12%
Moody’s MCO $211.50 $243.90 15.32%
Globe Life GL $71.97 $82.34 14.41%
Ansys ANSS $232.47 $261.83 12.63%
Stryker SYK $166.49 $186.43 11.98%
Disney DIS $96.60 $108.15 11.96%
RPM International RPM $59.50 $66.41 11.61%
Intercontinental Exch ICE $80.75 $89.45 10.77%
Cerner CERN $62.99 $69.39 10.16%
Becton, Dickinson BDX $229.77 $252.53 9.91%
Church & Dwight CHD $64.18 $69.99 9.05%
AFLAC AFL $34.24 $37.24 8.76%
Fiserv FISV $94.99 $103.06 8.50%
Stepan SCL $88.46 $95.40 7.85%
FactSet FDS $260.68 $275.00 5.49%
Check Point Software CHKP $100.54 $105.74 5.17%
Ross Stores ROST $86.97 $91.36 5.05%
Hormel Foods HRL $46.64 $46.85 0.45%
Hershey HSY $132.50 $132.43 -0.05%
Middleby MIDD $56.88 $55.63 -2.20%

Source: Yahoo Finance

Portfolio Changes

The philosophy of the AdvisorShares Focused Equity ETF is to make portfolio changes just once a year. At the end of the year, we add five stocks and delete five. We made our changes in December, so there were no changes to make this month.

Top Holdings

Ticker Security Description Portfolio Weight %

As of 04.30.2020.

Management Fee

In a first for the ETF industry, the portfolio manager of CWS has “skin in the game.” The manager’s compensation is directly tied to portfolio’s performance. Using the trailing 12-month returns of CWS vs. its S&P 500 Index benchmark, stronger outperformance is rewarded with a larger management fee while weaker underperformance is penalized with a smaller management fee. The CWS fulcrum fee was 0.83% during April 2020. After the Fund’s April performance, the CWS fulcrum fee will adjust to 0.75% in May 2020.



Eddy Elfenbein
Crossing Wall Street
AdvisorShares Focused Equity ETF (CWS) Portfolio Manager


Past Manager Commentary


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 Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.

There is no guarantee that the Fund will achieve its investment objective. An investment in the Fund is subject to risk, including the possible loss of principal amount invested. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual issuers, industries or the stock market as a whole. Shares of the Fund may trade above or below their net asset value (“NAV”). The trading price of the Fund’s shares may deviate significantly from their NAV during periods of market volatility. There can be no assurance that an active trading market for the Fund’s shares will develop or be maintained. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time. Other Fund risks include market risk, liquidity risk, large cap, mid cap, and small cap risk. Please see prospectus for details regarding risk.

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.