DWMC: 1st Quarter 2023 Portfolio Review
Microcaps (as measured by the Russell Micro Cap Index) underperformed the S&P 500 for the quarter (-2.8% vs. +7.5%). DWMC also lagged its benchmark a bit (-3.13%) as the US stock market underwent a pronounced laggard rally. This means that stocks doing the worst previously are now doing the best (which is the opposite of what relative strength does). This is a rare phenomenon, but the good news is we typically see this happen off long-term bottoms in the market. Most of the underperformance came from Financials as the recent banking crisis unfolded. Financials had held up well before this so the portfolio had a higher weight here than we typically would.
The portfolio is currently comprised of 164 companies that range in market cap from 90mm to 2,366mm. Traditionally, micro-cap companies are below 300mm in total market capitalization. Once a security is included in the portfolio, we will not sell it unless it falls significantly out of favor in our ranks. This means that at times, we may own companies that are more traditionally defined as small, mid, or large cap stocks. This allows the portfolio to fully capitalize on securities that are exhibiting strong momentum characteristics. Currently, our top 10 holdings are comprised of companies that have appreciated to a larger allocation over time in the portfolio; the top 10 holdings comprise ~13.3% of the overall portfolio.
Top 10 Holdings
|Ticker||Security Description||Portfolio Weight %|
|PBT||PERMIAN BASIN ROYALTY TRUST||1.81%|
|SPLP||STEEL PARTNERS HOLDINGS LP||1.76%|
|BELFB||BEL FUSE INC-CL B||1.27%|
|ASC||ARDMORE SHIPPING CORP||1.23%|
|RELL||RICHARDSON ELEC LTD||1.20%|
|HROW||HARROW HEALTH INC||1.16%|
|CBAY||CYMABAY THERAPEUTICS INC||1.13%|
|MYRG||MYR GROUP INC/DELAWARE||1.07%|
|AMR||ALPHA METALLURGICAL RESOURCE||1.06%|
As of 03.31.2023. Cash is not included.
The strategy is positioned to overweight or underweight sector allocations dependent on the relative strength of the investable universe and the portfolio allocation. The sector weight is entirely determined by the strength of the individual names in the portfolio and those that are selected based on the strategies technical buy process.
The portfolio is currently most overweighted towards Energy, Industrials, and Financials as value-oriented sectors continue to dominate our rankings. Significant underweights include Health Care and Communication Services.
As of 03.31.2023.
John G. Lewis
Nasdaq Dorsey Wright
AdvisorShares Dorsey Wright Micro Cap ETF (DWMC) Portfolio Manager
Past Manager Commentary
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.
The Fund is subject to a number of risks that may affect the value of its shares, including the possible loss of principal. Stock prices of microcap companies are significantly more volatile, and more vulnerable to adverse business and economic developments, than those of larger companies. Micro-cap stocks may also be thinly traded, making it difficult for the Fund to buy and sell them. There is no guarantee that the Fund will achieve its investment objective.
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.