EATZ: 4th Quarter 2023 Portfolio Review
Performance
EATZ concluded the fourth quarter with a 20.41% increase in its net asset value (NAV). The portfolio’s positive performance for the quarter surpassed the S&P 500, which recorded a 11.69% gain. Looking at year-to-date performance, EATZ had a positive return of 25.37% (NAV).
Portfolio
Winners and Losers
Top performers in the quarter included Red Robin Gourmet Burgers (RRGB) with a notable 56.66% increase, BJ’s Restaurants Inc. (BJRI) up by 55.15%, and Dave & Buster’s Entertainment (PLAY) with a gain of 45.97%. On the flip side, the significant detractors from the portfolio were Wendy’s Co. (WEN), experiencing a -2.79% decline for the quarter, Dine Brands Global Inc. (DIN) down -2.67%, and El Pollo Loco Holdings Inc. (LOCO) with a loss of -2.33% for the quarter.
Portfolio
In October there was a notable recovery in restaurant sales and traffic performance, offering reassurance that the underwhelming results observed in September might have been more of an anomaly rather than the onset of a significant downturn for the industry.
Holdings Changes
A new holding was established in Dutch Bros Inc. (BROS) with the acquisition of 4,600 shares. Additionally, positions were augmented in Bloomin’ Brands Inc. (BLMN) with an increase of 900 shares and Shake Shack Inc. (SHAK) with an additional 1,500 shares. On the other hand, positions were trimmed in BJ’s Restaurants Inc. (BJRI) by 2,700 shares and Red Robin Gourmet Burgers (RRGB) by 1,500 shares. Various other trades comprised smaller tactical adjustments to the portfolio.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| ARCO | ARCOS DORADOS HOLDINGS INC-A | 6.70% |
| TAST | CARROLS RESTAURANT GROUP INC | 6.13% |
| DPZ | DOMINO’S PIZZA INC | 5.94% |
| BROS | DUTCH BROS INC-CLASS A | 5.13% |
| BLMN | BLOOMIN’ BRANDS INC | 4.97% |
| CHUY | CHUY’S HOLDINGS INC | 4.74% |
| EAT | BRINKER INTERNATIONAL INC | 4.71% |
| SHAK | SHAKE SHACK INC – CLASS A | 4.65% |
| WING | WINGSTOP INC | 4.60% |
| CASY | CASEY’S GENERAL STORES INC | 4.54% |
As of 12.312023. Cash is not included. Subject to change.
Please see our complete Fund holdings at advisorshares.com/etfs/eatz. The holdings details are updated each market day.
Market Update
Despite the challenges posed by inflation, restaurant sales have remained resilient as consumers prioritize spending on experiences and services. Many dining establishments have embraced technology-driven solutions to improve online ordering, implement contactless payment systems, and enhance delivery logistics. This strategic integration of technology allows them to better meet evolving consumer preferences for convenience, even amid labor shortages in the fourth quarter.
However, recruitment and retention challenges persist, leading to reduced operating hours, streamlined menus, and an increased reliance on automation to address labor gaps. Restaurants are still contending with rising costs related to labor, food ingredients, and supplies. These cost pressures arise from factors such as increased demand for specific products, disruptions in the supply chain, and inflationary forces.
In response to these challenges, some establishments have adjusted their menu prices, explored alternative sourcing options, or pursued operational efficiencies to navigate this demanding landscape.
Cheers,Past Commentary
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.
The success of companies owning and operating restaurants depends heavily on disposable household income and consumer spending, and changes in demographics and consumer preferences can affect the success of such companies. These companies may be subject to severe competition, which may have an adverse impact on their profitability. In addition, restaurants may be affected by nutritional and health concerns, and federal, state and local food inspection and processing controls. Changes in labor laws and other labor issues, such as increased labor costs, could adversely affect the financial performance of such companies.
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.