GK: 4th Quarter 2022 Portfolio Review
Commentary
Q4 2022 was a very difficult time for investors including those in our fund. We had an overweight position in Tesla and during Q4. Telsa vastly underperformed and really capped off a very difficult year. We believe, the fund is positioned for a rebound in 2023 by continuing to keep its focus on its three main investment themes: clean energy and transportation; technology; and the consumer. With inflation numbers receding and the market anticipating a recession, it feels as if all the negative has been priced into the portfolio. We believe the Federal Reserve (Fed) is at the end of the rate tightening cycle and if a recession is avoided there is large opportunity in our portfolio.
I became more bullish on the global economy with China reversing its zero covid policy. I felt that this policy was a disaster but didn’t think the Chinese would reverse course 100%. China ending zero covid was a very smart decision and made us much more bullish on 2023. Many of our positions for MGM, Disney and Tesla not to mention Apple and others rely on China for supply chain and the Chinese consumer. The reopening of China is bullish for our portfolio. Unfortunately 2022 was a dismal year for our themes and somewhat worse than expected due the wildly aggressive Fed. The good news is that we think the Fed is almost done with the rate cycle and now China will be a positive contributor to the global growth scenario.
We would love to see hostilities in Ukraine end but the economic effect of the Russian oil embargo and the lack of commodities seems to be offset by supplies around the world. We do think the war will create a huge replacement cycle for military hardware along with a massive expansion of NATO forces. I added Raytheon to the portfolio and continue to hold Northrup as I think defense contractors are slow to realize the added need for their weapons but over the next several years there will be a massive upgrade cycle in military force to counter Putin and his evil ambitions. I hope the war ends soon but unfortunately it looks to be a drawn out affair. We don’t expect the war to have much economic impact and in fact has helped many global companies as they fill the void for energy and commodities that is left from Russia.
All of the negative makes me feel 2023 might be a surprise on the good side. If we avoid recession and the Fed ends their cycle along with inflation rapidly dropping is good for the consumer. We still see strong jobs in America so this bodes well for the many areas the fund is invested in for 2023.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| TSLA | TESLA INC | 6.24% |
| MGM | MGM RESORTS INTERNATIONAL | 6.14% |
| MSFT | MICROSOFT CORP | 5.61% |
| NFLX | NETFLIX INC | 4.68% |
| AAPL | APPLE INC | 4.46% |
| DE | DEERE & CO | 4.40% |
| NOC | NORTHROP GRUMMAN CORP | 3.85% |
| DIS | WALT DISNEY CO/THE | 3.83% |
| LPLA | LPL FINANCIAL HOLDINGS INC | 3.58% |
| IIPR | INNOVATIVE INDUSTRIAL PROPER | 3.58% |
As of 12.31.2022. Cash is not included. Subject to change.
Regards,
Ross Gerber | Gerber Kawasaki | President and CEO
AdvisorShares Gerber Kawasaki ETF (GK) Portfolio Manager
Past Manager Commentary
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