GK: 1st Quarter 2024 Portfolio Review
Commentary
The first quarter of the year kicked off with a bang for the GK fund. Throughout 2023, the GK fund strategically divested from many of its climate-related positions as they suffered a significant decline, largely attributed to higher interest rates dampening demand for solar power and EV cars. The culmination of this strategic shift was the reduction of our allocation to Tesla, which had been a top investment since the inception of the fund.
The challenges facing Tesla were predominantly self-inflicted, stemming from Elon Musk’s behavior as CEO. However, our initial foresight recognized that Musk’s actions, coupled with ineffective product advertising strategies and an economic slowdown in China, would exert pressure on Tesla’s sales. Consequently, we substantially reduced our position in Tesla and other climate-related investments, instead increasing our investment in AI and technology-related ventures.
This pivot during the first quarter of 2024 yielded remarkable results for the fund. While Tesla emerged as the worst-performing stock in the S&P 500, Nvidia, our new top holding, soared, contributing to GK’s return of 14.76% (NAV) in Q1, significantly outpacing the S&P 500, which was 10.56%. We are exceptionally pleased with this outcome and remain steadfast in our focus on the technology and consumer segments of our portfolio, anticipating favorable returns for our shareholders.
We continue to favor healthcare and financial sectors, particularly companies like Blackstone and LPL Financial, which boast reasonable valuations and promising growth prospects. Additionally, we see considerable potential in companies like Novo Nordisk, with their weight loss drugs experiencing strong demand. Healthcare and financials remain undervalued in our view, presenting ongoing opportunities for investment.
Despite the higher valuations in the technology sector, we remain committed to seeking opportunities, particularly in artificial intelligence (AI). As we enter a new era of AI development, we are particularly excited about the opportunities it presents, focusing on the hardware infrastructure necessary for AI systems. Our current focus includes increasing investments in chip and hardware makers such as ASML, Nvidia, AMD, Dell and Broadcom.
We have an optimistic outlook for the US economy, anticipating robust consumer spending and resilience throughout the year, despite higher interest rates. The prospect of the Federal Reserve lowering rates further augments this outlook, potentially stimulating real estate and consumer spending. While lower rates have yet to materialize, the continued economic growth, coupled with subsiding inflation, bodes well for the future.
Looking ahead to 2024, we are bullish, buoyed by the upcoming presidential election’s focus on growth and lower interest rates, along with the burgeoning AI thematic boom. We appreciate the ongoing support of our investors and are proud of our performance in 2023 and 2024. As we continue to rebound from the challenges of 2022, we remain committed to delivering value to our shareholders and thank you for your patience and long-term vision.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| NVDA | NVIDIA CORP | 10.03% |
| MGM | MGM RESORTS INTERNATIONAL | 8.45% |
| MSFT | MICROSOFT CORP | 7.59% |
| NVO | NOVO-NORDISK A/S-SPONS ADR | 6.24% |
| LEN | LENNAR CORP-A | 6.12% |
| GOOG | ALPHABET INC-CL C | 5.75% |
| DIS | WALT DISNEY CO/THE | 5.59% |
| AAPL | APPLE INC | 4.69% |
| LPLA | LPL FINANCIAL HOLDINGS INC | 4.63% |
| NFLX | NETFLIX INC | 4.35% |
As of 3.31.2024. Cash is not included. Subject to change.
Regards,
Ross Gerber | Gerber Kawasaki | President and CEO
AdvisorShares Gerber Kawasaki ETF (GK) Portfolio Manager
Regards,
Ross Gerber | Gerber Kawasaki | President and CEO
AdvisorShares Gerber Kawasaki ETF (GK) Portfolio Manager
Past Manager 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.
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. Investing in mid and small capitalization companies may be riskier and more volatile than large cap companies. Because it intends to invest in value stocks, the Fund could suffer losses or produce poor results relative to other funds, even in a rising market, if the Sub-Advisor’s assessment of a company’s value or prospects for exceeding earnings expectations or market conditions is incorrect. Other Fund risks include market risk, equity risk, large cap risk, liquidity risk and trading risk. Please see prospectus for details regarding risk.
Investing involves risk including possible loss of principal. The Sub-Advisor’s judgment about the markets, the economy, or companies may not anticipate actual market movements, economic conditions or company performance, and these factors may affect the return on your investment. When models and data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. In addition, the use of predictive models has inherent risk. Because predictive models are usually constructed based on historical data supplied by third parties, the success of relying on such models may depend heavily on the accuracy and reliability of the supplied historical data. The prices of growth stocks are based largely on projections of the issuer’s future earnings and revenues. If a company’s earnings or revenues fall short of expectations, its stock price may fall dramatically.
Companies involved in the cannabis industry face competition, may have limited access to banks, limited resources due to litigation and are dependent on receiving necessary permits and authorizations to engage in medical cannabis research or to cultivate, possess or distribute cannabis. The possession and use of cannabis, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments.
The value of stocks of technology companies tend to be more volatile than the overall market and are vulnerable to rapid changes in technology, rapid product obsolescence, the loss of patent, copyright and trademark protections and government regulation and competition. The expansion of online gambling (both regulated and unregulated), including the award of additional licenses or expansion or relocation of existing gambling companies, and competition from other leisure and entertainment activities, could impact these companies’ finances. Companies within the biotech industry invest heavily in research and development, which may not lead to commercially successful products.
Diversification does not guarantee favorable returns. While the fund invests across multiple thematic trends it is considered a “non-diversified fund” under federal law, the Fund may invest a greater percentage of its assets in a particular issuer and hold a smaller number of portfolios securities.
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.