HDGE: 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 www.advisorshares.com/etfs/hdge.
For the month of April, the AdvisorShares Ranger Equity Bear ETF (NYSE Arca: HDGE) lost -15.63% on market price while the S&P 500 Index gained 12.82%.
|Performance History (04.30.2020)||HDGE NAV (%)||HDGE Market (%)|
As stated in the Prospectus, the total annual operating expenses are 3.12% (includes 0.18% acquired fund fees). 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 month-end performance please visit www.advisorshares.com/etfs/hdge.
Collapsing JP Morgan Stock is Signaling Wall Street’s Worst Fears for the Economy
As the chart below shows, JP Morgan’s share price is about to break through March lows. That means expectations are that shares could go substantially lower amid analyst forecasts that earnings may fall 50% in 2020. In fact, many analysts are predicting earnings won’t recover to 2019 levels until 2022 as a result of falling interest rates and a collapsing economy. As the banking industry leader, trouble for JPM means trouble for the whole banking sector, with negative implications for credit creation and the broader economy, possibly into 2022.
The market bounce has turned investor sentiment from fear of loss to fear of missing out. In particular, companies that saw stocks hurt the most from the Covid-19 market impact, also saw stocks bounce back the hardest in April. The following chart shows the returns on stocks ranked by March momentum.
Shares of weak companies, companies with accounting flaws or simply overpriced stocks that short sellers tend to favor saw dramatic bounces as confidence returned to equity markets. Importantly, fundamentals in the economy continue to worsen, even as stock prices have mostly recovered.
Stocks were grouped and ranked by the relevant factor as of the end of the prior month and the returns computed for the month just ended. Stocks chosen were based on Two Rivers Analytics’ universe of stocks. © Copyright 2019. All Rights Reserved Two Rivers Analytics. Further Distribution Prohibited without prior permission.
For the month of April 2020, the largest realized and unrealized gains were Synchrony Financial (SYF), RealReal, Inc. (REAL), and Golar LNG Limited (GLNG). Synchrony Financial (SYF) stock rose 23.00% despite missing expectations when they announced earnings. The company offers consumer credit including private label credit cards. We covered the position. Luxury consignment company, RealReal’s (REAL), stock gained 67.48% after plummeting in March. Investors have warmed to retail stocks as the economy is slowly reopened. The company had laid off 25% of its staff on weak results, suspended guidance and moved to change their store policies to “by appointment only” in order to comply with social distancing requirements. We covered the position. Golar LNG (GLNG) stock lost -10.03% during April. The company received a force majeur notice from BP. BP intends to postpone accepting delivery of a GLNG vessel as scheduled, depriving GLNG of those revenues. We covered the position.
The largest realized and unrealized losses for April were Wayfair, Inc. Class A (W), Ollie’s Bargain Outlet Holdings Inc (OLLI) and DuPont de Nemours, Inc. (DD). Wayfair (W) stock spiked 132.11% during the month on renewed investor optimism for retail and better than expected results as consumers shifted purchases on line. We covered the position. Discount retailer Ollie’s Bargain Outlet’s (OLLI) stock gained 46.55% for similar reasons to Wayfair. Retail had a meaningful bounce in expectations. Ollie’s strategy of selling essential goods at discount prices overcame investors’ fears. DuPont (DD) stock rallied 37.89%. The company reaffirmed guidance before the corona virus impact began to be felt. The company has new management and received a favorable ruling on a legacy environmental lawsuit from Chemours.
|Ticker||Security Description||Portfolio Weight %|
|PAGS||PAGSEGURO DIGITAL LTD-CL A||-2.38%|
|GPC||GENUINE PARTS CO||-2.10%|
|ELY||CALLAWAY GOLF COMPANY||-2.10%|
|CNI||CANADIAN NATL RAILWAY CO||-2.06%|
|WB||WEIBO CORP-SPON ADR||-2.05%|
|FANG||DIAMONDBACK ENERGY INC||-2.02%|
|ZG||ZILLOW GROUP INC – A||-2.02%|
As of 04.30.2020. Cash not included.
Ranger Alternative Management
AdvisorShares Ranger Equity Bear ETF (HDGE) Portfolio Manager
Past Manager Commentary