Tuttle Capital Management has decided to hedge their bets against Jim Cramer. And they are putting their money where their mouth is. The advisory firm has filed a prospectus with the US Securities and Exchange Commission (SEC) for two new exchange-traded funds (ETFs). The proposed ETFs stocks will focus on doing the exact opposite of Cramer’s suggestions, who is known for having a reverse Midas touch when it comes to stocks.
As an investment advisor on CNBC’s Mad Money, Cramer is known for making predictions that often fall flat. His bold suggestions have made him the brunt of many jokes and popular in the crypto and stock community. Taking note of how Cramer’s advice often misses the mark, Tuttle has decided to capitalize on the opportunity. In the last year, the stock market has been bearish and its falling has spooked everyone.
How do ETF stocks work?
ETF stocks contain a basket of shares that are sold on a stock exchange. They are essentially multiple stocks or bonds held together in a single fund, similar to mutual funds. Many investors prefer getting a piece of ETF stock as it reduces risk and diversifies portfolios.
Just like individual stocks. ETF stocks can also be traded throughout the day and prices are affected based on demand and supply.
Financial planners assemble and manage ETF stocks for their clients. While ETF investments have low expense ratios and potential tax benefits, getting expert help can also mean high brokerage commissions. ETFs tend to be safer than individual stocks as they are a mixed bag of securities, which reduces volatility, and are managed by financial experts.
The Jim Cramer ETF Investment
The Inverse Cramer ETF will bet against Cramer’s stock recommendations.
“The fund is an actively managed exchange traded fund that seeks to achieve its investment objective by engaging in transactions designed to perform the opposite of the return of the investments recommended by television personality Jim Cramer,” the prospectus reads.
Tuttle Capital Management will essentially pick stocks or bonds that are directly opposite to Cramer’s recommendations on his show or Twitter. “Under normal circumstances, at least 80% of the Fund’s investments is invested in the inverse of securities mentioned by Cramer,” the filing reads.
The Cramer ETF investment will go long on stocks or ETF stocks that Cramer promotes as negative. They will be traded throughout the day and the ETF stocks will be inversely proportional to Cramer’s market view.
Bloomberg’s Senior ETF Analyst Eric Balchunas mentioned that he was unsurprised by the move as he had predicted way back in February that the time is right to launch an inverse Jim Cramer ETF. Long before Tuttle realized the potential behind Cramer’s financial advice, crypto trader Algod, who is popular on Twitter, shared with his followers that he did an “Inverse Cramer” and has had returns of over 80% on his investments. The “Inverse Cramer” movement took off on Reddit and Twitter, where people started suggesting that it will be more profitable to track Jim Cramer’s recommendations so that you can do the opposite. It did not help matters that his calls on Netflix, AMC, and ARKK were way off the mark early this year.
This is not the first time that Tuttle has pinned its hopes on inverse ETF stocks. Last year, it went after Cathie Wood’s Ark Invest (ARKK) with the inverse ETF The Tuttle Capital Short Innovation ETF (SARK). Wood is known for being bold and unapologetic with her investments. In November, Tuttle Capital CEO Matt Tuttle called it unprecedented and said that when ARKK is down SARK is usually up.
The Cranmer Inverse ETF will have a portfolio of around 25 to 30 securities around the same weight. The ETF funds will be managed by experts and will be known as the Inverse Cramer ETF with ticker SJIM and the Long Cramer ETF with ticker LJIM.
