WESTPORT, Conn.--(BUSINESS WIRE)--ETF industry veteran Brad Lamensdorf launched today The Active Alts Contrarian ETF (NASDAQ: SQZZ), a first-of-its-kind actively managed ETF that seeks capital appreciation by investing in companies with solid fundamentals that have very large short positions and are subject to a short squeeze. Also, as a secondary investment strategy, Lamensdorf intends to lend out the hard-to-borrow securities in an effort to earn a stream of monthly income which has the potential to enhance the total return.
“SQZZ is the first ’40 Act fund to employ this novel strategy of seeking to capitalize on “short squeeze” opportunities and generate potential income by getting paid for lending securities,” said Lamensdorf.
The SQZZ ETF portfolio manager screens securities that are highly shorted to isolate indications of unexpected values. “Because of changing market conditions or smart management moves, highly shorted securities may have promising fundamentals, creating the potential for a profitable short squeeze,” Lamensdorf explains.
The ETF invests in securities with market capitalization of $250 million or greater with at least $1 million a day in trading volume. The strategy does not have to be fully invested at all times, and it can raise 100% cash if warranted by market conditions, which may allow the fund to outperform in bear markets.
Moreover, until a short squeeze materializes, SQZZ investors earn current income by receiving the majority of the interest from banks who are paid by borrowers of the security. Typically, when securities are loaned from an investor’s margin account, the investor earns nothing— the payment is kept by the bank or broker. SQZZ is not typical; when it loans securities, the bank will pay the ETF the majority of the interest it may earn, that income goes to SQZZ investors in the form of a dividend.
“While securities lending is commonplace, SQZZ will be partnering with major banks to optimize which securities to lend and to get the most income for the fund, which may bolster returns,” Lamensdorf says.
Lamensdorf is the founder and president of the ETF’s sub-adviser, Active Alts, Inc. He is the co-manager of the actively managed AdvisorShares Ranger Equity Bear ETF (NYSE Arca: HDGE), which shorts U.S. traded securities. He also produces the Lamensdorf Market Timing Report, a newsletter which provides subscribers with market timing strategy and technical analysis. See www.lmtr.com. His investment experience includes the position of market strategist and portfolio manager for Taylor & Company, the trading unit of Bass Brothers Enterprises in Ft. Worth, Texas. In 1998 Lamensdorf was the founder and CIO of Tarpon Partners, L.P. a long/short hedge fund in Dallas, Texas.
SQZZ’s Advisor is Rational Advisors, Huntington, New York, which received Securities and Exchange Commission approval to issue SQZZ.
Consider the objectives, risks, charges and expenses carefully before investing; the prospectus contains this and other information about the investment company. The prospectus and SAI may be obtained by going to www.activealts.com or calling Active Alts Corporation at 203-557-3006. Call 203-557-3006 or go to www.activealts.com); the prospectus should be read carefully before investing.
Distributed by Foreside Fund Services, LLC
About The Active Alts Contrarian ETF (NASDAQ; SQZZ)
The Active Alts Contrarian ETF (NASDAQ; SQZZ), a first-of-its-kind actively managed ETF, seeks capital appreciation by investing in companies with solid fundamentals that have very large short positions and are subject to a short squeeze. As a secondary investment strategy, the ETF hedges its portfolio by lending out these hard-to-borrow securities in an effort to earn a stream of income payments.
|Active Alts Corp|
|Brad Lamensdorf CEO / CIO||John Lawrence Allen -COO|
A “short squeeze” occurs when investors who have sold short shares of an equity security seek to rapidly cover or buy back the short position due to actual or perceived appreciation in the security, which may occur because of positive news or events related to the company, its market sector or the market generally. The activity of short sellers covering their positions has the potential to add upward momentum to share price increases.
StrategyShares: Active Alts contrarian ETF: SQZZ
Prospectus dated September 21, 2016
Investment Objective: The investment objective of the Active Alts Contrarian ETF is to seek current income and capital appreciation.
Total Annual Operating Expenses 3.41%; Net 1.95%.
It is possible to lose money by investing in the Fund. The Fund may invest in other investment companies, and will fluctuate in response to the performance of the acquired funds; therefore, there may be certain additional risks, expenses and tax results that would not arise if you invested directly in the securities of the acquired funds.
The Fund may invest in unaffiliated and affiliated money market funds; therefore, the Advisor is subject to conflicts of interest in allocating the Fund’s assets among the underlying funds, as it will receive more revenue from affiliated funds than from unaffiliated funds.
Although the Shares of the Fund are approved for listing on the NASDAQ stock market, there can be no assurance an active trading market will develop and be maintained for the Fund’s shares.
The Fund invests in foreign companies, which may be subject to greater risks than investing in domestic companies. Investing in the securities of small and medium capitalization companies generally involves greater risk than investing in larger, more established companies.
The Fund’s investment strategy seeks to invest in stocks in which a significant amount of market participants have taken short positions, when the market participants believe the value of these stocks will decline in the future. If these market participants are correct, the value of stocks in which the Fund invests will decrease, and the Fund will lose money on its investments.
Due to the practice of lending securities, the Fund may lose the opportunity to sell some of its securities at a desirable price.
The Fund’s portfolio is actively managed, and will likely have a higher portfolio turnover rate than non-actively managed portfolios; and it will likely experience short-term capital gains, taxed at shareholders’ ordinary income tax rates.
Shares of Exchange Traded Funds (ETFs) are not individually redeemable and owners of the shares may acquire those shares from the ETF and tender those shares for redemption to the ETF in Creation Units only, see the ETF prospectus for additional information regarding Creation Units. Investors may purchase or sell ETF shares throughout the day through any brokerage account, which will result in typical brokerage commissions.