Betting Against Jim Cramer? Yup - Inverse Cramer ETFs
"Connecticut-based advisory firm Tuttle Capital Management has submitted a preliminary prospectus filing with the United States Securities and Exchange Commission (SEC) for two new exchange-traded funds (ETFs) centered around betting against the investment tips from Jim Cramer" [Quarmby, B. It’s happened: Someone’s filed for Cramer ETFs with the SEC. (Accessed October 6, 2022)].
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Jim Cramer, a popular host of CNBC’s Mad Money who believes he is a mysterious crypto and stock advisor. He works on sharing investment tips for both the communities but always ends up suggesting the opposite marks. So people always prefer to do the opposite way of whatever Cramer shares. Now, the trending case is filed with the United States Securities and Exchange Commission (SEC) by an advisory firm, Tuttle Capital Management. Moreover, the case is against the investment ideas for the two new exchange-traded funds (ETFs) by Jim Cramer. As per the SEC Act, the firm has submitted the preliminary prospectus file with the SEC on October 05, 2022 for further approval. As a matter of fact, the entire market is happy that someone has filed for Cramer’s ETFs to the authorities.
[Angel, J. Cramer’s Investment Tips Backfired! Two New Cramer’s ETFs are Filed with SEC. (Accessed October 6, 2022)].
The SEC filing is quite precise concerning the objective of the proposed 'SJIM' ETF.
The Inverse Cramer ETF (the “Fund”) seeks to provide investments results that are approximately the opposite of, before fees and expenses, the results of the investments recommended by television personality Jim Cramer [...] 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 (“Cramer”). Under normal circumstances, at least 80% of the Fund’s investments is invested in the inverse of securities mentioned by Cramer. The Fund’s adviser monitors Cramer’s stock selection and overall market recommendations throughout the trading day as publicly announced on Twitter or his television programs broadcast on CNBC, and sells those recommendations short or enters into derivatives transactions such as futures, options or swaps that produce a negative correlation to those recommendations. The Fund goes long on stocks or ETFs that represent sectors that Cramer is negative on. The Fund uses Index ETFs and inverse Index ETFs to take the opposite side of Cramer’s announced market view. The Fund’s portfolio is comprised generally of 20 to 25 equally weighted equity securities of any market capitalization of domestic and foreign issuers. If Cramer does not take any view on any of the securities in the Fund’s portfolio, the adviser retains discretion to sell positions once profit or loss targets are met, or market conditions such as large swings in either direction necessitate a sale and replace them with securities that meet the criteria of the Fund’s initial portfolio. Under normal circumstances, the Fund will hold positions no longer than a week but could hold position longer if Cramer continues to have a contrary opinion. (emphasis added)
[Securities and Exchange Commission. Securities Act Registration No. 333-204808 Investment Company Act Registration No. 811-23066 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Post-Effective Amendment No. 279. (Accessed October 6, 2022)].
"The 67-year-old CNBC host is a former hedge fund manager who has made people angry as he turned from a Bitcoin lover to a crypto skeptic within a matter of 10 days. In another instance, Cramer cautioned in July that the U.S. Securities and Exchange Commission might look into Coinbase, only for the cryptocurrency exchange price to skyrocket by 50% the following week. In his latest prediction on Oct. 4, Cramer said that equity stocks would bottom fish in the coming weeks with a rally after that. Since crypto recently swayed away from the highest ever correlation between the equity and digital asset markets, Bloomberg noted recently that the latter seems to outperform the former. [Sharma, S. Jim Cramer Crypto Predictions Are So Wrong That Investors Proposed an Inverse ETF. (Accessed October 6, 2022)].
"While many look upon finance TV shows today as not much more than cheesy entertainment, there is no question that the shows themselves still have a loyal following and are some of the highest-rated programming on cable TV. Long gone are the days where Mad Money and other CNBC live shows could generate close to half a million viewers per night, but the data clearly points to the fact that they still remain to be a relevant platform, maintaining a viewership base of around 200,000 throughout the year" [Quiver Quantitative. The Inverse Jim Cramer Strategy. (Accessed October 6, 2022)].
Nowadays, being more concerned with appearances and ratings numbers, he appears to follow a philosophy that the more outrageous and controversial the stock picks, the better. While outlandish and controversial may lead to good ratings, this philosophy, combined with the large numbers of recommendations he has to make, ultimately has led to poor returns [...] [T]he TV host has made close to 900 stock recommendations this quarter alone. However, this can be used to the advantage of the average investor, as his underperformance becomes solidified to the point where inverting his stock recommendations in actuality delivers alpha on the market, thereby presenting an interesting and possibly lucrative investment strategy.
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"Despite the apparent novelty and absurdity of the filing, Bloomberg’s senior ETF analyst Eric Balchunas was unsurprised by the move, highlighting on Twitter that he had tipped such a thing to occur back in February: 'We actually wrote back in Feb about how an Inverse Cramer ETF would likely be filed at some point. Given some of the stuff that has been tried with ETFs this isn’t [a] big stretch [...]' [Quarmby, supra].
This type of play is nothing new for Tuttle Capital Management. The firm previously caused a stir late last year by launching an inverse ETF on the Nasdaq stock exchange called the Turtle Capital Short Innovation ETF (SARK). In what Tuttle Capital CEO Matt Tuttle described in November as something that has “has never been done before,” the purpose of SARK is to bet against the ARK Innovation ETF (ARKK) from Cathie Wood’s ARK Invest [...] Notably, since its launch on Nov. 9, SARK is up 83.1%, according to Yahoo Finance data, which may be unsurprising considering the bearish investing climate in 2022.
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