BUZZ, Darling’s ETF on social media, debut in negotiations

Investors hoping to use the ETF to jump into the recent GameStop craze Corp.

and AMC Entertainment Holdings Inc.

however, he will be very disappointed. The ETF has 75 shares, but the video game retailer and shares of some other companies at the epicenter of the recent Reddit trading frenzy are not included.

Jamie Wise, founder of Buzz Indexes, which also runs a hedge fund strategy outside of Toronto, said this is because GameStop, AMC and other retailers have been uncomfortable with not meeting the indexing criteria. on which the ETF is based.

Companies listed on major U.S. stock exchanges and with market values ​​of at least $ 5 billion are the initial barriers to entry, and a GameStop could not be met since the last quarterly rebalancing of the index on Jan. 1, Wise said. GameStop’s market cap was $ 9.2 billion on Thursday and rose to $ 22.7 billion at the end of January.

Other than that, the components have to see at least a million dollars in an average daily transaction volume of three months and constantly talk on social media for a longer period. Exactly how many mentions are part of the secret sauce of Buzz Indexes.

However, the fund includes several popular actions among citizens of Reddit’s WallStreetBets and Twitter. There is the electric car manufacturer Tesla Inc.,

Plug Power fuel cell developer Inc.

and the online betting site DraftKings Inc.

But there are also a lot of stable stocks, including Ford Motor Co.

, Pfizer Inc.

and Boeing Co.

This assortment of shares was vulnerable to continued market withdrawal. The recent increase in Treasury yields, coupled with expectations of strong economic growth this year, has forced investors to reassess the amount of exposure to their shares. This has been largely to the detriment of technological growth and other actions, many of which form BUZZ.

Market shares recorded further losses on Thursday as this change continued. The ETF fell 3.6% in its commercial debut, worse than the 1.3% of the S&P 500. PlugPower fell more than 8%, while Tesla and DraftKings fell 4.9 % and 5.8%, respectively.

“Right now they have a difficult environment,” Wise acknowledged about some of the fund’s components.

This is the second review of Mr.’s index. Wise. An earlier incarnation was used in the Sprott Buzz Social Media Insights ETF. It launched in 2016, managed to surpass the S&P 500 in certain periods, but never got much fanfare. At the time, the asset manager closed the fund after raising only $ 8.8 million, well below the viability level of an ETF.

This time, Messrs. Wise and Lopez say the timing seems right for an ETF based on social media advertising. Without risking it, Wise brought in Dave Portnoy, founder of Barstool Sports Inc., who also considers himself a naughty trader and uses social media to promote his wild bets.

Portnoy, owner of Buzz Indexes, has been promoting the ETF all week since it took to its water-cooled-style podium in a video explaining how the fund works, how it got involved, and ultimately why its a legion of online fans should buy it.

“They showed me their algorithm. I said, “This is great, of course, it will work,” Portnoy said in the video. “Twitter, social media, everything is dictating stock prices.”

Wise said the decision to introduce Mr. Portnoy – who has changed his Twitter profile photo to the ETF logo, a drawing of a bee – was not obvious. “It’s a voice among millions of the online community,” he added.

Lopez, of Van Eck, said Portnoy has no affiliation with the company, only the index provider.

Mr Portnoy continued to garner support for the ETF on Thursday, even as red appeared on the stock market.

“If you don’t think what’s happening with $ BUZZ right now isn’t proving the power of me and Barstool, I don’t know what to tell you,” Mr. Portnoy, adding: “* I’m not a financial advisor.”

Write to Michael Wursthorn to [email protected] and Sebastian Pellejero to [email protected]