Emles Alpha Opportunities ETF (the “Fund”) seeks to maximize total return, with capital preservation as a secondary goal.

Performance summary of Q3 2021

Since inception, the Fund has delivered -1.96% as of September 30, 2021. This return compares favorably to -4.97% total return delivered by the Russell 2000 Index over the same time period.

Quarter in review

EOPS benefitted from three acquisitions this quarter as Kraton, At Home Group, and CAI International all announced deals.

Later in the quarter, the fund benefitted during the rotation from growth to value. This included undervalued positions (Thor Industries, Macy’s, LGL Group) as well as overvalued short positions (Peloton Interactive, Wayfair, Roblox).

Detractors included The Children’s Place and Kohls on the long side, and Tesla on the short side. Tesla’s negative contribution to the fund’s returns was mitigated by selling puts throughout the quarter. We added to Kohls and The Children’s Place, as they have continued to beat earnings and raise their outlook

Looking ahead

EOPS is constructed from dominant companies which are growing earnings yet still trading at discounted valuations. We maintain conviction that they will outperform the high-flying tech and growth names that are currently in favor.

We continue to hold companies which are prime candidates to be acquired in the portfolio.

Specialty retailers and companies selling to high end consumers should continue to be rewarded for earnings growth as households have record savings. We are particularly happy about the Camping World CEO’s stated goal to reach $1B in earnings, and the large, accretive acquisitions announced by both Signet Jewelers and Thor Industries.

Should a pullback occur, we feel that EOPS is in a position of power relative to the main benchmark indices which are trading at 20-30 times 2022 earnings, vs EOPS with a single digit multiple.

Full performance and holdings information can be found here.  

Tags: etf, Inflation, Volatility