Charles Biderman is back with a new float shrink ETF. TrimTabs Asset Management is launching the TrimTabs Float Shrink ETF under the ticker ” ” this week. This follows AdvisorShares’ decision to replace TrimTabs as the Sub-Advisor for the AdvisorShares Wilshire Buyback ETF at the end of June. With TTAC, TrimTabs founder Charles Biderman is bringing its proven proprietary algorithmic approach to a new ETF. “We’re extremely excited to be able once again to offer our proven methodology to investors,” said Biderman. The AdvisorShares Wilshire Buyback ETF, which was developed and managed by Biderman until this past June, is up 110% over the past five years, 33 percentage points better than the S&P 500. TTAC is primarily focused on generating long-term gains that exceed those of the Russell 3000 Index. It does so by selecting approximately 100 companies that are both generating free cash flow and reducing their share count without the use of leverage. “Free cash flow is the gold standard when it comes to evaluating a company,” said Biderman. “While managements have enormous discretion in how they report sales, earnings, assets, and liabilities, free cash flow is much less likely to be subject to the same financial gimmickry.” Another pillar of TTAC’s investment methodology is a focus on share reductions, also known as “float shrink.” Companies execute share reductions by lowering the amount of shares outstanding, most commonly through stock buybacks, though this can also be accomplished with other corporate actions. This can prove advantageous for investors holding the stock in question, as they end up holding a “larger piece of the pie.” Biderman said TrimTabs takes an extra step by ensuring that companies executing buybacks are only doing so with free cash flow, not through additional leverage. TTAC’s expense ratio will be 59 basis points, compared to 90 basis points currently being charged for the AdvisorShares TTFS.
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