Amidst the weakness in the equity markets last week, an actively managed exchange traded fund, AdvisorShares Active Bear ETF (NYSEArca: HDGE), has caught our attention.
It is structured as a “bear” product but it does not utilize swaps or futures like many of the inverse/leveraged “short” ETFs that are available to investors.
Instead, the portfolio manager attempts to identify individual equities that have low quality earnings and/or aggressive accounting practices, and establishes short positions in these companies, hoping to realize gains as share prices fall.
The managers also attempt to capitalize on company events such as earnings guidance or downward earnings revisions, that generally would have a negative impact on share prices and thus play out as gains for the fund if it holds short positions in such equities.
HDGE is up 4.5% over the past five trading sessions and on two of the past five days, trading volume has greatly eclipsed the average daily volume figure of 74,429 shares that typically trades in the product. Currently, top short positions in HDGE are Vulcan Materials (NYSE: VMC), Spectrum Brands (NYSE: SFB), Rockwell Collins (NYSE: COL), Medidata Solutions (NasdaqGM: MDSO) and Whirlpool (NYSE: WHR).
AdvisorShares Active Bear ETF
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