He highlights Apple as a prime example. The iPad maker shrank its float by 6.7% last year while eBay (NasdaqGS: EBAY), Intel (NasdaqGS: INTC) and Yahoo (NasdaqGS: YHOO) all reduced their floats by at least 5%.
TTFS, which has landed five-star ratings from Morningstar, allocates just 6% of its combined weight to the energy and utilities sectors, two groups Chen is less enthusiastic about. However, he does see some pockets of float reduction in the energy patch. [Float Shrink ETF Earns Five-Star Rating]
“From a float shrink perspective, we don’t see Energy and Utilities as attractive. Utilities companies are traditionally not big fans of buybacks, and we probably should not expect Energy firms to spend big on buybacks at the moment. However, it doesn’t mean we can’t find opportunities in these areas. Take Tesoro (NYSE: TSO) for instance. This firm gained 44% in the past six months while the Energy Select Sector SPDR Fund (NYSEArca: XLE) tumbled $19%. Its float shrank by 5% last year. It has a $1 billion buyback program at the moment. It can afford to continue the 5% shrink rate in the next two years,” said Chen.
TrimTabs Float Shrink ETF