Make an Icahn Inspired Trade With This Unique Retail ETF

Among retail ETFs, the ProShares Decline of the Retail Store ETF (NYSEArca: EMTY) is one of the premier avenues for profiting from the decline of brick-and-mortar retailers and the emerging weakness in traditional malls.

Underscoring the point that EMTY could be ready to rally, some well-known, professional investors are picking up on the theme of the demise of malls.

“Activist investor Carl Icahn is poised to win big if the American mall loses,” according to CNBC. “Icahn, likely the largest short seller of mall debt, stands to gain $400 million or more if mall owners can’t pay or service their debt, trader sources told the Wall Street Journal.”

Icahn’s bet against corporate debt issued by mall property owners appears to be inspired by a familiar theme: rampant physical store closures across the U.S.

“Vacancies in U.S. shopping malls hit an eight-year high, though some regions are faring better with retail upheaval than others, according to data from Reis, part of Moody’s Analytics,” according to Seeking Alpha.

Decline of the Retail Store

The Decline of the Retail Store ETF provides daily short exposure or -1x to the new Solactive-ProShares Bricks and Mortar Retail Store Index, which is comprised of traditional retailers and equally weights components. The fund holds companies including department stores, supermarkets and sellers of apparel, consumer electronics and home improvement items, such as retailers like Barnes & Noble, The Gap, Macy’s, Kroger and Best Buy, among others.

“The big bet by the legendary investor comes as U.S. retail store closures — many of them as part of mall shutdowns — have hit record highs this year as customers get more accustomed to the convenience of online shopping,” reports CNBC.

News of Icahn’s anti-mall bet comes a day after the Commerce Department revealed that online shopping ticked higher in the third quarter, another catalyst for EMTY.

“The Census Bureau of the Department of Commerce announced today that the estimate of U.S. retail e-commerce sales for the third quarter of 2019, adjusted for seasonal variation, but not for price changes, was $154.5 billion, an increase of 5.0 percent (±0.4%) from the second quarter of 2019,” said the Commerce Department in a note out Tuesday.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.