Political grandstanding in Washington pointed to yet another legislative showdown along partisan lines as a key deadline to raise the current debt ceiling approached. The fallout from China’s renewed hardline regulatory stance toward technology and other for-profit businesses, together with the potential default of a large Chinese property developer stoked fears of potential contagion across global markets. Surging COVID-19 delta variant cases resulted in lowered global growth expectations amid supply chain shocks. Finally, U.S. central bankers appeared to rethink the ‘transitory’ nature of their inflation expectations as they indicated a readiness to reversing pandemic stimulus programs as early as November, while guiding to an accelerated timeline for increasing the Fed Funds rate relative to earlier expectations; a decidedly hawkish tone, which caught many market participants off-guard. The confluence of the above events led to heightened investor anxiety, resetting global equities lower.
The BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index” or “Index”) returned -6.46% during the month of September and trailed the S&P 500 Index by 1.60% year to date (14.32% vs. 15.92%, respectively) but led by 11.65% over the last year (41.65% vs. 30.00%, respectively) as of the end of the month. Continue reading for details on recent performance and the latest Index reconstitution.
Plug Power Leads Advancing Stocks within the BUZZ Index
Plug Power (NASD: PLUG) led advancing stocks during the recent period between selection dates of the BUZZ Index1. PLUG was first featured within the BUZZ Index during the October 2020 monthly reconstitution, debuting at a 2.39% weight. PLUG is a leading provider of comprehensive hydrogen fuel cell turnkey solutions. The company is focused on hydrogen and fuel cell systems that are used to power electric motors primarily in the electric mobility and stationary power markets. PLUG was trading near $17 per share when it first entered the BUZZ Index and over the course of the past year the stock has experienced significant volatility as investors rushed to gain exposure to alternative energy providers amidst the EV mania in late 2020 and early 2021. As the euphoria within the market segment cooled, shares of PLUG consolidated into a narrow trading range around $25. The shares recently broke to the upside, rallying over 30% as the company announced two new partnerships. The first, with refiner Phillips 66 (NYSE: PSX), is to explore ways to deploy PLUG Power’s technology within Phillips 66’s operations, while the second, with aircraft maker Airbus (Euronext Paris: AIR), sees the commercial aerospace giant and PLUG working together to investigate green hydrogen for use in air transportation.
| Top Contributors: September 9, 2021 – October 14, 2021 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Plug Power Inc | PLUG | 2.90 | 0.83 |
| Digital Turbine Inc | APPS | 1.50 | 0.45 |
| Ford Motor Co | F | 1.50 | 0.28 |
| Tesla Inc | TSLA | 3.21 | 0.26 |
| Opendoor Technologies Inc | OPEN | 0.78 | 0.19 |
| Advanced Micro Devices Inc | AMD | 3.06 | 0.18 |
| General Motors Co | GM | 0.78 | 0.13 |
| Uber Technologies Inc | UBER | 0.71 | 0.11 |
| Netflix Inc | NFLX | 1.72 | 0.11 |
| salesforce.com Inc | CRM | 0.76 | 0.10 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein. For a complete list of holdings in the ETF, please visit www.vaneck.com.
Biotech stocks Novavax (NASD: NVAX) and Moderna (NASD: MRNA) paced the top detractors from performance during the period between the September and October selection dates of the BUZZ Index. The COVID-19 pandemic fueled the growth and profitability of many biopharma companies that benefited from the development of vaccines and treatments against the novel coronavirus. Merck & Co. (NYSE: MRK) served as a catalyst for a broad sell-off in shares of COVID-19 vaccine manufacturers as the company, together with its partner Ridgeback Biotherapeutics, announced that their experimental drug Molnupiravir, an oral antiviral medicine, significantly reduced the risk of hospitalization or death in findings from a planned interim analysis of the phase 3 trial in at-risk, non-hospitalized adult patients with mild-to-moderate COVID-19.
| Bottom Contributors: September 9, 2021 – October 14, 2021 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Novavax Inc | NVAX | 2.50 | -1.05 |
| Moderna Inc | MRNA | 2.72 | -0.85 |
| DraftKings Inc | DKNG | 2.23 | -0.59 |
| AMC Entertainment Holdings | AMC | 2.89 | -0.59 |
| Peloton Interactive Inc | PTON | 1.35 | -0.33 |
| Pfizer Inc | PFE | 2.73 | -0.25 |
| Facebook Inc | FB | 1.77 | -0.24 |
| Palantir Technologies Inc | PLTR | 3.08 | -0.21 |
| ContextLogic Inc | WISH | 0.42 | -0.21 |
| GameStop Corp | GME | 3.04 | -0.21 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein. For a complete list of holdings in the ETF, please visit www.vaneck.com.
Sentiment Stock Highlight: SPAC-Related Companies
Special Purpose Acquisition Corporations (“SPACs”) are an increasingly utilized structure in which ‘blank-check’ style companies raise cash with the goal of identifying a private company with which to merge. The process, referred to as a “Qualifying Transaction”, seeks to establish a faster, more efficient path for private companies to begin their public life, relative to a traditional IPO process. During 2020, SPACs shot into the investing spotlight, and after years of being a niche product, surged in popularity after the COVID-19 crash. Many companies which were brought public via SPAC Qualifying Transactions posted huge gains, notably those from the electric vehicle industry. Investors, lured by a SPAC’s upside optionality and capped downside risk, began to flood into the SPAC market, resulting in a year of record issuance.
In January 2021, the BUZZ Index monthly rebalance and reconstitution saw three stocks enter the Index that began their public lives through SPAC Qualifying Transactions; space technology company Virgin Galactic (NYSE: SPCE), online sports entertainment company Draftkings (NASDAQ: DKNG), and electric vehicle company Nikola Corp (NASDAQ: NKLA). As their share prices soared, the amount of online conversation and level of positive investor sentiment surrounding these companies also exploded higher. Since then, SPAC issuance and capital activity has remained robust. So far in 2021, over 470 SPACs have completed an IPO raising a staggering $134B in proceeds to hunt for Qualifying Transactions. Deal announcements have also occurred at a record pace, with hundreds of SPACs announcing or closing previously announced Qualifying Transactions. Two former SPACs which closed Qualifying Transactions are featured as first-time entrants within the BUZZ Index during the October monthly reconstitution, ChargePoint Holdings Inc. (NYSE: CHPT), formerly Switchback Energy Acquisition Corp. (NYSE: SBE), and UWM Holdings Corp. (NYSE UWMC), formerly Gores Holdings IV Inc. (NYSE: GHIV).
Shares of ChargePoint and United Wholesale Mortgage trended in opposing directions following the closing of their Qualifying Transactions. ChargePoint and Switchback announced their deal in Q4 2020 and amidst the ensuing frenzy for all things “EV”, the stock soared, rising four-fold ahead of the closing of the transaction in Q1 2021. Since the transaction closed and SBE transitioned to CHPT, the shares have been range bound yet still roughly doubled their value from the initial level of the SBE SPAC before the merger was announced. United Wholesale Mortgage likewise announced their transaction with Gores Holdings in Q4 2020; however, following a brief push higher, UWMC stock has trended consistently lower, post deal close and now trades roughly 30% below the level of GHIV SPAC before the merger was announced. While both stocks have performed in different directions, they share one common theme, online investors are positive regarding the company’s prospects and as a result, both enter the BUZZ Index for the first time in October.
ChargePoint (CHPT) Stock Price: September 18, 2019 – October 15, 2021
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein. For a complete list of holdings in the ETF, please visit www.vaneck.com.
United Wholesale Mortgage (UWMC) Stock Price: March 24, 2020 – October 15, 2021
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein. For a complete list of holdings in the ETF, please visit www.vaneck.com.
BUZZ Index October 2021 Rebalance Highlights
Affirm Holdings
This month the BUZZ Index features numerous first-time entrants including Affirm Holdings (NASDAQ: AFRM). Founded by PayPal co-founder Max Levchin in 2013, for years AFRM has been trying to position itself as a leader in the growing “Buy Now, Pay Later” segment within e-commerce, offering customers loans and installment options on purchases. AFRM completed its IPO in January 2021 and the stock quickly rose to $90 per share, almost double its IPO price of $49. The stock continued to rally until mid-February then proceeded a month long decline, consolidating within a range of $60 per share through the summer months. AFRM surprised many by announcing a partnership arrangement with Amazon.com (NASD: AMZN) on August 30, 2021. The arrangement proved to be a vote of confidence in AFRM’s business model, and the stock has since more than doubled. Volume across social media platforms has been increasing for months, and sentiment has been heavily bullish, suggesting this may be the beginning of a long-term uptrend. This month, AFRM jumps into the BUZZ Index with a maximum 3% weight.
Coinbase
In July 2021, the BUZZ Index first featured MicroStrategy (NASDAQ: MSTR), a dot-com era technology company that had pivoted its business model to devoting its capital to buying and holding Bitcoin. This month, the BUZZ Index features another cryptocurrency play – this one in the form of one of the most popular crypto exchanges in the U.S., Coinbase (NASDAQ: COIN). Created in 2012, Coinbase was recognized as one of the most legitimate exchanges in the “wild west” cryptocurrency space, providing millions of retail investors access to Bitcoin. Its IPO in April 2021 proved ill-timed, as Bitcoin experienced a 50% decline in value just one month post COIN’s IPO, bringing down all crypto-related stocks. Bitcoin has since erased those losses and is once again nearing its all-time highs. As Bitcoin has rallied, COIN has begun to trend higher as well. Investor sentiment towards the stock has likewise been bullish, sending COIN into the BUZZ Index this month for the first time at a 2.11% weight.
For more on the rebalance results, view the BUZZ Index reconstitution report.
Originally published by VanEck on October 22, 2021.
Important Disclosures
1 Period between September 9th, 2021 – October 14th, 2021.
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