If you’ve ever dreamed of investing alongside CNBC’s Jim Cramer or going against his picks through a single investment vehicle, your oddly-specific dreams have now come true, thanks to two new ETFs from Tuttle Capital.
Long Jim or Short Jim?
The Long Cramer Tracker ETF (BATS:LJIM) affords investors the opportunity to invest alongside Cramer by taking positions in stocks and ETFs of sectors he speaks positively of or recommends on his popular show, Mad Money. Conversely, the Inverse Cramer ETF allows investors to “fade” Cramer by shorting stocks he recommends and by taking positions in stocks or sectors that he’s bearish about. The funds also invest in (or short) stocks that Cramer mentions on Twitter.
Tuttle Capital is also the firm behind the Tuttle Capital Short Innovation ETF (NASDAQ:SARK), which fades the picks of the ARK Invest Innovation ETF (NYSEARCA:ARKK). Like Cramer, ARK’s founder and CIO Cathie Wood is another high-profile, polarizing figure in the investing world, so it appears that Tuttle is going back to the well here with these two Cramer-themed ETFs.
SARK has attracted a decent amount of publicity and managed to accrue over $300 million in assets under management (AUM) so far, but the two Cramer ETFs have a long way to go to this point — SJIM has about $5.5 million in AUM while LJIM has a microscopic AUM of $1 million.
The pair of ETFs only launched in early March, so their track record is based on a small sample size, but so far, SJIM is up 0.5% since inception, while LJIM is down 2.6%.
Looking into LJIM’s Holdings
LJIM holds 36 positions, and its top 10 holdings make up just 35.5% of assets.
Cramer is well-known to be a long-time fan of Nvidia (NASDAQ:NVDA), even going as far as to name his dog after the company, so it is unsurprising that the semiconductor giant is LJIM’s largest holding, with a 5% weighting.
Cramer was pounding the table on Meta Platforms (NASDAQ:META) when it bottomed out in late 2022, and Meta is LJIM’s second-largest position.
Looking at LJIM as a whole, you’ll find an assortment of blue-chip U.S. stocks ranging from Dow components like Boeing (NYSE:BA) and Caterpillar (NYSE:CAT) to more tech and growth names like Advanced Micro Devices (NASDAQ:AMD), Tesla (NASDAQ:TSLA), and the aforementioned Nvidia and Meta Platforms.
Subjectively, just from my own experience watching Mad Money and Squawk on the Street here and there over the years, I would say that this strategy reflects Cramer’s general investment style fairly accurately. Below, you’ll find an overview of LJIM’s top holdings using TipRanks’ holdings screen.
While these picks may not be anything fancy or under the radar, you could do a lot worse than investing in a diversified basket of blue-chip U.S. companies and top growth stocks over the long run, so LJIM actually doesn’t look bad.
In fact, LJIM has managed to accrue an ETF Smart Score of 7 out of 10, which is just on the cusp of an outperform rating based on TipRanks’ proprietary Smart Score system. Individual top 10 holdings like Nvidia, On Holding AG (NYSE:ONON), Starbucks (NASDAQ:SBUX), ChampionX (NASDAQ:CHX), and Apple (NASDAQ:AAPL) all have Smart Scores of 8 or above.
What is the Price Target for LJIM?
LJIM stock has also accrued a Moderate Buy consensus rating from analysts. The average LJIM stock price target of $29.24 implies 17.2% upside potential from current levels.
SJIM’s Holdings
On the other hand, SJIM is made up mostly of short positions in the stocks that Cramer touts. There are also smaller positions in companies that Cramer has been bearish on. Below you’ll find an overview of SJIM’s holdings.
One thing that I find curious about SJIM’s holdings is that it doesn’t have a position in Coinbase (NASDAQ:COIN) (or a crypto-themed ETF), given Cramer’s long-time aversion to crypto, or any Chinese stocks or ETFs, given that Cramer has advised viewers against investing in China for years, so I would think a position in something like an Alibaba (NYSE:BABA) would be a strong fit here.
Size and Fees
With just $5.5 million in assets under management, SJIM is a minuscule ETF, and LJIM is even smaller, with $1 million in assets under management. This minuscule size makes these ETFs particularly susceptible to market volatility.
Another negative here is the high fees. This is an actively-managed, niche-focused ETF, so its fees are going to be higher than a low-fee, broad-market ETF like the Vanguard S&P 500 ETF (NYSEARCA:VOO) or the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), but the expense ratio of 1.2% that both ETFs have still seems a bit steep.
Spare a Thought for Jim
It seems that Cramer has attracted quite a few detractors in recent times; bashing his picks that don’t work out has become a popular pastime on social media. For instance, the “Inverse Cramer” profile on Twitter has accrued over 226,000 followers since 2021.
In fairness to Cramer, Mad Money has been on the air since 2005, and he hosts it almost every day that the market is open (in addition to co-hosting Squawk on the Street most days), so anyone who needs to fill up this much airtime is bound to have their share of hits and misses.
While his strategy of investing in blue-chip U.S. stocks is nothing fancy or complex, for the most part, it has been an effective strategy for investors over the long run. His advice of investing in index funds first and diversifying isn’t bad advice for new investors, and he has helped to get many people into investing for the first time, which is a net positive for society as a whole in my view, so I don’t think he truly deserves the bad rap that he gets on some of the snarkier corners of the internet.
Additional Thoughts
Cramer can change his mind about a pick whenever he wants, or flip from bullish to bearish on a company on a whim, so there will likely be an elevated level of turnover here, especially in SJIM. According to the ETF’s prospectus, “Under normal circumstances, the Fund will hold positions
no longer than a 5-day trading week but could hold a position longer if Cramer continues to have a contrary opinion.” This high level of turnover could lead to a higher tax burden for investors holding these vehicles in taxable accounts.
While SARK (the aforementioned ETF that enables investors to fade the ARK Innovation ETF) has garnered a larger AUM, the difference between these ETFs and SARK is that SARK can also be used by investors as a convenient way to short a certain breed of tech stock given ARK’s association with richly-valued tech stocks.
I’m actually more bullish on LJIM than SJIM, based on its relatively high-quality portfolio of holdings with strong Smart Scores. However, given the nature of Cramer’s investment style, investors can probably simply own a cheaper broad-market U.S. ETF and achieve roughly similar results.
There’s Always a Bull Market Somewhere
While the idea of the inverse Cramer ETF is entertaining, I don’t really see it as a viable long-term investing strategy. Given their size, fees, and strategies, it seems unlikely that these ETFs will attract significant institutional investments and will likely end up as more of a novelty than a widespread long-term investing strategy.
That said, the goal of the ETFs may simply be to generate more publicity for Tuttle Capital, and they have succeeded in that regard. As Cramer says, “There’s always a bull market somewhere.”
