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  • Underwriters Lose No Time Pumping Out New Shares After Labor Day 0 comments
    Sep 11, 2013 7:15 AM | about stocks: TTFS, PKW

    Underwriters lose no time pumping out new shares after Labor Day as new offerings Hit $5.2 Billion in the past week. Read this investor insight by Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) to learn about the recent fund flow trends.

    The U.S. stock market historically performs more poorly in September than in any other month, but this month may buck the historical trend. Our demand indicators continued to turn more favorable for both the short term and the intermediate term in the past week. As for the short term, investors are still unloading U.S. equity ETFs, which is bullish from a contrarian perspective. These ETFs redeemed $27.2 billion (3.3% of assets) in the past month, the biggest trailing one-month outflow since February 2008. Another positive contrary indicator is that leveraged ETF investors have turned pessimistic. Leveraged long ETFs redeemed 15.3% of assets in the past week, the biggest outflow this year, while leveraged short ETFs issued 0.8% of assets.

    Turning to supply, we are concerned about how quickly underwriters started dumping new shares into the market after Labor Day. New offerings reached $5.2 billion in the past week, led by large overnight deals for LinkedIn ($1.4 billion), LyondellBasell Industries ($1.2 billion), and Jarden ($800 million). Assuming stock prices hold up, we would not be surprised if new offerings accelerated to $8.0 billion ($1.6 billion daily) this week. If and when new offerings start topping $10 billion weekly, it could make it tough for stock prices to move higher. The U.S. stock market has historically performed poorly when new offerings exceed $10 billion per week.

    Given the weakness of wage and salary growth and employment growth as well as massive redemptions from bond funds-bond mutual funds and exchange-traded funds have lost $44.3 billion (1.2% of assets) since the start of August-we expect the Federal Reserve to reduce its money printing later this year by no more than $15 billion to $20 billion per month.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: This communication is a publication of TrimTabs Asset Management. It should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Information presented does not involve the rendering of personalized investment advice. Content should not be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. Performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing performance returns. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Past performance may not be indicative of future results. Therefore, no investor should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions, may materially alter the performance of an investor’s portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio.To the extent that this content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security. AdvisorShares is a sponsor of actively managed exchange-traded funds (ETFs) and holds positions in all of its ETFs. This document should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any products mentioned. Investment in securities carries a high degree of risk which may result in investors losing all of their invested capital. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results. To learn more about the risks with actively managed ETFs visit our website is an SEC registered RIA, which advises to actively managed exchange traded funds (Active ETFs). This article was written by Minyi Chen, CFA the portfolio manager of the AdvisorShares TrimTabs Float Shrink ETF (NYSEARCA:TTFS). We did not receive compensation for this article, and we have no business relationship with any company whose stock is mentioned in this article. This information should not be taken as a solicitation to buy or sell any securities, including AdvisorShares Active ETFs, this information is provided for educational purposes only.

    Stocks: TTFS, PKW
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