Leatherback Asset Management, a Florida-based alternative investment boutique, has introduced its first ETF with the launch of an actively managed long/short income strategy.
Michael Winter, Founder and CEO, Leatherback Asset Management.
The Leatherback Long/Short Alternative Yield ETF (LBAY US) has listed on NYSE Arca and comes with a management fee of 0.95% and a total annual fund operating expense of 1.09%.
The fund has been brought to market in partnership with private-label ETF platform Tidal ETF Services.
Investment strategy
The ETF seeks to deliver a mix of current income and long-term capital appreciation through a long/short approach, purchasing securities offering sustainable shareholder yield (defined as dividends plus buybacks plus debt pay-downs) and taking short positions in securities expected to decline in price.
The portfolio is managed by Leatherback founder Michael Winter, a 20-year veteran of hedge fund strategies with a particular focus on building long/short portfolios, and is expected to have net exposure of 75% – 110% long. Income will be distributed to investors on a monthly basis.
Winter and his team identify long positions through quantitative and fundamental analysis of US-listed companies from across the market capitalization spectrum. Eligible positions include common stocks, depositary receipts, preferred stocks, ETFs, closed-end funds, business development companies, master limited partnerships, real estate investment trusts, investment-grade corporate bonds, and convertible bonds. The fund may write covered calls on its long positions in a bid to boost income.
The team identifies short positions in equity securities by seeking financial statement anomalies, poor corporate governance, or the existence of fads that may lead security prices to be overvalued in the short-term. Additionally, the fund may sell short ETFs that target a particular sector, size segment, or factor risk premia if Leatherback perceives there are significant headwinds for those investments.
Winter commented, “LBAY represents the type of dynamic, innovative, active approach that investors of all types should have available to them but which for too long have been reserved for institutions and accredited investors.”
“With bond yields at historic lows, investors are looking elsewhere for the income they need. Passive strategies too often come with misunderstood or misattributed risks, and active strategies in a mutual fund or hedge fund wrapper burden investors with onerous lockups and high fees. With LBAY, investors now have a powerful tool for adding alternative yield to their portfolios, guided by experienced active management.”
According to filings, Leatherback has a second fund in the pipeline: the actively managed Leatherback Long/Short Absolute Return ETF (LBAR US). LBAR proposes to target capital appreciation by taking long positions in undervalued securities and short positions in securities that are expected to decline in price while utilizing a proprietary risk management overlay.