How the new SARK ETF lets investors bet against disruptive tech companies

Tuttle Capital Management CEO and CIO Matthew Tuttle speaks with Yahoo Finance Live about how the SARK ETF offers a new hedge against unprofitable tech companies.

Video transcript

- And amid all of the volatility, where are the best places to invest? Well, our next guest says he has an idea. Matthew Tuttle from Tuttle Capital Management, CEO and CIO, thank you so much for your time today.

You say that investing in the antithesis of Cathie Wood's ARKK ETF is a good idea, and I love the name SARK is the name of the ETF. And you say it's a one-stop ticker option for exposure to short, hot, and emerging industries. So you got me. What sectors are we talking about here?

MATTHEW TUTTLE: Right. So ARKK, the Ark Innovation Fund, is obviously very well known for investing in what they call innovative technology. You know, other people have referred to that area as maybe unprofitable technology, you know, companies like Teladoc, like Zoom, CRISPR. There's a whole bunch.

And basically what you're seeing is in a rising-interest-rate environment, those companies-- the unprofitable technology companies are the ones that are really getting hit the hardest.

So we launched SARK as really a way that, you know, A, investors could bet against those types of companies but, B, as a better way to hedge their portfolios, you know, given the volatility we're having in the market-- you know, today being a really good example of that.

ALEXIS CHRISTOFOROUS: I want to talk about some other areas that you're seeing opportunities in the ETF space, and I'm wondering how much money you see flowing into real estate right now and specifically REITs. I mean, we know the housing market has been one of the pillars of this economic recovery, but on the horizon we may very well have higher interest rates starting as early as next spring, and still yet to be seen how that's all going to play out for the housing market.

MATTHEW TUTTLE: Yeah. So, you know, again, what we've seen is all of the unprofitable technology, unprofitable growth has gotten crushed. You know, where a place is that you could put your money that are maybe a little bit smoother-- and, you know, if you look at kind of the sectors over the last couple of weeks, real estate investment trusts haven't done great, but on a relative standpoint, they've certainly done a lot better than some of the other stuff out there. And we found a couple of good companies to add in our FOMO ETF, which goes long things versus SARK, which is inverse.

- I want to go back to SARK and, you know, ask you how risky of an investment is this right now? Is it the right investment for everyone, particularly given this environment of volatility and high angst around the virus?

MATTHEW TUTTLE: Well, it's perfect in that type of environment because it really is an effective portfolio hedge if this market really does go into a correction because, yeah, a lot of times people like using inverse ETFs on the S&P or on the NASDAQ to hedge their portfolios, but really what you're doing when you're buying one of those ETFs is you've got inverse exposure to the FAANG stocks, the profitable technology. Whereas if you were using SARK as a hedge, you've got exposure to the unprofitable stuff.

And, you know, look at what's happening to those companies today, for example. You know, they're selling off quite a bit, and SARK's doing very, very well today.

ALEXIS CHRISTOFOROUS: Well, let's talk a little bit about other ways folks are hedging in the ETF space. What are you doing right now with regards to cryptocurrencies?

MATTHEW TUTTLE: So we just got out-- in our FOMO ETF, we just got out of most of our crypto exposure. We kept one which is SI, Silvergate. It's more of a banking play. We did get out of the miners. We did get out of-- we were in GBTC. We got out of that. We'll be looking to add that back in.

But basically what we've seen in the whole risk-off environment we've seen over the past couple of weeks is Bitcoin's getting caught up in that. So we're waiting to kind of wait to see for it to bottom, and then we'll look to get back into GBTC and some of the miners. You know, we love getting into HUT and MARA and RIOT. So we'd look to enter back into those when we can.

- And I want to ask you about the EV space because, you know, Cathie Wood's ARKK heavily invested in Tesla, and now she is investing in things like Zoom as well. But you also, you highlight, EV as a place to invest. So what is the correlation or what's different there? And then, you know, how unique is your ETF? Are there others like it around?

MATTHEW TUTTLE: So if you're referring to SARK, no. This is the first of its kind ETF that gives inverse exposure to another ETF. Never been done before. My guess is probably never to be done again.

And, you know, as you mentioned, Ark Innovation does own Tesla, which has really been the only stock in their portfolio that's really done well this year. Beyond that, though, there's a lot more in the EV space.

In FOMO, we own Gores Guggenheim. We own Lucid Motors. We own XPEV, and we also own Canoo, and we're in and out a lot of the EVs. We're seeing that too as one sector that hasn't been hit as hard by kind of this growth sell-off recently. So we still do love the EV space, but there's a whole lot more than Tesla. And the problem you run into with Tesla is you've got a, for lack of a better way to describe it, unpredictable CEO who could do anything at any time.

- All right, we will leave it there. Matthew Tuttle, Tuttle Capital Management CEO and CIO, thank you for that investment insight.

And that was our ETF report brought to you by Invesco QQQ.