Renowned financial media personality Jim Cramer could be gaining a new level of appeal as two ETFs are proposed that would offer investors an opportunity to ride his stock tips or bet against them.
The two exchange-traded funds filed with the Securities and Exchange Commission Wednesday by Tuttle Capital Management seek to tap into the emotions of both fans and critics of the colorful host of CNBC’s "Mad Money."
While the new funds could face a few hurdles related to the use of Cramer’s name, and the proposed active strategies are expected to require some art to accurately track Cramer’s on-air stock picks, the theme is already getting rave reviews.
“No doubt it’s a little bit off the wall, but there’s been a mini-ecosystem built around Cramer’s epically bad calls,” said Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.
“Clearly, there’s an interest in it, so that’s a sign it could have broad appeal,” he said.
Balchunas cited as examples of Cramer’s infamous mishits his bullish calls on meme stocks AMC Entertainment Holdings (AMC) and Coinbase Global (COIN) right before the stocks nosedived.
Then there’s the clip from March 11, 2008, when Cramer vehemently argued that “Bear Stearns is fine … don’t move your money from Bear, that’s just being silly.”
Six days later Bear Stearns was bailed out after its stock price had fallen by 90%.
“There’s few more prominent people in the financial world than Jim Cramer, and people tend to be in favor and follow his ideas, or ridicule his investment picks because he’s so visible,” said Todd Rosenbluth, head of research at VettaFi.
“These ETFs will potentially allow investors to tap into either being on his side or against him,” Rosenbluth said.
According to the filings, the long-only version will invest in stocks on which Cramer makes bullish calls. The inverse ETF will go long stocks that Cramer is bearish on and short stocks that the TV host and former hedge fund manager is bullish on.
“The idea behind these ETFs has been batted around in the Twittersphere for quite a while, so it’s no surprise to see an issuer attempt to bring these to fruition, particularly an issuer like Tuttle Capital,” said Nate Geraci, president of The ETF Store.
Tuttle Capital is a small but edgy ETF shop that has already tapped into the mood of investors looking to take down noisy forecasters by launching an ETF that offers inverse exposure to the $8.2 billion ARK Innovation ETF (ARKK).
Tuttle sold the AXS Short Innovation Daily ETF (SARK), along with three other ETFs, to AXS Investments. But the fact that SARK has grown to more than $350 million shows promise for strategies playing off Jim Cramer’s vocal stock picks.
“Jim Cramer has become a polarizing figure in financial media and has long been ridiculed for his stock picks, fairly or unfairly,” Geraci said. “It’s almost become a national sport for people to disparage Cramer’s stock selections and market calls. These ETFs will attempt to capitalize on that polarization and Cramer’s overall notoriety, and I expect the Inverse Cramer ETF to become a viable product.”
But while the appeal might be there among investors and social media pundits, viability is still up in the air.
“It’s conceivable that these funds don’t see the light of day,” Rosenbluth said. “I don’t know if the SEC is going to be comfortable with having Cramer in the name of an ETF.”
Balchunas believes Cramer could take action to prevent the ETFs from using his name. But Balchunas also thinks the ETFs could succeed with revised names that still reference the TV host.
CNBC did not respond to a request for comment for this story.
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