A new ETF is being launched in early October and invests based on share buybacks by companies.
The TrimTabs Float Shrink ETF (symbol TTFS) will open for trading on Wednesday, October 5, 2011. The portfolio management team of TTFS is a part of TrimTabs Asset Management (“TrimTabs”).
TTFS’ investment objective is based on TrimTabs proprietary research, which measures the "change in float shrink" (net change in number of shares
The premise here is that share buybacks are a good indicator of stocks going up. Sounds very reasonable.
Charles Biderman is the founder and Chief Executive Officer of TrimTabs. He says that “Top insiders at a firm know more about its fundamentals than the investing public. We have discovered that it has been strategic over the years to buy the overall market when the trading float of shares is shrinking; and to sell the overall market when the trading float of shares is growing. We have discovered that float shrink, free cash flow and debt/equity analysis have been good indicators in determining future performance of stocks.”
Noah Hamman, CEO and Founder of AdvisorShares. : “We believe investors will be excited about TTFS because it is a fundamentally attractive alternative for U.S. equity market exposure to a Russell 3000 or S&P 500 Index. Why own the entire U.S. market when you can buy the 100 companies shrinking their trading float of shares, growing cash flow and not borrowing to buy back shares?”