Short Bets Pay Off for Actively Managed Bear ETF

ETF Ribbon Cutting (Photo credit: ACEP UAF)

An actively managed ETF that bets against stocks by shorting them has profited recently from some well-timed positions in troubled companies.

The $264 million AdvisorShares Active Bear ETF (NYSEArca: HDGE) is up 15.7% for the three months ended June 8, compared with a 2.4% decline for the S&P 500, according to investment researcher Morningstar.

The ETF enjoyed a “windfall” last month when shares of Green Mountain Coffee Roasters (NasdaqGS: GMCR) tumbled 48% on disappointing earnings, The Wall Street Journal reports.

The fund is co-managed by John Del Vecchio and Brad Lamensdorf. [Chart of the Day: Active Bear ETF]

Del Vecchio has a background in forensic accounting and hunts for companies that are aggressive in their accounting practices, a sign that they may be trying to paper over a decline in the business. These companies are shorted on the expectation they will miss earnings or lower guidance.... Continue to read. 

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