00:00ETF owns Berkshire Hathaway stock as well as the individual names that Berkshire owns.
00:04Why add on the individual names in addition to Berkshire, which basically means you're doubling
00:10down on the individual holdings in addition to that 10 percent of Berkshire Hathaway itself?
00:16I'm just curious about the construction of this fund. Yeah, well, thanks for having me. Berkshire,
00:21you know, has a lot of private market holdings. They have the cash hoard of $365 billion. So when
00:25you buy Berkshire, you're not getting real direct exposure to their top thought, their top
00:30portfolio holdings. So our belief was that, you know, Buffett and now Abel are quite good at
00:36choosing public securities to make big bets on. So why don't we package those in the ETF and give
00:42investors direct access? Yeah. So it's like a more pure play exposure, if you will, with income. So
00:47one question for me is like Berkshire famously doesn't really distribute dividends. So like in
00:53my mind, there's, you know, Warren Buffett and Berkshire has a lot of mega fans, super fans out
00:57there. So how much of like that $1 billion is people that held Berkshire somewhere else and
01:01they want to have it be, you know, more productive on an income basis? How much of that is contributing
01:05to the billion? I feel like this is the perfect sweet spot for those types of investors.
01:08Yeah, and you nailed it. I mean, that's one of the main use cases, right? If you own Berkshire B,
01:13it doesn't pay the dividend. You, you know, use Omaha, O-M-A-H as a complement to your Berkshire
01:18exposure and you create a synthetic dividend for that stock. You could also use it as a
01:23complement to your traditional S&P 500 or Q's exposure as well, because those are very,
01:28you know, highly concentrated in the MAG-7. I'm curious, Adam, have you talked to anyone
01:33over at Berkshire about this ETF? Have they reached out to you? Have they given you any kind
01:37of response to what you're doing here? No, we've reached out to them. We'd love to go to the annual
01:43meeting with a big O-M-A-H sign outside or inside if we could. But no, we haven't spoken
01:48to them.
01:49But we're huge Berkshire fans. Clearly, this is a tribute to them. We're not affiliated with
01:54Berkshire or Buffett. You know, this is a tribute product providing, you know, new exposure to
01:59investors. You know, invest like Buffett, but with 15% annual income paid monthly.
02:04Yeah, so the options income area, premium income, options overlay, however you want to quantify it,
02:09is one of the hottest areas of the ETF market you guys launched in March of last year. How much
02:14of
02:14it was like this was your idea and you were going to do it versus you saw how much demand
02:18and interest
02:18there was for options income? I mean, if you look at the AUM of options income ETF, it is straight
02:22up
02:23and to the right. Yeah, I mean, options income is a core of what we do over at Vista Sheriffs
02:28along
02:28with our super cycle growth equity strategies. So, you know, we saw that 15% was a sweet spot for
02:36investors. It wasn't too much where you're going to see that nav decay that some of the higher yielding
02:40products often have. But we're able to pay out our 1.25% per month. We've never missed a month.
02:46And
02:46it's, you know, it's proven itself out in the marketplace, which is nice.
02:51When you look at the individual names that you own, in addition to Berkshire Hathaway stock and
02:56filing on Friday, we learned that Berkshire started a stake in D.R. Horton and increased its stake
03:01in Macy's. Did you automatically follow suit to make adjustments? I mean, how much of a time lag
03:07is there between what Berkshire does and how you make adjustments to the ETF?
03:12Yeah, the core way we do that is through the 13F filing. So there's an average of a 45-day
03:17delay
03:17when we make our portfolio changes, which can go in our favor or against us, right? It depends where
03:22the market's moving. But we are an active ETF, so we are able to make those changes in real time.
03:27For these, we did not. We're just following the 13F filings and doing it according to our process.
03:33But, you know, it's a rules-based methodology, and then we have our active overlay to make
03:38intra-quarter changes when necessary. So generating that 15% yield, like we talked about,
03:44that options portfolio is obviously actively managed. So I'm just wondering if you can talk
03:48a little bit more about, like, how you are actually deciding where to strike those options,
03:52where to sell, how much to sell. What options are you selling? Are they individual stocks? Are they
03:56more futures index-based? Just give me an insight into how you're making your options selling
04:00decisions. Yeah, so it's a data-driven active strategy. We look to, we use call spreads on the
04:07entire portfolio. So we're writing against each underlying security. The duration of those call
04:13spreads really depends on the volatility of the underlying holdings. So they could be short-term
04:17or they can go out a week or two, depending. What we're trying to do is just scrape off 1
04:21.25%
04:22per month. So we are not trying to maximize income. We just want that 1.25% per month.
04:28Once a position hits that, we're taking the position off and putting on a new position.
04:34So it's very conservative on how we run that. If we happen to make more than 1.25% in
04:39a month,
04:39we'll put that back into the nav. So that's really important for investors.
04:43When James was showing us the chart of the OMA and how it's performed, he talked about the S&P
04:50500
04:50value as kind of a benchmark. Is that what you see as the most appropriate benchmark for OMA?
04:56Well, certainly, Berkshire is traditionally a value-tilted portfolio. So that would be a good
05:02benchmark. But the S&P, again, if you look at the holdings of the value or any of the S
05:08&P indexes,
05:09they're very overweight in technology. And now Berkshire does have some of its own
05:13technology exposure now. But if you look back a year, Berkshire really struggled when the MAG 7
05:18went straight up. We were in a momentum-driven market. Value did not keep up. However, this year,
05:24doing a little bit better versus kind of the S&P overall.
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