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HomeFinanceDan Ives, Tom Lee Bypass Wall Street With Social Media Megaphone
Dan Ives, Tom Lee Bypass Wall Street With Social Media Megaphone
Dan Ives, left, and Tom Lee, right
(Bloomberg) — Beating the market is hard, and lately, winning new money even harder. Yet two Wall Street bulls with social-media megaphones are doing both, just as many stock pickers are watching their clients walk away.
ETFs launched separately by veteran strategist Tom Lee and longtime tech bull Dan Ives have found success by betting big on the technology stocks benefiting from the AI boom, all while leveraging their founders’ personal brands to attract investors. Along the way, they have engineered a rare double act: outperformance and inflows.
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So far, that approach is working. Lee, who broadcasts to more than half a million followers on X and is the co-founder of Fundstrat Global Advisors, has seen his Granny Shots US Large Cap ETF (ticker GRNY) pull in roughly $2.5 billion in less than 12 months. Ives’s eponymous Wedbush AI Revolution ETF (IVES), meanwhile, has shot to around $750 million in assets since its June debut. Both funds are handily beating the S&P 500 Index this year, with GRNY up 23% and IVES 25%.
“I wanted a way for investors around the world, retail and institutional, to invest in the AI theme,” said Ives, a managing director at Wedbush Securities known for bold calls and a colorful wardrobe. In a world of ultra-complicated ETFs, he said he wanted a fund simple enough “that someone in junior high school could understand what we’re doing.”
Going all-in has its pitfalls. Valuations in tech stocks have grown stretched, leaving concentrated bets vulnerable to a pullback. Investors in hot ETFs can also be fickle, quick to pile in when markets are surging and just as ready to abandon ship if the tide turns. Cathie Wood’s flagship ARK Innovation ETF (ARKK) serves as an example: the fund tumbled nearly 70% when investors abandoned bets on pandemic-era darlings in 2022 and is still seeing outflows, despite a 44% rally this year.
And of course, both Lee and Ives have stumbled in the past. In February, Lee urged investors to buy a tariff-fueled dip in stocks that turned out to be the prelude to a far worse selloff, a call for which he publicly apologized months later. Ives, a long-time Tesla bull, has wavered on the EV-maker. He cut his target on Tesla nearly in half in April, just before the stock began to rebound from its lows of the year, only to reverse course later and declare that the company has entered a “golden age.”
Still, the bull market has made it easier to shrug off risks, as the relentless grind higher in stocks punishes investors sitting on the sidelines. Lee and Ives have both benefited from that climate, using their social media bullhorns to bypass the gatekeepers active managers typically depend on — broker-dealer platforms, consultants, retirement plans — and appeal directly to potential clients. Many of Lee’s followers are retail traders. who treat his daily posts as investable signals. Ives, long a fixture on television as a tech bull, taps a similar dynamic.
“The bears are in hibernation mode,” said Ives. “They missed transformational tech over the last 20 years because they were waiting for some black swan event and just focused on valuations and spreadsheets.”
Active vs Passive
By contrast, it’s been a year of missed chances for many of Wall Street’s active managers. Barely a third of active funds are beating the S&P 500, according to Athanasios Psarofagis of Bloomberg Intelligence, and fewer still are attracting new assets. Investors — fatigued by high fees and years of underperformance — continue piling into passive trackers, such as those linked to the S&P 500.
Part of the reason for those lackluster results is active managers’ tendency to underweight tech stocks in a bid to diversify their portfolios — a strategy that can help take the edge off downturns but also hurts performance in tech-driven bull markets.
Lee and Ives have gone the other way. Their funds both have Tesla Inc., Alphabet Inc. and Oracle Corp. as their top names, with the stocks up 5%, 30% and 75% year to date, respectively. The rest of their portfolios are also largely oriented on tech and AI, though only a quarter of the two funds’ holdings overlap, according to data from the ETF Research Center.
“We seek to identify both the long-term themes we see shaping the economy and stock market over the next 5-10 years, as well as the short-term themes that capture tactical market shifts,” said Ken Xuan, co-portfolio manager of GRNY.
The payoff has been immediate: Lee’s GRNY — whose name is derived from an unconventional basketball free-throw style he likens to his systematic, theme-based stock-picking process — has seen inflows every month since launch, bar one. Ives’ ETF has not seen a weekly outflow since it launched.
“If you haven’t been leaning hard into mega-cap and AI leaders, you’ve been left behind,” said Dave Mazza, chief executive officer of Roundhill Investments. “The managers who’ve done best are the ones willing to run old-school, high conviction, concentrated portfolios, while those hugging the benchmark or shying away from AI over valuation concerns have ended up missing the rally entirely.”
Other boutique players have also managed to outperform. Take the Strategas Macro Thematic Opportunities ETF (SAMT), run by strategist Ryan Grabinski. Launched in 2022, the actively-managed fund focuses on five themes, including AI, industrial power and deglobalization. It holds some 40 stocks rebalanced roughly every month and is up 26% year to date.
More broadly, AI-related stocks are up 40% in the past year, by one measure. While some might find it hard to jump in on the heels of such a run, Ives believes the trade still has another “three to four years” left to go.
AI “is the most exciting tech theme in the last 40, 50 years,” he said. “I feel like it’s 10:30 p.m. in a party that goes until 4:00 a.m.”
–With assistance from Vildana Hajric and Matt Turner.
