December 2020: Week 3

Edition #024 - Data recap of last week's big moves inside the Tech ETF landscape. See what to keep an eye on for the week ahead.

Weekly Changes (Overall):

Out of 101 Tech ETFs analyzed, the average Tech ETFs had a strong positive week, bouncing back after last weeks small reversal. Tech ETFs averaged a strong gain of 3.55% compared to a loss of 0.16% last week.

This weeks top 5 ETFs were slightly considerably smaller on average than last weeks $1,866 AUM with just $471m in AUM on average. vs $1,404m in AUM.

Additionally, we saw strength again in these smaller dollar ETFs in terms of holding size, where the top 5 this week and had on average 40 holdings compared to an average of 49 last week.

This continues to play into theme that ETFs with less holdings are performing better than those with more holdings.

I’ll be sharing more research on how non-systematic risk (risk outside of the general risk of the market itself) starts to be eliminated around 20-30 holdings…but here’s a good place to start in the mean time.

Cloud Security Dominance:

Was the theme of the week with 3/5 ETFs centered around Cybersecurity and 2 more with an eye towards it.

Why?

Despite some recent strength off of the back of secular and COVID-19 digital transformation tailwinds, last week news broke on a hack around $5b SolarWinds (NYSE: SWI) security issues.

“After hackers gained access to SolarWinds' software as far back as March. The hackers managed to install malware in an update of the company's Orion software which was then downloaded by thousands of clients—compromising top federal agencies as well as hundreds of private companies.”

The general US response included

“President-elect Joe Biden’s team has begun discussing potential responses to the alleged Russian hack of key government agencies and top private American companies, including a possible cyberattack against the rival nation's own infrastructure.”

according to Newsweek.

9+ Stocks > 27% MTD:

Out of 27 stocks from $BUG (Global X Cybersecurity ETF) which is currently in the top spot for Tech ETFs in December, 9 have returned greater than 27% through the month.

Earlier this month, I started to build a position in $CRWD (Crowdstrike) which is currently ranked 3rd for this months returns from $BUG. It is leading many Cybersecurity and data stocks in multiple financial metrics including 86% YoY revenue growth.

The stock is currently trading at an all time high of $203.75 after a 9.99% gain on Friday, and is currently slightly down pre-market by 0.82%.

$CRWD is trading at a 37.4x 2021 Forecasted Revenue which may pose an issue to some looking to enter the stock.


Hopefully you found this weeks edition useful, and as always none of this is investment advice and to reiterate, I do own a position in $CRWD and may continue to add/reduce this over the next few weeks.

Best,

Stuart