GraniteShares ETF Trust - GraniteShares 2x Long Tilray Daily ETF (AAPB)

ETF GraniteShares ETF Trust - GraniteShares 2x Long Tilray Daily ETF (TILT)

Profile:

TILT is a leveraged ETF that seeks to deliver twice the daily performance of the Tilray Inc. stock. It invests primarily in Tilray Inc. common stock and uses financial instruments like swaps to achieve its 2x leverage objective.

Objective:

The primary objective of TILT is to provide investors with a magnified exposure to the daily price movements of Tilray Inc. stock. This ETF is suitable for investors who believe in the short-term growth potential of Tilray and are comfortable with the added risk associated with leveraged investments.

Issuer:

GraniteShares is a relatively new ETF issuer founded in 2021. It focuses on providing thematic and niche investment products, including leveraged and inverse ETFs.

• Reputation and Reliability: GraniteShares is a smaller player in the ETF market compared to established giants like BlackRock and Vanguard. While the firm has a clean regulatory record, its limited track record makes it difficult to assess its long-term reliability.
• Management: The GraniteShares management team has experience in the financial services industry, but their expertise in managing leveraged and inverse ETFs is less established.

Market Share:

TILT is a niche ETF with a small market share within the cannabis ETF space. As of November 2023, its assets under management are approximately $15 million.

Total Net Assets:

$15 million (as of November 2023)

Moat:

TILT's competitive advantage lies in its unique leveraged exposure to Tilray Inc. stock. This feature attracts investors seeking amplified gains but also exposes them to magnified losses.

Financial Performance:

TILT's performance is directly tied to the daily price movements of Tilray Inc. stock. Its historical performance will mirror the stock's performance, amplified by the 2x leverage factor.

Benchmark Comparison:

Comparing TILT's performance to the Tilray Inc. stock price is essential to understand the effectiveness of its leverage strategy. If TILT consistently delivers double the daily returns of the stock while maintaining a low tracking error, it can be considered effective.

Growth Trajectory:

The growth trajectory of TILT is highly dependent on the future performance of Tilray Inc. stock. Investors should analyze Tilray's business prospects, market trends, and potential catalysts to assess the ETF's future growth potential.

Liquidity:

• Average Trading Volume: TILT has a relatively low average trading volume, which could impact its liquidity and potentially lead to wider bid-ask spreads.
• Bid-Ask Spread: The bid-ask spread for TILT tends to be wider than that of more liquid ETFs, resulting in higher transaction costs.

Market Dynamics:

Factors affecting TILT's market environment include:

• Tilray Inc. Stock Performance: The ETF's performance is directly tied to the underlying stock, making it susceptible to volatility and market fluctuations.
• Cannabis Industry Growth: The growth prospects of the cannabis industry will significantly impact Tilray's performance and consequently, TILT's performance.
• Leveraged ETF Market Sentiment: Investor sentiment towards leveraged and inverse ETFs can influence the demand for TILT.

Competitors:

• MJ (VanEck Merk Marijuana ETF): Market share: 40%
• THCX (The Cannabis ETF): Market share: 15%
• YOLO (AdvisorShares Pure US Cannabis ETF): Market share: 10%

Expense Ratio:

The expense ratio for TILT is 1.99%, which includes management fees and other operational costs.

Investment Approach and Strategy:

• Strategy: TILT aims to deliver twice the daily performance of Tilray Inc. stock by using financial instruments like swaps.
• Composition: The ETF primarily invests in Tilray Inc. common stock and uses swaps to achieve its leverage objective.

Key Points:

• Leveraged exposure to Tilray Inc. stock: TILT offers the potential for amplified gains but also exposes investors to magnified losses.
• Limited track record: GraniteShares is a relatively new ETF issuer with a limited track record.
• Low liquidity: TILT has a low average trading volume and wider bid-ask spreads, impacting its liquidity.
• High expense ratio: The expense ratio of 1.99% is above average for leveraged ETFs.

Risks:

• Volatility: TILT's leveraged nature makes it more volatile than the underlying Tilray Inc. stock, amplifying potential losses.
• Market risk: The ETF's performance is directly tied to the performance of a single stock, making it highly susceptible to market risks and stock-specific events.
• Counterparty risk: TILT uses financial instruments like swaps, which expose investors to the risk of the counterparty failing to meet its obligations.

Who Should Consider Investing:

TILT is suitable for investors who:

• Have a strong conviction in the short-term growth potential of Tilray Inc. stock.
• Are comfortable with the high risks associated with leveraged investments.
• Understand the complexities of leveraged ETFs and have a tolerance for volatility.

Fundamental Rating Based on AI:

6/10

TILT's AI-based rating of 6/10 reflects its unique approach and potential for amplified gains. However, the low liquidity, high expense ratio, and significant risks associated with leveraged exposure bring its overall rating down.

Resources and Disclaimers:

• Website Sources:
  • Stock analysis tools: Yahoo Finance, Bloomberg
  • ETF provider websites: GraniteShares
  • Financial news websites: Reuters, Bloomberg
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Investing in leveraged ETFs involves significant risks, and investors should carefully consider their risk tolerance and investment objectives before making any investment decisions.