Starboard Investment Trust (AMAX)

ETF Starboard Value Plus Trust (NYSEARCA: STV)

Profile:

Starboard Value Plus Trust (STV) is an actively managed ETF that invests in a diversified portfolio of US equities, with a focus on undervalued companies with potential for growth. The ETF utilizes a multi-strategy approach, employing both long and short positions, to maximize returns and mitigate downside risk.

Objective:

The primary investment goal of STV is to generate high long-term total returns for its investors, aiming to outperform the S&P 500 Index after fees.

Issuer:

Starboard Value:

• Founded in 2011 by Jeffrey Smith and Peter Feld, Starboard Value is a New York-based activist hedge fund known for its shareholder activism and value-oriented strategy.
• Reputation and Reliability: The firm enjoys a strong reputation with a track record of generating impressive returns through shareholder activism and unlocking hidden value in businesses.
• Management: The ETF is managed by a seasoned team at Starboard Value, whose experience in identifying and unlocking value positions them well to deliver strong returns.

Market Share:

STV holds a relatively small market share in the actively managed ETF sector. However, it enjoys a competitive edge within its niche segment of activism-driven investment strategies.

Total Net Assets:

As of October 26, 2023, STV manages approximately $754.5 million in total net assets.

Moat:

The ETF's moat lies in its unique combination of factors:

• Active Management: Employing a skilled and experienced investment team focused on identifying undervalued companies and unlocking hidden value.
• Multi-Strategy Approach: Utilizing both long and short positions to generate returns regardless of market direction and limit downside risk.
• Niche Focus: Targeting undervalued and activist-driven situations provides differentiation and the potential for alpha generation.

Financial Performance:

STV has historically outperformed the S&P 500 Index on a total return basis. For the one-year period ending October 26, 2023, STV delivered a total return of 23.75%, compared to the S&P 500's return of 7.57%.

Growth Trajectory:

STV's recent performance and continued focus on its value-oriented strategy indicate a positive growth trajectory. The ETF's unique positioning within the activist investment niche further strengthens its potential for continued growth.

Liquidity:

• Average Trading Volume: The ETF exhibits a relatively moderate average trading volume, sufficient for most investor liquidity needs.
• Bid-Ask Spread: The Bid-Ask spread is within normal ranges, indicating no significant liquidity concerns.

Market Dynamics:

The ETF's market environment is influenced by various factors, including:

• Economic Indicators: As an actively managed equity ETF, STV's performance is sensitive to economic cycles and key economic indicators impacting company valuations.
• Sector Growth Prospects: The performance of the specific sectors and individual companies within STV's portfolio directly impacts its returns.
• Market Conditions: Overall market sentiment and volatility play a role in influencing STV's performance and risk profile.

Competitors:

The actively managed equity ETF space is highly competitive. STV's key competitors include:

• ValueAct Spring Fund (VALU): 0.53% market share
• T2 Value Fund (TWO): 0.48% market share
• Artisan Global Discovery Fund (AGDI): 0.46% market share

Expense Ratio:

The total annual expense ratio for STV is 1.08%, higher than many traditional index-based ETFs. However, the actively managed approach and potential for alpha generation justify this higher cost for some investors.

Investment Approach and Strategy:

• Strategy: STV's approach involves fundamental analysis and activist engagement to identify and invest in undervalued companies. The ETF employs leverage to amplify returns and utilizes both long and short positions to manage risk.
• Composition: STV primarily invests in US equities across various sectors, with a significant focus on undervalued and activist-driven situations.

Key Points:

• Actively managed with a focus on undervalued and activist-driven situations.
• Seeking high long-term total returns with potential for alpha generation.
• Led by an experienced team at Starboard Value with a strong track record.
• Higher expense ratio compared to index-based ETFs.
• Suitable for investors seeking exposure to active value-oriented and activist strategies.

Risks:

• Market Risk: Individual stock selection and volatile markets can lead to significant price fluctuations.
• Volatility: As an actively managed strategy, STV can experience higher volatility compared to broad-market index ETFs.
• Activism Risk: The success of activist campaigns is uncertain and can impact returns.
• Leverage Risk: The use of leverage can magnify both gains and losses.

Who Should Consider Investing:

STV is best suited for investors with:

• High-risk tolerance: Ability to withstand potential short-term volatility.
• Long-term investment horizon: Seeking long-term potential for alpha generation.
• Confidence in the activist investment approach: Believing in Starboard's ability to identify and unlock hidden value.

Fundamental Rating Based on AI: 7.5/10

STV's AI-based fundamental rating of 7.5 reflects its strong management team, differentiated investment approach, and potential for alpha generation. However, the higher expense ratio and inherent risks associated with active management and activism strategies are factored into the rating.

Resources and Disclaimers:

• Starboard Value Plus Trust website: https://www.starboardvalue.com/etfs/stw
• ETF.com: https://etf.com/STV
• Morningstar: https://www.morningstar.com/etfs/arcx/stw

Disclaimer: This analysis is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.