Wall Street analysts often stick to the consensus, hesitant to make bold predictions for fear of being proven wrong. But Tom Lee is a different breed. As the chief investment officer of Fundstrat Capital, Lee has earned a reputation for his audacious market calls, such as predicting the S&P 500 would hit 15,000 and Bitcoin could reach $10 million. His unapologetically bullish outlook has garnered him a dedicated following, especially among DIY retail investors in today’s speculative market.
Now, Lee is leveraging his growing prominence with the launch of a new exchange-traded fund (ETF) called the Granny Shots US Large Cap ETF (GRNY), which debuted earlier this month and has already amassed over $400 million in assets. The fund marks the first of what Lee hopes will be many, showcasing his theme-driven stock-picking methodology.
The name Granny Shots derives from a unique basketball free-throw style, which Lee compares to his systematic approach to stock selection. It may not look flashy, but Lee argues it has the highest likelihood of success. “Our clients and their loyalty are not just because we’re bulls,” Lee said in an interview. “It’s because we’ve given them many reasons to understand why markets should do what they’re doing.”
So far, the ETF has performed well. Since launching in early November, GRNY has risen 2.2%, outperforming the S&P 500, which advanced just 0.2% over the same period. With $412 million in inflows, it ranks in the top 10% of fund launches this year in terms of asset accumulation speed, according to Bloomberg Intelligence.
However, GRNY arrives at a challenging time for stock pickers. Data from Strategas Research reveals that about two-thirds of large-cap managers have underperformed the S&P 500 this year. Additionally, thematic ETFs have struggled, with nine out of ten months in 2023 seeing outflows, as per Bloomberg Intelligence.
Lee remains undeterred. His fund is based on a combination of long-term themes, such as easing financial conditions and global labor suppliers, as well as shorter-term factors like seasonality and style tilt. Stocks that align with two or more of these themes are included in the ETF. For example, Meta Platforms falls into five of the themes, while Alphabet and Garmin fit into four.
Lee emphasizes transparency in the process, saying, “Granny Shots is giving people a really good understanding of why they’re owning this.”
The fund’s top holdings include companies like Axon Enterprise, Tesla, and CrowdStrike, with a diversified portfolio of about 35 stocks. The ETF will be rebalanced quarterly, and the themes will evolve over time to adapt to changing market conditions.
Being persistently bullish doesn’t always guarantee success, of course. Lee’s optimistic outlook faced setbacks during challenging years like 2018 and 2022. But his accuracy in 2023 has been impressive: Lee’s S&P 500 forecast was one of the most accurate on Wall Street, predicting the index’s 24% gain. This year, his bullish predictions have again proven prescient, with the S&P 500 up 26%, surpassing even the most optimistic forecasts. Lee also predicted Bitcoin would reach $100,000 back in 2018 and has maintained a target of $150,000 for the cryptocurrency by the end of this year.
Alongside Ken Xuan, Lee co-manages the new fund and joins a growing list of notable economists and investors launching ETFs, including Nouriel Roubini and Rob Arnott. Yet, Lee is clear that having a well-known name isn’t enough to ensure success. “I don’t think just because someone has a name they can launch an ETF and attract assets,” he said.
The ultimate goal for Lee is to use GRNY as the foundation for a series of ETFs based on his investment philosophy, bringing his bold, thematic approach to a broader audience.
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