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GameStop (GME) shares rise after lower-than-expected earnings and Roaring Kitty&#39;s support for CEO. Net sales and EPS fall, but losses decrease.

What&#39;s Going On With GameStop Stock On Monday?

GameStop

Earnings

Offerings

GameStop releases Q1 2024 results early, falls short of estimates ahead of Roaring Kitty&#39;s Friday livestream. 

GameStop Releases Q1 Results Ahead Of &#39;Roaring Kitty&#39; Event, Files Prospectus To Raise Capital Via Equity Offering

General

GRUB

IVOO

TKAYF

Callaway Golf Set To Enter S&amp;P Midcap 400 Index

Long Ideas

Broad U.S. Equity ETFs

Trading Ideas

ETFs

MDYG

MDYV

3 Mid-Cap ETFs For An Overlooked Asset Class

Small Cap Analysis

Small-Cap ETFs Kept It Rolling In August

M&amp;A Could Make Mid-Cap ETFs Great Again

Small Cap

Small-Caps Look To Build On March Steadiness

Markets

Minding The Middle With A Popular Mid-Cap ETF

Investors Back Away From Mid-Cap ETFs

Mid-Cap ETFs Hit By Departures

SPDR S&P 400 Mid Cap Growth ETF (based on S&P MidCap 400 Growth Index--symbol: MUV)

SPDR S&P 400 Mid Cap Value ETF (based on S&P MidCap 400 Value Index--symbol: MGD

GameStop Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GME#NYSE">GME</a>) shares were trading higher in the premarket in a volatile Monday session, indicating a possible rebound.
Last Friday, the stock closed lower by 39% after the company reported <a target="_blank" href="https://www.benzinga.com/news/earnings/24/06/39224137/gamestop-releases-q1-results-ahead-of-roaring-kitty-event-files-prospectus-to-raise-capital-via-equ" rel="noreferrer noopener">fiscal first-quarter earnings</a> ahead of its schedule and Roaring Kitty held a live stream.
While many were looking for an updated thesis on why Gill is investing heavily in GameStop once again, several investors <a target="_blank" href="https://www.benzinga.com//node/39237023" rel="noreferrer noopener">were left with more questions</a> after the stream.
The livestream ended up being disappointing for investors and the stock.
The video game retailer reported net sales of $881.8 million, down from $1.237 billion last year, lagging the analyst consensus estimate of $995.3 million.
GameStop reported an EPS loss of $(0.12), missing the&nbsp;analyst consensus estimate loss of $(0.09).
The quarterly net loss improved to $(32.3) million, down from $(50.5) million last year. GameStop also&nbsp;disclosed an at-the-market offering program, which permitted the sale of up to 75 million shares.
This added to the 45 million shares sold last month, which raised $933 million.
Last week, Keith Gill, also known as Roaring Kitty, expressed his backing for CEO Ryan Cohen during an Alphabet Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) YouTube livestream, the Financial Times <a target="_blank" href="https://www.ft.com/content/c2293c65-5aba-43ea-b7dd-21190baa94fc" rel="noreferrer noopener">reports</a>.
The retailer&#8217;s core business has been declining, with store numbers shrinking by over a quarter in five years, but investment gains have mitigated some losses.
Gill confirmed his significant investment in GameStop and denied working with any third-party funder.
Investors can gain exposure to the GameStop stock via iShares Core S&amp;P Mid-Cap ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IJH#NYSE">IJH</a>) and SPDR MidCap Trust Series I (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MDY#NYSE">MDY</a>).
Price Action: GME shares traded lower by 3.05% at $27.36 at the last check Monday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock

What's Going On With GameStop Stock On Monday?

Video game retailer GameStop Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GME#NYSE">GME</a>) stock released its first-quarter 2024 results early Friday ahead of its scheduled June 11 date.
The company reported net sales of $881.8 million, down from $1.237 billion year-over-year. The net sales total missed a <a href="https://www.benzinga.com/pressreleases/24/06/g39222992/gamestop-discloses-first-quarter-2024-results" target="_blank" rel="noreferrer noopener">consensus estimate of $995.3 million</a>.
The company reported a loss of 12 cents per share, missing the <a href="https://www.benzinga.com/calendars/earnings" target="_blank" rel="noreferrer noopener">estimate of a loss of 9 cents per share.</a>
The performance reflects customers transitioning to video games and collectibles online, while the retailer depended on brick-and-mortar stores, according to Reuters.
The gross margin improved by 450 bps to 27.7%. The quarter&#8217;s net loss was $32.3 million, down from $50.5 million last year.
The company held $1.08 billion in cash and equivalents as of May 4, 2024.
The stock got a <a href="https://www.benzinga.com/news/24/06/39210792/whats-going-on-with-gamestop-stock" target="_blank" rel="noreferrer noopener">boost from the</a> return of  Keith Gill, also known as Roaring Kitty, to social media following three years of hush. Gill is known for spearheading the meme stock movement.
GameStop will be the subject of a YouTube livestream by meme trader Gill later Friday.
GameStop also <a href="https://news.gamestop.com/node/20566/html" target="_blank" rel="noreferrer noopener">filed a prospectus supplement</a> with the SEC regarding its at-the-market offering program, which allows the sale of up to 75 million shares.
Before this filing, GameStop sold 45 million shares on May 17, generating about $933.4 million in gross proceeds. 
The company said it intends to use the net proceeds from the new offering for general corporate purposes, including mergers and acquisition activity.
GameStop&nbsp;stock gained over 78% in the last 12 months. Investors can gain exposure to the stock via iShares Core S&amp;P Mid-Cap ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IJH#NYSE">IJH</a>) and SPDR MidCap Trust Series I (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MDY#NYSE">MDY</a>).
Price Action: GME shares traded lower by 16.9% at $38.64 premarket at the last check on Friday.
Photo via Shutterstock.

GameStop Releases Q1 Results Ahead Of 'Roaring Kitty' Event, Files Prospectus To Raise Capital Via Equity Offering

SPDR MidCap Trust Series I (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MDY#NYSE">MDY</a>) shares experienced unusual options activity on Tuesday. The stock price moved up to $495.47 following the option alert. 
<ul>
<li>Sentiment: BEARISH</li>
<li>Option Type: SWEEP</li>
<li>Trade Type: PUT</li>
<li>Expiration Date: 2021-09-17</li>
<li>Strike Price: $480.00</li>
<li>Volume: 1085</li>
<li>Open Interest: 23</li>
</ul>
<h2>Three Signs Of Unusual Options Activity</h2>
Extraordinarily large volume (compared to historical averages) is one indication of unusual options market activity. Volume refers to the total number of contracts traded over a given time period when discussing options market activity. The number of unsettled contracts that have been traded, but not yet closed, is called open interest. These contracts are not yet closed because a buyer has not purchased the contract, or a seller has not sold it.
The trading of a contract with an expiration date in the distant future is another sign of unusual activity. Generally, additional time until a contract expires increases the potential for it to reach its strike price and grow its time value. Time value is important in this context because it represents the difference between the strike price and the value of the underlying asset. 
Contracts with a strike price far from the underlying price are also considered unusual because they are defined as being "out of the money". This occurs when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made because the underlying asset value is expected to change dramatically in the future, and the buyer or seller can take advantage of a greater profit margin. 
<h2>Understanding Sentiment</h2>
Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price. 
These observations are made without knowing the investor's true intent by purchasing these options contracts. The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock.
<h2>Using These Options Strategies</h2>
Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.
For more information to understand options alerts, visit <a href="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts" title="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts">https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts</a>

Analyzing SPDR MidCap Trust Series I's Unusual Options Activity

<ul>
<li>Callaway Golf Co&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ely#NYSE">ELY</a>)&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/pressreleases/21/06/n21521870/callaway-golf-set-to-join-s-p-midcap-400-apollo-medical-to-join-s-p-smallcap-600" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">is set to replace</a>&nbsp;GrubHub Inc&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/grub#NYSE">GRUB</a>) in the S&amp;P MidCap 400.</li>
<li>The S&amp;P MidCap 400 index comprises 400 companies with midrange market capitalization, between $200 million and $5 billion.</li>
<li>Callaway&#39;s addition comes after the British-Dutch company online food ordering company,&nbsp;Just Eat Takeaway.com NV&nbsp;(OTC: <a class="ticker" href="https://www.benzinga.com/stock/tkayf#OTC">TKAYF</a>),&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/m-a/21/06/21513947/grubhub-shareholders-approve-just-eat-takeaway-coms-acquisition-offer" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">agreed to acquire GrubHub</a>.</li>
<li>Callaway&#39;s market cap stands at $5.35 billion as of Thursday&#39;s close.</li>
<li>Price Action:&nbsp;ELY shares are trading lower by 4.28% at $33.75 in premarket trading on last check Friday.</li>
</ul>

Callaway Golf Set To Enter S&P Midcap 400 Index

Mid-cap stocks and exchange traded funds have long histories of outperforming their large- and small-cap counterparts. Mid caps also have lengthy histories of being ignored. In fact, it&#39;s safe to say advisors and investors are woefully under-allocated to stocks in the middle.
&ldquo;Only $782 billion is invested in pure mid-cap strategies, compared with $6.7 trillion in large caps and $825 billion in small caps,&rdquo; <a href="https://us.spdrs.com/en/etf/spdr-sp-midcap-400-etf-trust-MDY">according to State Street</a>. &ldquo;Yet, mid caps have historically offered greater growth potential than large caps and less volatility than small caps.&rdquo;
<h3>SPDR S&amp;P MIDCAP 400 ETF</h3>
One of the original, mid-cap ETFs, the SPDR S&amp;P MIDCAP 400 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mdy#NYSE">MDY</a>) tracks the S&amp;P MidCap 400 Index, featuring companies in the $1 billion to $8 billion market capitalization range. MDY has $19.19 billion in assets under management and allocates about 47% of its weight to financial services, industrial and technology stocks. Data suggest MDY is home to a lot of hidden gems.
&ldquo;Neither the fundamental Wall Street analysts nor the academic quantitative investors pay attention to mid caps. Fundamental analysts focus on well-known firms with heavy media coverage and high-profile earnings reports. In fact, twice as many analysts, on average, cover large-cap stocks as cover mid-cap stocks,&rdquo; according to State Street.
<h3>SPDR S&amp;P MIDCAP Value ETF</h3>
The SPDR S&amp;P 400 Mid Cap Value ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mdyv#NYSE">MDYV</a>) merits some consideration right now because of signs the value factor is on the mend. The fund&#39;s nearly 300 components have market caps ranging from $1.6 billion to $6.8 billion.
MDYV&#39;s underlying index, the S&amp;P MidCap 400 Value Index &ldquo;includes stocks exhibiting the strongest value characteristics based on: book value to price ratio; earnings to price ratio; and sales to price ratio,&rdquo; <a href="https://us.spdrs.com/en/etf/spdr-sp-400-mid-cap-value-etf-MDYV">according to State Street</a>.
<h3>SPDR S&amp;P MIDCAP Growth ETF</h3>
The SPD S&amp;P MidCap Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mdyg#NYSE">MDYG</a>) checks the boxes investors look for with the growth factor without much of the earning variability and volatility associated with small-cap growth funds.
&ldquo;Mid caps have had a 7% higher growth rate than large caps, with 32% less earnings volatility than small caps. In fact &mdash; and perhaps speaking to some of the leverage efficiency (return on assets, total-debt-to-assets) metrics &mdash; the volatility of mid caps&rsquo; earnings growth rates has been lower than that of large caps, on average,&rdquo; according to State Street.
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Small-cap stocks and the relevant exchange-traded funds are trouncing their large-cap counterparts this year, a theme that isn&#39;t showing much sign of abating.
The iShares Core S&amp;P Small-Cap ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ijr#NYSE">IJR</a>), which tracks the S&amp;P SmallCap 600 Index, is up 18.3 percent this year while ETFs and index funds tracking the larges-cap S&amp;P 500 were higher by 9.7 percent.
<h3>What Happened</h3>
Last month, the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/08/12238855/the-longest-bull-run-in-history-not-everybody-agrees">U.S. bull market became the longest on record</a>. Of course that means some stellar returns for the S&amp;P 500 and large-caps since March 10, 2009, but smaller stocks have been even more impressive.
&ldquo;While the record-breaking Bull market for the <a href="https://us.spindices.com/indices/equity/sp-500">S&amp;P 500</a> is spectacular, mid-caps and small caps did even better,&rdquo; <a href="http://www.indexologyblog.com/2018/09/04/the-biggest-bull-didnt-win/">said S&amp;P Dow Jones Indices</a>.&nbsp;&ldquo;The S&amp;P MidCap 400 posted an annualized 18.6% equity return and 20.5% with dividends, and the S&amp;P SmallCap 600 posted an annualized 20.9% equity return and 22.4% with dividends.&rdquo;
The iShares Core S&amp;P Mid-Cap ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ijh#NYSE">IJH</a>) and the SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mdy#NYSE">MDY</a>) are among the ETFs offering exposure to the S&amp;P MidCap 400 Index.
<h3>Why It&#39;s Important</h3>
Smaller stocks continue topping their large-cap rivals. Last month, IJR beat the S&amp;P 500 by 150 basis points. Two months into the third quarter, IJR is beating the S&amp;P 500 by 30 basis points on a quarter-to-date basis.
&ldquo;The small cap outperformance was widened in Aug. with a monthly return of 4.8% versus 3.3% for large caps and 3.2% for mid-caps,&rdquo; according to S&amp;P Dow Jones. &ldquo;It was the sixth straight positive month for small-caps delivering a total return of 20.0% over the period in the strongest run since the six months ending Mar. 2012, when the index gained of 31.2%.&rdquo;
Last month, nine of 11 small-cap sectors generated positive returns.
<h3>What&#39;s Next</h3>
Sectors such as health care and industrials are driving domestic small-cap benchmarks higher this year. Those sectors combine for nearly a third of IJR&#39;s weight.
&ldquo;For example, <a href="https://us.spindices.com/indices/equity/sp-600-industrials-sector">industrials</a>, the biggest sector in the S&amp;P 600, is having its best year since 1997, up 17.5% ytd, and its third best on record,&rdquo; according to S&amp;P Dow Jones. &ldquo;The smaller companies of this sector may be more insulated from U.S.-China trade tensions and also has less <a href="http://www.indexologyblog.com/2018/07/02/small-cap-premium-is-5th-biggest-in-history/">revenues coming from overseas</a> so has outperformed the large-cap industrials. Also, heath care in small caps is having its second best year on record, up 47.4%, the best ytd performance since 2000.&rdquo;
<iframe allow="autoplay; encrypted-media" frameborder="0" height="315" src="https://www.youtube.com/embed/kqr-h-pmky4" width="560"></iframe>
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For much of the current bull market in U.S. stocks, mid-cap equities and exchange traded funds have been leaders. That trend has cooled over the past several years.
For the three years ended July 30, the S&amp;P MidCap 400 Index trailed the large-cap S&amp;P 500 and the S&amp;P SmallCap 600 Index. Some market observers believe mid-caps can rise again, buoyed by tax cuts and increased mergers and acquisitions activity.
<h3>What Happened</h3>
While smaller stocks are rallying this year, mid-caps are being left behind. The SPDR S&amp;P MIDCAP 400 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mdy#NYSE">MDY</a>), which tracks the aforementioned S&amp;P MidCap 400, is up 4.1 percent year-to-date, putting it 170 basis points behind the S&amp;P 500. The S&amp;P SmallCap 600 is beating MDY by more than 2-to-1.
MDY&#39;s 399 holdings have market values ranging from $1 billion to $4.5 billion, though the standard <a href="https://www.investopedia.com/terms/m/midcapstock.asp">widely accepted definition</a> of mid-cap is a stocks with a market capitalization of $2 billion to $10 billion.
<h3>Why It&#39;s Important</h3>
Regarding the impact of mergers and acquisitions, &ldquo;That&rsquo;s the market phenomenon where companies that are deemed potential takeover targets get bid up based on a higher anticipated acquisition price,&rdquo; <a href="https://www.bloomberg.com//news/articles/2018-07-30/mid-cap-stocks-still-have-room-to-run-as-m-a-effect-kicks-in">reports Bloomberg</a>. &ldquo;Many investors see mid-cap companies as a sort of sweet spot for deals, since they&rsquo;ve surpassed their infancy and shown their staying power but aren&rsquo;t expensive behemoths yet.&rdquo;
MDY allocates nearly 10 percent of its weight to the health care sector, a group that has already seen brisk consolidation activity this year, due in large part to the tax reform legislation passed in late 2017. The technology and consumer discretionary sectors, MDY&#39;s second- and fourth-largest sector weights, respectively, could also be fertile territory for larger acquirers.
Historical data suggest mid-caps are often favored targets. Since 2009, MDY has seen 10 percent more takeovers than its large-cap counterpart, the SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>), according to Bloomberg data.
<h3>What&#39;s Next</h3>
While investors have been revisiting small-cap ETFs and sticking with some large-cap domestic equity funds, some mid-cap ETFs are doing fairly well in terms of year-to-date inflows.
The iShares Core S&amp;P Mid-Cap ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ijh#NYSE">IJH</a>), which also tracks the S&amp;P MidCap 400, and the Vanguard Mid-Cap ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vo#NYSE">VO</a>), have seen combined 2018 inflows of $3.32 billion.
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M&A Could Make Mid-Cap ETFs Great Again

March was unkind to the S&amp;P 500. The benchmark U.S. equity index lost 2.5 percent last month, with eight of its 11 member sectors finishing the month in the red. That was after a rough February for stocks across the board.
&ldquo;As the volatility rose, the market went from posting its <a href="http://www.indexologyblog.com/2018/02/01/sp-500-posts-best-january-since-1997/">best January since 1997</a>, up 5.7 percent, to losing 3.7 percent in <a href="http://www.indexologyblog.com/2018/03/01/where-may-equities-go-from-here/">February, its first monthly loss in 15 months</a>,&rdquo; S&amp;P Dow Jones Indices said&nbsp;<a href="http://www.indexologyblog.com/2018/04/02/small-caps-rebound-big-in-march/">in a recent note</a>.
&ldquo;February wasn&rsquo;t only bad for large-caps but for the mid-size and smaller stocks too. As a quick recap for February, 10 of the 11 sectors in the S&amp;P 500 fell; the S&amp;P MidCap 400 lost 4.4 percent, also with 10 sectors down; and the S&amp;P SmallCap 600 lost 3.9 percent with all 11 sectors losing.&rdquo;
In March, the S&amp;P 500 struggled in large part because its two largest sector weights slumped. Technology and financial services, which combine for almost 40 percent of the index, fell 3.9 percent and 4.3 percent, respectively, last month. Perhaps surprisingly, things were better for smaller stocks.
<h3>
	March Surprises</h3>
While the S&amp;P 500 slumped in March, the same cannot be said of its mid- and small-cap counterparts, the S&amp;P MidCap 400 Index and the S&amp;P SmallCap 600 Index.
&ldquo;While the S&amp;P&nbsp;MidCap 400 gained just 93 basis points, the S&amp;P SmallCap 600 gained over 2 percent that pushed its year-to-date returns into positive territory, up 57 basis points in 2018,&rdquo; said S&amp;P Dow Jones.
The iShares Core S&amp;P Small-Cap ETF (NYSE: <a class="ticker" href="/stock/ijr#NYSE">IJR</a>), one of the largest exchange traded funds tracking the S&amp;P SmallCap 600 has large finacial services and technology exposure. Those sectors combine for over 35 percent of IJR&#39;s weight.
The SPDR S&amp;P MIDCAP 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>), which holds 400 stocks with market values ranging from $1 billion to $4.5 billion, allocates about 35.3 percent of its combined weight to financial and technology stocks. Those are MDY&#39;s two largest sector weights.
<h3>
	Better In March</h3>
Last month, only three S&amp;P 500 sectors &mdash; energy, real estate and utilities &mdash; notched positive returns. Conversely, only two sectors in the S&amp;P MidCap 400 &mdash; materials and consumer discretionary &mdash; finished lower for the month, according to S&amp;P data. The same goes for the S&amp;P SmallCap 600, as only energy and telecommunications stocks in that index finished lower in March.
In March, investors pulled nearly $666 million from MDY and $81.4 million from IJR.
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Mid-cap stocks and the corresponding exchange traded funds are often overlooked in favor of large- and small-caps, but ample research and data points suggest investors should take closer looks at mid-cap equities and funds.
The SPDR S&amp;P MIDCAP 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>) is one of the oldest and largest mid-cap ETFs on the market. MDY, which debuted in 1995 and now has $19.21 billion in assets under management, tracks the widely followed S&amp;P MidCap 400 Index. MDY holds 400 stocks with a weighted average market capitalization of $5.77 billion.
&ldquo;Of the universe of 2,862 publicly listed US stocks, the chart below shows that 46 percent have market capitalizations between $1 billion and $12 billion &mdash; qualifying them as mid-caps,&rdquo; said State Street Global Advisors&nbsp;<a href="http://blog.spdrs.com/post/the-power-of-the-mighty-middle-3-advantages-of-mid-cap-stocks">in a recent note</a>. &ldquo;Investors who allocate only to large- and small-caps will lack pure beta exposure to the largest segment of U.S. firms.&rdquo;
<h3>
	An Important Presence</h3>
With mid-caps accounting for more than 46 percent of all public companies listed in the U.S., that means this market segment is 700 basis points more prominent than large-caps and has more than triple the listings of smaller stocks. Additionally, mid-caps historically outperform large-caps while delivering significantly less volatility than small-caps.
&ldquo;Mid-cap stocks, as represented by the S&amp;P MidCap 400 Index, have delivered higher annualized returns than their large- and small-cap peers over the past 20 years,&rdquo; said SSgA. &ldquo;What&rsquo;s more, these returns were achieved with reduced volatility relative to small caps. This has resulted in mid-cap stocks delivering the highest risk-adjusted returns over this period.&rdquo;
MDY devotes nearly 18 percent of its weight to both the technology and financial services sectors. None of the ETF&#39;s 400 holdings account for more than 0.75 percent of its weight.
<h3>
	Consistent Outperformance</h3>
Historical data suggest that when the S&amp;P 500 rises, mid-caps typically deliver better returns. Additionally, mid-caps perform better than large-caps when the S&amp;P 500 falters.
&quot;Since 1997, in months where the S&amp;P 500 Index posted a positive return, mid-caps have outperformed large-caps 64 percent of the time and small-caps 51 percent of time,&rdquo; said SSgA. &ldquo;Conversely, in months where the S&amp;P 500 declined, mid-caps outperformed small-caps 57 percent of the time. This highlights mid-caps&rsquo; ability to generate higher absolute returns while potentially reducing downside risk relative to small-caps.&rdquo;
Related Links:
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/02/11192525/short-considerations-with-corporate-bond-etfs#/null">Limiting Duration With Corporate Bond ETFs</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/02/11192602/another-electric-vehicle-etf-arrives">Another EV ETF Is Here</a>

Broadly speaking, exchange-traded funds have been on a torrid pace of asset gathering through the first quarter, but there have recently been some signs of departures from large-cap equity funds. Data suggest investors are also retreating from some popular mid-cap ETFs.
In terms of outflows, March has not been kind to the SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>) and the iShares Core S&amp;P Mid Cap ETF (NYSE: <a class="ticker" href="/stock/ijh#NYSE">IJH</a>). Both of those ETFs <a href="https://www.benzinga.com/trading-ideas/long-ideas/16/12/8848480/mid-cap-etfs-hit-by-departures">track the widely followed</a> S&amp;P MidCap 400 Index.
&ldquo;IJH has over $38 billion in assets under management, while MDY is the second largest Mid-Cap ETF behind it with $19.5 billion,&rdquo; said<a href="http://streetonefinancial.com/"> Street One Financial</a> Vice President Paul Weisbruch in a recent note. &ldquo;So while recent redemptions are certainly not gigantic in size, they&rsquo;re still&nbsp;notable nonetheless given the year-to-date underperformance MidCaps have displayed versus the Large-Cap S&amp;P 500 (trailing by nearly 300 basis points YTD).&rdquo;
<h3>Recent Investor Action</h3>
Since the start of March, investors have yanked almost $1.2 billion combined from IJH and MDY. With cyclical sectors in favor for much of this year, it is interesting that mid-cap ETFs such as IJH and MDY would be bleeding assets.
For example, IJH devotes over 18 percent of its weight to technology, one of this year&#39;s best-performing sectors. Additionally, cyclical financial services, industrial and consumer discretionary names combine for about 41 percent of the ETF&#39;s weight.
Some mid-cap ETFs are dodging the outflows trend. For example, the iShares S&amp;P Mid-Cap 400 Value ETF (NYSE: <a class="ticker" href="/stock/ijj#NYSE">IJJ</a>) has added nearly $53 million in new money this month. The $6.1 billion IJJ holds 286 and follows the S&amp;P MidCap 400 Value Index. IJJ allocates over 45 percent of its weight to financial services, technology and industrial stocks.
As has been the case with so many Vanguard ETFs this year, the Vanguard Mid-Cap ETF (NYSE: <a class="ticker" href="/stock/vo#NYSE">VO</a>) is packing on the assets. This month, investors have added $244.5 million to VO, bringing the ETF&#39;s year-to-date inflows total to over $1 billion. That is good for one of the best tallies among mid-cap ETFs.
VO only charges 0.08 percent per year, or just $8 on a $10,000 investment. That makes VO cheaper than 93 percent of competing funds, <a href="https://personal.vanguard.com/us/funds/snapshot?FundId=0939&amp;FundIntExt=INT">according to Vanguard data</a>.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/03/9136947/the-bull-markets-best-performing-mid-cap-etf">The Bull Market's Best-Performing Mid-Cap ETF</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/03/9177800/size-matters-with-small-caps-etfs">Size Matters With Small-Caps ETFs</a>

Mid-cap exchange-traded funds have been among this year&#39;s best-performing broad market ETFs. Broadly speaking, mid-cap ETFs have also been prolific asset gatherers, but that trend is changing as 2016 draws to a close.
<h3>DON And MDY</h3>
The WisdomTree MidCap Dividend Fund (ETF) (NYSE: <a class="ticker" href="/stock/don#NYSE">DON</a>) and the SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>) are up an average of 21.6 percent year-to-date, underscoring the strength of mid-cap stocks. As its name implies, MDY follows the S&amp;P MidCap 400. DON tracks the WisdomTree MidCap Dividend Index, which weights its holdings based on cash dividend projections for the coming year.
DON and MDY are two of the <a href="https://www.benzinga.com/trading-ideas/long-ideas/16/01/6119700/the-allure-of-mid-cap-dividends">most popular mid-cap ETFs</a>, but other funds in this category also hold billions in assets and it is some of those funds that are recently falling victim to outflows.
<h3>VO And IJJ</h3>
Investors have recently been departing the Vanguard Mid-Cap ETF (NYSE: <a class="ticker" href="/stock/vo#NYSE">VO</a>) and the iShares S&amp;P MidCap 400 Value Index (ETF) (NYSE: <a class="ticker" href="/stock/ijj#NYSE">IJJ</a>). IJJ is up nearly 28 percent this year, while VO is higher by 12.7 percent.
&ldquo;Specifically, we notice over $1.3 billion leaving <a href="http://etfdailynews.com/etf/SPY/">VO</a> (Vanguard Mid-Cap) and more than $1 billion flowing out of <a href="http://etfdailynews.com/etf/IJJ/">IJJ</a> (iShares Mid-Cap 400 Value). The two funds respectively have about $16.6 billion and $5.6 billion in assets under management,&rdquo; said <a href="http://streetonefinancial.com/">Street One Financial</a> Vice President Paul Weisbruch in a note out Wednesday.
Still, the recent outflows from big-name mid-cap ETFs like IJJ and VO do not put significant dents in the overall bullishness of 2016 mid-cap ETF flows.
<h3>Inflows And Outflows</h3>
&ldquo;So these larger inflows are worth noting, even if they are simply tax-related portfolio tilts or performance/end-of-quarter linked trading. Even with the latest outflows, VO has still had a more than respectable year in 2016 in terms of attracting net assets, with more than $2.2 billion in while IJJ has still managed to attain a net positive $700 million in during this time frame,&rdquo; added Weisbruch.
IJJ allocates over 21 percent of its weight to financial services stocks while industrial, technology and consumer discretionary names combine for over a third of the ETF&#39;s weight.
VO is a hit with investors in part to its low fee. With an annual expense ratio of just 0.08 percent, VO is less expensive than 93 percent of rival funds, <a href="https://personal.vanguard.com/us/funds/snapshot?FundId=0939&amp;FundIntExt=INT">according to Vanguard data</a>.

Depending on where one looks, performances for mid-cap exchange-traded funds this year range from solid to spectacular. The SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>) is solid with a year-to-date gain of 3.1 percent, although that trails the S&amp;P 500.
<h3>The Appeal Of Mid-Cap ETFs</h3>
The WisdomTree MidCap Dividend Fund (ETF) (NYSE: <a class="ticker" href="/stock/don#NYSE">DON</a>) qualifies as spectacular with a year-to-date of over 12 percent, or more than triple the returns offered by the S&amp;P 500. Despite those impressive performances, traders are not covering their short positions on mid-cap stocks nearly as rapidly as they are covering bearish bets on large caps.
&ldquo;Average short interest of the constituents of the iShares Russel Top 200 has declined by 25 percent from 1.7 percent to 1.3 percent as of latest count. Meanwhile average short interest of the relatively high constituents of the iShares Russel Mid Cap ETF (the next 800 largest companies by market cap) has declined by relatively less, falling 11 percent, from 4.6 percent to 4.1 percent,&rdquo; said Markit <a href="http://www.markit.com/Commentary/Get/15072016-Equities-Shorts-covering-continues-as-US-equities-surge">in a recent note</a>.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/07/8225469/value-is-working-here-too">Value Is Working Here, Too</a></bzrelatedlink>
The iShares ETF being referenced above is the $12.8 billion iShares Russell Midcap Index Fund (ETF) (NYSE: <a class="ticker" href="/stock/iwr#NYSE">IWR</a>). IWR is higher by 8.8 percent year-to-date.
<h3>Why So Shy?</h3>
&ldquo;Perhaps short sellers (on average) expect that large caps have more to run in order to &lsquo;catch up&rsquo; to the performance of midcaps or alternatively that the midcaps have scope to moderate lower,&rdquo; noted Markit.
Within the mid-cap universe, short sellers have targeted consumer discretionary and healthcare names. Those are IWR&#39;s second- and fifth-largest sectors, respectively, combining for over a quarter of the ETF&#39;s weight.
&ldquo;The &lsquo;most shorted&rsquo; stock across the midcaps currently is &lsquo;athleisure&rsquo; clothing retailer Under Armour Inc (NYSE: <a class="ticker" href="/stock/ua#NYSE">UA</a>) with 28.1 percent short interest which has surged higher by almost double since the beginning of April. Short interest has risen and shares have plummeted on <a href="http://www.reuters.com/article/us-underarmor-stock-idUSKCN0X82DD">slower growth concerns</a>,&rdquo; according to Markit.
Did you like this article? Could it have been improved? Please email <a href="mailto:feedback@benzinga.com">feedback@benzinga.com</a> with the story link to let us know!

Short Ideas

Shorts Still Clinging To Mid-Cap ETFs

The Russell 2000 and the S&amp;P SmallCap 600 Indexes are the benchmarks of benchmarks when it comes to smaller U.S. stocks. There are plenty of exchange-traded funds linked to those indexes, but for the purposes of this piece, we&#39;ll use the iShares Russell 2000 Index (ETF) (NYSE: <a class="ticker" href="/stock/iwm#NYSE">IWM</a>), the largest small-cap ETF, and the iShares S&amp;P SmallCap 600 Index (ETF) (NYSE: <a class="ticker" href="/stock/ijr#NYSE">IJR</a>).
As their names imply the Russell 2000 and the S&amp;P SmallCap 600 Indexes hold about 2,000 and 600 stocks, respectively. With such a wide discrepancy in the number of holdings it is reasonable to expect, particularly over longer holding periods, that these small-cap benchmarks will produce returns that are <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/06/8065444/maybe-some-goods-for-risk-appetite-small-caps-are-hot-ag">nowhere close to each other</a>.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/06/8096374/janus-unveils-big-thematic-etf-push">Janus Unveils Big Thematic ETF Push</a></bzrelatedlink>
To be precise, IWM currently holds 1,945 stocks while IJR is home to 600 small caps, <a href="https://www.ishares.com/us/products/239710/IWM?referrer=tickerSearch">according to iShares data</a>.
However, there are other differences investors should be aware of.
<h3>More Differences</h3>
&ldquo;Constituents in IWM but not in IJR include firms with market caps above the largest firms in IJR &mdash; in fact, IWM has 23 percent overlap with the SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>) &mdash; as well as firms smaller than the smallest in IJR, or what many might call microcaps. In the end, however, the weighted average market cap of stocks in IWM is only slightly larger than those in IJR, at $1.9 billion versus $1.5 billion, respectively,&rdquo; said <a href="http://altavista-research.com/">AltaVista Research</a> in a research note.
Based on the premise that larger stocks are historically less volatile than their smaller counterparts, it would be reasonable to expect that IWM, with more mid-cap exposure than IJR, would also be less volatile. However, perhaps by virtue of its micro-cap exposure, IWM has been 80 basis points more volatile than IJR over the past three years.
With such a big difference in number of holdings, it is also reasonable to expect some significant sector-level differences with IWM and IJR. For example, IWM&#39;s top three sector weights are financial services, technology and healthcare. In the small-cap world, healthcare often means biotech and that is a contributing factor to IWM&#39;s volatility. Those sectors combine for 55.1 percent of IWM&#39;s weight.
IJR&#39;s top three sectors weights, in order, are financials, industrials and technology. Those groups combine for about 57 percent of the ETF&#39;s lineup. Additionally, IJR&#39;s financial services and technology allocations are below those of IWM. Likewise, IJR&#39;s healthcare weight is 160 basis points below that of IWM.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/06/8065444/maybe-some-goods-for-risk-appetite-small-caps-are-hot-ag">Maybe Some Goods For Risk Appetite: Small Caps Are Hot Again</a></bzrelatedlink>
&ldquo;If size and sector allocations are similar, what accounts for such differences in performance? The answer is fundamentals. Whereas Russell&rsquo;s index methodology simply ranks all U.S. stocks by size and groups them into index buckets according to where they fall, S&amp;P index guidelines are more selective and subjective. For example, firms are supposed to have 4 trailing quarters of positive income in order to be considered for index inclusion (although the S&amp;P index committee sometimes ignores this),&rdquo; said AltaVista.

Big Differences Between Some Small-Cap ETFs

S&amp;P Dow Jones Indices <a href="http://www.prnewswire.com/news-releases/restoration-hardware-holdings-set-to-join-the-sp-midcap-400-300245859.html">announced</a> after Monday's market close that Restoration Hardware Holdings Inc (NYSE: <a class="ticker" href="/stock/rh#NYSE">RH</a>) will be added to the S&amp;P MidCap 400 index after Wednesday's market close.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/news/16/02/6696307/index-shuffling-privatebancorp-to-join-s-p-midcap-400-cogent-communications-to-jo">Index Shuffling: PrivateBancorp To Join S&amp;P MidCap 400, Cogent Communications To Join S&amp;P SmallCap 600</a></bzrelatedlink>
Restoration Hardware will replace Atmel Corporation (NASDAQ: <a class="ticker" href="/stock/atml#NASDAQ">ATML</a>) in the index, as Atmel's will be fully acquired by Microchip Technology Inc. (NASDAQ: <a class="ticker" href="/stock/mchp#NASDAQ">MCHP</a>) prior to Wednesday's scheduled index change.
Shares of Restoration Hardware were trading higher by nearly 3 percent early Tuesday morning.

ATML

MCHP

Rydex ETF Trust S&P Midcap 400 Pure Growth ETF

Restoration Hardware To Join S&P MidCap 400 Index

<img alt="global6packsupporttestjan19-675x304.jpg" height="304" src="https://www.benzinga.com/files/images/2016/January/21/global6packsupporttestjan19-675x304.jpg" width="675" />

	CLICK ON CHART TO ENLARGE

	Unless a person lives under a rock, you are well aware that stocks have got off to a rough start this year.

	Above is our Global 6-pack, which looks at key global markets, on a multi-year basis.

	Each has created a series of lower highs since mid last year.

	The global declines since May of last year has each of these testing 5-year rising channel support. The declines over the past 8-months, has taken these indices from &ldquo;channel resistance to support.&rdquo;

	Support is support until broken and key support tests are in play right now.

	These 5-year bull trends are still in play. Should support give way, we would be looking at a pattern we haven&rsquo;t seen in years.

	We humbly feel what markets do at rising support, could well impact portfolio construction for the next several months!

	This was originally shared on <a href="http://blog.kimblechartingsolutions.com/2016/01/5-year-global-support-channels-all-being-tested-now/">Kimble Charting Solutions</a>

Eurozone

Technicals

SPDR Dow Jones Industrial Average ETF Trust

5-Year Global Support Channels All Being Tested Now

As expected, S&amp;P 500 dividend growth slipped last year with a spate of payout cuts in the energy sector proving problematic. Energy is the seventh-largest sector weight in the S&amp;P 500.
&ldquo;Indicated dividend net increases (increases less decreases) rose $3.6 billion during the fourth quarter of 2015 for U.S. domestic common stocks, a massive deceleration from the $12.0 billion increase registered during the fourth quarter of 2014. In dollar terms, the decline equates to a 70.0 percent year-over-year slowdown in dividend increases. For the full year 2015, dividend net increases fell 29.4 percent to $38.7 billion compared to an increase of $54.8 billion for the corresponding period in 2014,&rdquo; said <a href="http://us.spindices.com/">S&amp;P Dow Jones Indices</a>.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/01/6101953/this-dividend-etf-looks-primed-for-a-solid-2016">This Dividend ETF Looks Primed For A Solid 2016</a></bzrelatedlink>
There are other troubling dividend data points. As S&amp;P Dow Jones Indices points out, the number of companies boosting payouts last year was 2,810, which sounds nice until acknowledging that was 15 percent lower the number of dividend raisers found in 2014. Last year, 504 issues decreased their dividend payments compared to 291 decreases in 2014, a 73.2 percent increase, according to S&amp;P Dow Jones Indices.
<h3>The Appeal Of Mid Caps</h3>
One group that looked good on the dividend front last year was mid caps, and if that trend continues, it could be good news for investors in exchange-traded funds such as the WisdomTree MidCap Dividend Fund (ETF) (NYSE: <a class="ticker" href="/stock/don#NYSE">DON</a>) and the SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>).
&ldquo;Howard Silverblatt, Senior Index Analyst at S&amp;P Dow Jones Indices found that 70.5 percent of the issues within the S&amp;P MidCap 400 pay a cash dividend, the same as in the third quarter, but up from the 68 percent which paid at the end of 2014.&nbsp; Within the S&amp;P SmallCap 600, 53.6 percent of the issues pay, down from the 53.9 percent which paid at the end of the third quarter, but up from 52.7 percent which paid a year ago,&rdquo; according to the index provider. 
<h3>MDY And DON</h3>
As its name implies, MDY follows the S&amp;P MidCap 400. DON tracks the WisdomTree MidCap Dividend Index, which weights its holdings based on cash dividend projections for the coming year. In the current environment, mid-cap ETFs have some advantages <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/01/6101953/this-dividend-etf-looks-primed-for-a-solid-2016">over their large-cap rivals</a>.
For example, MDY devotes just 3 percent of its weight to energy stocks, making that group the ETF&#39;s second-smallest sector allocation. Additionally, MDY is lightly allocated to interest rate-sensitive sectors, such as telecom and utilities. Conversely, the ETF features healthy allocations to cyclical sectors like financial services and technology that traditionally perform well when rates rise.
Notably, financials account for the <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/12/6076842/finding-dividend-growth-with-financial-services-etfs">largest percentage</a> of S&amp;P 500 dividends. MDY currently sports a trailing 12-month yield of 1.32 percent. 
For its part, DON is also lightly allocated to energy stocks, as six sectors command larger weights in the ETF than energy. DON currently sports a whopping 5.4 percent distribution yield, <a href="http://www.wisdomtree.com/etfs/fund-details.aspx?etfid=3#sector">according to WisdomTree data</a>.
The ETF holds over 400 stocks, including Coach Inc (NYSE: <a class="ticker" href="/stock/coh#NYSE">COH</a>), Mattel, Inc. (NASDAQ: <a class="ticker" href="/stock/mat#NASDAQ">MAT</a>) and Kohl&#39;s Corporation (NYSE: <a class="ticker" href="/stock/kss#NYSE">KSS</a>).
Image Credit: <a href="https://pixabay.com/en/money-dollar-currency-business-1038723/">Public Domain</a>

Dividends

Intraday Update

The Allure Of Mid-Cap Dividends

<img alt="" src="https://blog.kimblechartingsolutions.com/wp-content/uploads/2015/12/small-and-mic-cap-hanging-onto-support-dec-22-675x294.jpg" style="width: 420px; height: 183px;" />

	Mid-Cap 400 (MDY) and Russell Small Cap 2000 (RUT) remain inside of clean multi-year rising channels.

	Each has made a series of lower highs since the peaks this past summer.

	It has paid to buy each of these on rising support, will it be different this time?

	From a 30,000 foot view, the Power of the Patterns feels its important to hang onto support at (1) above!

	This was originally posted on <a href="https://blog.kimblechartingsolutions.com/2015/12/small-and-mid-caps-testing-multi-year-rising-support-again/">Kimble Charting Solutions</a>

Kimble: Small And Mid-Caps Testing Multi-Year Support, Again

One of the themes in the stock market this year has been the under-performance of small-cap stocks &ndash; and conversely, the out-performance of large-caps. Today&rsquo;s Chart Of The Day is a caricature of that theme as it involves a comparison between the very smallest stocks, micro-caps, and the very largest, mega-caps. Not surprisingly, the micro-caps have taken it on the chin this year relative to the mega-caps. In the past few days, however, the deterioration in micro-caps has accelerated, reaching a dubious milestone.

	As measured by the ratio between the iShares Russell Micro-Cap ETF (IWC) and the Rydex Russell Top 50 ETF (XLG), micro-caps are at a 3-year low and have broken their uptrend that has been in place since 2009.

	<img alt="" src="https://40.media.tumblr.com/995c4204a58fe4bc205556345ce24694/tumblr_inline_nzh1oaQjnJ1sq14jh_500.jpg" style="width: 600px; height: 396px;" /> 
	&ldquo;So what?&rdquo; you may say. &ldquo;Something always has to be leading and something else has to be lagging&rdquo; That is true. However, it is more bullish for the broad stock market when the smaller, more speculative issues are leading the way. When that is the case, it can be a sign of relative comfort and willingness to take on risk on the part of investors. Money will flow into stocks more readily under those circumstances.

	However, when the micro-caps are lagging and the largest, seemingly most secure stocks are leading the way, it can be a sign of apprehension by investors to take risk. Money is less likely to find its way into the stock market under those &ldquo;risk-off&rdquo; circumstances.

	Sure, we all know that these divergences can persist for some time. 2015 is a testament to that. Eventually, though, the small-cap weakness tends to leak into the broader market, including the large caps. The concern at this point is that the divergence has already persisted for some time. In fact, the micro-cap:mega-cap ratio topped back in March of 2014. So we are approaching 2 years of lagging small caps. At this point, the market segments that have thus far been able to avoid similar weakness are likely on borrowed time.

	So, does that mean go out and sell all of your strong-performing large-caps also? Not at all. In fact, the relative weakness in small-caps is due, naturally, in part to the healthy action in the large-caps. We are strong proponents of relative strength, i.e., buy what is going up. Therefore, if you are going to own stocks right now, the large-cap space continues to be a place that warrants an over-weight allocation.

	What about the strong seasonal pattern for small-caps? That is certainly a potential factor. As we noted in a few posts earlier this month, December has been exceedingly bullish for small-caps, particularly following an intra-month drawdown. Even if it wasn&rsquo;t a seasonally positive time of year, a mean-reversion bounce by the small-caps in some fashion would not be too surprising.

	However, we will go back to the topic of relative strength. What happens in the very short-term is highly unpredictable. However, concentrating on longer-term relative strength when allocating investments has worked best for us. Buying a stock in a long-term uptrend provides greater margin for error than trying to catch a falling knife. Even if you do not time your purchase ideally, you are swimming with the tide and are more likely to eventually see the position go your way.

	The trend is your friend, in other words. And the trend continues to be strongly in the favor of mega-caps and against micro-caps. And while there may be bouts of mean-reversion in the small-caps&rsquo; favor, a durable shift their way is unlikely at this time. On the contrary, given the recent relative breakdown, an acceleration of the current trend away from micro-caps may even be forthcoming.

	More from <a href="http://jlfmi.tumblr.com/About">Dana Lyons</a>, JLFMI and My401kPro.

	This was originally posted on <a href="http://jlfmi.tumblr.com/post/135360579925/slump-in-smallest-stocks-vs-biggest-stocks-is">Dana Lyons&#39; Tumblr</a>

Are Small Stocks Warning Of A Large Problem?

Exchange traded products listed in the United States, including exchange traded funds, added just $2.4 billion in new assets last month, according to ETF research firm <a href="http://etfgi.com/news/detail/newsid/600">ETGI</a>.&nbsp;

	Still, net U.S. ETF inflows through the first eight months of the year were $127.5 billion and the U.S. ETF industry is now home to $2.03 trillion in combined assets under management, underscoring not only the industry&#39;s rapid growth, but investors&#39; growing preference for passively managed products.

	It is something to think about the next time a pundit says &ldquo;It&#39;s a stock picker&#39;s market,&rdquo; advice that endorses active investing, but the reality is 2015 is shaping up to be another year of mediocre performance for active managers. Data from <a href="http://us.spindices.com/">S&amp;P Dow Jones Indices&#39;</a> newly released U.S.&nbsp;S&amp;P Indices Versus Active Funds (SPIVA&reg;) Scorecard confirm as much.

	For the 12 months ended July 31, nearly two-thirds of active large-cap managers failed to beat their benchmark, according to S&amp;P Dow Jones Indices. The good news, sort of, for active managers and the investors that stick with this methodology is that the 65.3 percent failure rate of large-cap managers for the year ended July 31 is better than five- and 10-year laggard rates of 81 percent and 80 percent, respectively.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5829553/proshares-adds-to-dividend-growth-lineup-with-europe-etf">ProShares Adds To Dividend Growth Lineup With Europe ETF</a>

	It is not a leap of faith to infer from that data that, most of the time, investors would be better with low-cost, passive index product, including index ETFs such as the SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>), iShares Russell 1000 ETF (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>) or the Vanguard Total Stock Market ETF (NYSE: <a class="ticker" href="/stock/vti#NYSE">VTI</a>). In the case of the Vanguard Total Stock Market ETF, that fund charges a scant 0.05 percent per year, or just $5 per $10,000 invested.

	Those thinking that inefficiencies found with small caps would lead to active management being the superior choice would be wrong. For the year ended July 31, 59 percent of active small-cap managers lagged the S&amp;P SmallCap 600. However, that is better than the five- and 10-year laggard rates, which averages 80 percent, according to S&amp;P data.

	&ldquo;It is commonly believed that active management works best in inefficient markets, such as small-cap or emerging markets. This argument is disputed by the findings of this SPIVA report. The majority of small-cap active managers consistently underperformed the benchmark in both the 10-year period and each rolling five-year period since 2002,&rdquo; said S&amp;P.

	The iShares Core S&amp;P Small-Cap ETF (NYSE: <a class="ticker" href="/stock/ijr#NYSE">IJR</a>), which charges just 0.12 percent per year, has returned nearly 92 percent over the past five years.

	To be fair to active managers, there are some areas of strength, namely in the mid-cap space. For the 12 months ended July 31, just 48.2 percent of active mid-cap managers failed to beat the S&amp;P MidCap 400 Index. But, and there&#39;s always a &ldquo;but,&rdquo; 78 percent of active managers failed to beat the S&amp;P MidCap 400 over five years and 87 percent failed to beat that benchmark over 10 years, according to S&amp;P data.

	Perhaps that is why the iShares Core S&amp;P Mid-Cap ETF (NYSE: <a class="ticker" href="/stock/ijh#NYSE">IJH</a>) and the SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>) have $40 billion in combined assets under management.

	&ldquo;With the exception of emerging market equity funds, funds invested in global, international, and international small-cap equity categories fared better or at par with their respective benchmarks over a one-year period,&rdquo; adds S&amp;P. &ldquo;Over the 10-year horizon, managers across all international equity categories were outperformed by their benchmarks.&rdquo;

	Though there are some standouts among actively managed bond funds, <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5764416/gundlachs-first-etf-is-a-smash-hit-tops-1-billion-in-assets">including some new ETFs</a>, fixed income is a veritable wasteland of slack performance by active managers. Over the past decade, 93 percent of managers running active long-term government bond funds lagged their benchmarks while just 7 percent of active junk bond managers beat their benchmarks, according to S&amp;P data.

Bonds

Active Management Mediocrity Continues

Kynikos Associates, managed by famed short seller Jim Chanos, recently filed its first quarter Form 13F disclosing its long equity positions as of March 31.

	Its portfolio, focused on financial stocks -- which account for 45 percent of its total value, lost about 24 percent in market value over the quarter, and is now valued at $212.7 million.

	This article will take a look at some of the most relevant moves and positions of the first quarter.
<h3>
	Top Five</h3>

	When looking at Kynikos&rsquo; top five holdings (in terms of market value), one thing quickly stands out: all of them are ETFs.&nbsp; Following a 50 percent increase in the fund&rsquo;s stake, the SPDR S&amp;P MidCap 400 ETF (NYSE: <a class="ticker" href="/stock/mdy#NYSE">MDY</a>) displaced Sunedison Inc (NYSE: <a class="ticker" href="/stock/sune#NYSE">SUNE</a>) from the front-runner spot. Worth more than $13 million, Chanos&rsquo; 47,154 shares of the ETF account for more than 6 percent of his total equity portfolio.

	The iShares Russell 2000 Index (ETF) (NYSE: <a class="ticker" href="/stock/iwm#NYSE">IWM</a>) came in second, after the firm almost tripled its exposure. As of March 31, it disclosed ownership of 104,930 shares, also worth more than $13 million.

	Third in line is the SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>), which saw Kynikos boost its wage by 29 percent, to 62,419 shares, worth $12.88 million &ndash; which also represent more than 6 percent of the total portfolio.

	The fourth spot in the fund&rsquo;s list was occupied by a newcomer: the DBX ETF Trust (NYSE: <a class="ticker" href="/stock/dbeu#NYSE">DBEU</a>). Between January and March, inclusive, the firm acquired 334,760 shares, worth almost $10 million.

	Last in the top five is the Consumer Discretionary SPDR (ETF) (NYSE: <a class="ticker" href="/stock/xly#NYSE">XLY</a>), which ascended a position despite a 22 percent decline in the Chanos&rsquo; stake. The fund now owns 116,839 shares, worth approximately $8.8 million.
<h3>
	Other Interesting Moves (Or, Reshuffling The Top Five)</h3>

	The aforementioned Sunedison, which was the most valuable stake in the previous quarter, fell to the seventh spot in the list, after Kynikos trimmed its involvement by 58 percent, to 322,741 shares.

	Another interesting newcomer was McDonald&#39;s Corporation (NYSE: <a class="ticker" href="/stock/mcd#NYSE">MCD</a>). The fund purchased 67,788 shares, worth more than $6.6 million, over the quarter.

	Valero Energy Corporation (NYSE: <a class="ticker" href="/stock/vlo#NYSE">VLO</a>) was the runner-up in last quarter&rsquo;s list. However, the 254,115 shares position was closed over the first quarter. &nbsp;Same was the case for iShares MSCI Emerging Markets Indx (ETF) (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>), third in last quarter&rsquo;s list, which saw Kynikos dispose of all of its 293,180 shares over the period.

	Finally, Morgan Stanley (NYSE: <a class="ticker" href="/stock/ms#NYSE">MS</a>), which held the fourth spot, was also sold out. The fund got rid of 296,676 shares, which accounted for more than 4 percent of last quarter&rsquo;s portfolio, over the first quarter.

Short Sellers

Hedge Funds

DBEU

SUNE

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