The Qraft AI-Enhanced US Large Cap Momentum ETF AMOM, an exchange-traded fund driven by artificial intelligence, has acquired stakes in PayPal Holdings Inc. PYPL, Intel Corp. INTC and Moderna Inc. MRNA, while entirely divesting its holdings in Amazon.com Inc. AMZN and major retailers including Home Depot Inc. HD.
What Happened: The ETF’s latest portfolio after rebalancing in early November showed that apart from e-commerce giant Amazon and home improvement retailer Home Depot, it has entirely divested its holdings in retailers Lowe’s Companies Inc. LOW and Target Corp. TGT as well as consumer products giant Colgate-Palmolive Company CL.
The ETF, which has assets under management of $29.3 million, has a history of accurately predicting the price movements of Tesla Inc. TSLA shares.
The fund now has PayPal as its largest investment with a 7.7% weighting, followed by chipmaker Intel with a weighting of 6.3% and biotechnology firm Moderna with 4.7% weighting.
The other two stocks that make up the top five holdings in the AMOM portfolio are technology company International Business Machines Corp. IBM with a 4.0% weighting and oil giant ConocoPhillips COP with 3.5%.
Prior to the rebalancing, the ETF had Amazon, Home Depot, Lowe’s, Target and Colgate-Palmolive as its five largest stock holdings.
The ETF also revealed it recorded a profit of more than 195% after selling the stock of car rental firm Avis Budget Group Inc. CAR following a one-month holding period when the stock was the fund’s sixth largest holding.
Shares of Avis Budget skyrocketed more than 200% on Nov. 2 after the company posted blowout earnings results for the third quarter that may have also caused a potential short squeeze in its shares.
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Why It Matters: AMOM, a product of South Korea-based fintech group Qraft, tracks 50 large-cap U.S. stocks and reweighs its holdings each month. The fund uses artificial intelligence technology to automatically search for patterns that have the potential to produce excess returns and construct actively managed portfolios.
AMOM has delivered year-to-date returns of 17.98%, compared to its benchmark — the Invesco S&P 500 Momentum ETF SPMO – which has returned 22.95% so far this year.
The fund’s latest rebalancing shows it is now bullish on PayPal, Intel and Moderna.
PayPal is seen as benefiting from the rising adoption of digital payments due to the pandemic and its expansion into the ‘Buy Now Pay Later’ sector. The company reported weaker-than-expected revenue for the third quarter last week and also issued guidance below estimates.
In early November, Moderna reported weaker-than-expected results for the third quarter and lowered the full-year sales forecast for its COVID-19 vaccine. Nevertheless, the biotechnology company is expected to benefit from vaccine demand in low-income countries.
Price Action: AMOM shares closed 0.7% higher in Friday’s regular trading session at $38.00
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