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Can 'Supply and Demand' Help You Be a Better Investor?

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The concept of ‘supply and demand’ should be easily understood by not just anyone who has taken an economics course, but every investor as well. Yet, while this idea makes plenty of sense and we can see it working in a number of aspects in our lives, it can be tough to find this strategy in the investing world.

Well, if you are curious on how to apply this technique in the world of stocks, you’ll definitely want to listen to this edition of the Dutram Report. In this episode, I speak with Ted Theodore, the Vice Chairman and CIO of TrimTabs for some insights on this topic, as well as his company’s Float Shrink ETF (TTAC).

This fund takes supply demand principles and uses them in a strategy called ‘float shrink’. The idea behind this approach is to look for companies that are shrinking the number of shares in the float (hence the name), and this is usually done by looking at firms that have buybacks which reduce the supply of shares out in the market. However, the folks at TrimTabs don’t just look at buybacks, and so Ted and I discuss some of the other keys to this approach as well, such as free cash flow.

We also briefly discuss some of the fund’s main competitors such as PKW and TTFS. The comparisons between TTFS and TTAC are especially interesting, largely because TrimTabs used to be manager for that product from AdvisorShares. We talk about some of the challenges in starting this process over, but note that a reduced expense ratio probably doesn’t hurt matters, and especially for investors interested in this ‘float shrink’ approach.

These topics and more are all discussed in the latest edition of the Dutram Report so make sure to check it out for additional information. And for more news and insights into the world of ETFs, make sure to be on the lookout for the next edition of the Dutram Report, and check out the numerous other great Zacks podcasts as well!

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