Barstool Sports founder turned day-trader Dave Portnoy has a new investment to promote—an ETF, of which he’ll get a cut for every investor’s dollar.
Portnoy announced a new ETF focused on stocks with high levels of social media engagement, nicknamed BUZZ, to begin trading Thursday. The ETF, formally named the VanEck Social Sentiment ETF, will trade under the ticker BUZZ. The fund uses algorithms to track social media and news, buying the top 75 large cap stocks viewed as being discussed ‘most favorably’ by the algorithm. The announcement of the social media focused investment fund came suitably enough, on Portnoy’s Twitter feed. “A new ETF that I am a part of, I am putting my face behind, my reputation behind,” he said in the announcement.
Portnoy is part-owner and a director of the business, Buzz Holdings ULC, that licenses the strategy to VanEck. “He represents the Index and has no affiliation with VanEck. He does not provide investment advice on behalf of VanEck. There is no affiliation with VanEck and Barstool Sports,” VanEck said in an emailed statement.
Portnoy’s two partners in Buzz Holdings are Jamie Wise and Michael Kimel, according to a filing with British Columbia, Canada, where Buzz is registered. Wise is founder of Periscope Capital, an arbitrage hedge fund, meaning it uses long and short-selling approaches among other methods to stay market neutral. Kimel is owner of Toronto’s Overwatch franchise and co-founder of Chase Hospitality Group. He also is reportedly a minority owner of the Pittsburgh Penguins, although that information couldn’t be immediately confirmed. Kimel is a scion of a wealthy Ontario family and considered one of Toronto’s 50 most influential people, according to a regional magazine.
The index buys U.S. large cap stocks that have the “highest degree of positive investor sentiment and bullish perception based on content aggregated from online sources including social media, news articles, blog posts and other alternative datasets,” according to a press release on the fund, provided by VanEck. The strategy uses natural language processing, a form of Artificial Intelligence, to determine if chatter on a stock is positive or negative. The fund is then rebalanced monthly.
People who license indexes or strategies to ETFs, like Portnoy, typically receive a percentage of the assets under management an ETF compiles, so it’s in Portnoy’s interest to publicize the fund. Three hours after his video announcement, the Twitter post had 655,000 views. The VanEck ETF’s prospectus isn’t official yet and it doesn’t yet disclose the fees paid to Portnoy and Buzz Holdings. Generally speaking, an ETF with $150 million in assets, the level where an ETF is considered viable, would spin off about $150,000 in licensing fees, although fees can vary widely.
The Barstool Sports founder became well known for turning to day-trading during the pandemic, often pumping shares of Penn National Gaming, which owns a minority interest in Barstool. Portnoy is the face of an aggressive retail trading style that upends typical Wall Street dynamics, as seen in the recent short squeeze in GameStop shares. The rough-and-tumble style of social media-driven day-traders like Portnoy can be excessive—hedge fund billionaire and Mets owner Steve Cohen left Twitter in January after receiving personal threats stemming from an online conversation he had with Portnoy around GameStop.