Firm’s first offering focuses on “under the radar” energy stocks
with market caps over $1 billion, low valuations relative to
expected free cash flow, and strong balance sheets
It is no secret that energy stocks are out of favor with
investors these days and have been for some time. The fossil fuel
divestment trend, spurred by a now in-retreat ESG movement;
investors’ negative experiences during the waning days of the
“Shale Era” and COVID; and the yawning valuation gap between large-
and small-cap equities spurred by massive allocations to passive
investment approaches have all combined to leave a large swath of
the energy equity universe dramatically undervalued when compared
to their earnings potential. Where these trends persist,
opportunities exist; but noting opportunity and acting upon it
properly are two very different things.
For Octane Investments, this is just the sort of confluence of
factors for which their value-driven investment approach was
created; and today the firm is marking the launch of their first
investment vehicle: the Octane All-Cap Value Energy ETF (OCTA).
OCTA, which is listed on the Nasdaq with a competitive net
expense ratio of 0.30%*, is a high-conviction actively managed
ETF.
The approach underpinning the fund is built on Octane’s
proprietary investment “decision tree” which in this case starts
with the universe of energy stocks trading on U.S. exchanges
(removing companies with a market cap below $1 billion as well as
any Emerging Markets and/or tar sands companies) and uses a series
of questions – including “does this company have high free cash
flow?”; “does this company have a strong balance sheet?”; and “does
this company have a consistent history of returning cash to
shareholders?” – to arrive at a portfolio of ~30 stocks with low
P/E ratios and the potential for strong total returns.
“The world needs traditional energy, yet the exposure that most
investors have to the category is at historically low levels,” said
David Allen, CFA, Managing Director at Octane Investments. “But the
solution is not simply to allocate more to the biggest and broadest
energy funds on the market as doing so only means investors will
continue to miss out on the potential growth and yield to be found
when taking a more robust, systematic approach to allocating to the
sector.”
Allen added that there are a number of use cases he and his
colleagues have identified for OCTA, including as a means to
increase energy exposure in a diversified equity portfolio, to
balance the large-cap-centric tilt of the most widely used energy
ETFs on the market, and as a hedge against persistent
inflation.
“Our active value approach is uniquely suited to the specific
challenges and opportunities inherent in investing in the energy
sector, particularly when viewed through the lens of today’s
distorted markets. We are very pleased to be pulling back the
curtain on the Octane philosophy and to be launching our first ETF
in OCTA,” he added.
For more information on Octane Investments and OCTA, please
visit https://octane.nyc/octa/.
About Octane
Octane Investments, Inc. is a privately held company founded in
2023 to invest in traditional energy companies. The founder, David
Allen, CFA, is the Chair of the Board of Directors at the CFA
Society of New York. David earned his undergraduate degree in
Economics from the University of Pennsylvania and completed the
Value Investing curriculum at Columbia University’s executive
education program.
* Gross expense ratio of 0.60%. The Adviser has agreed to reduce
its unitary management fee to 0.30% of the Fund’s average daily net
assets through at least October 31, 2025. This agreement may be
terminated only by, or with the consent of, the Board of Trustees
(the “Board”) of Tidal Trust II (the “Trust”), on behalf of the
Fund, upon sixty (60) days’ written notice to the Adviser. This
Agreement may not be terminated by the Adviser without the consent
of the Board. The fee waiver is not subject to recoupment.
Important Information
Investors should consider the investment objectives, risks,
charges and expenses carefully before investing. For a prospectus
or summary prospectus with this and other information about the
Fund, please call (855) 574-5749 or visit our website at
https://octane.nyc/octa/. Read the prospectus or summary
prospectus carefully before investing.
Investments involve risk. Principal loss is possible.
Redemptions are limited and often commissions are charged on each
trade. Unlike mutual funds, ETFs may trade at a premium or discount
to their net asset value.
Equity Market Risk. Common stocks are generally exposed
to greater risk than other types of securities, such as preferred
stock and debt obligations, because common stockholders generally
have inferior rights to receive payment from specific issuers. The
equity securities held in the Fund’s portfolio may experience
sudden, unpredictable drops in value or long periods of decline in
value.
Energy Sector Risks: The market value of energy sector
investments can fall due to factors like fluctuating energy prices,
geopolitical events, stricter regulations, resource depletion, and
environmental accidents. Market volatility is also influenced by
large producers and buyers, and companies in this sector may incur
high costs and debts for resource expansion.
Oil and Gas Sector Risks: Companies in the oil and gas
sector are influenced by global energy prices, exploration and
production costs, and are prone to environmental and legal risks.
Ð'dValue Investing Risk. The value approach to investing involves
the risk that stocks may remain undervalued. Value stocks may
underperform the overall equity market if they remain out of favor
in the market or are not undervalued in the market.
Concentration Risk. The Fund’s investments will be
concentrated in energy-related industries. As a result, the value
of Shares may rise and fall more than the value of shares that
invest in securities of companies in a broader range of
industries.
Foreign Securities Risk. Investments in securities of
non-U.S. issuers involve certain risks not involved in domestic
investments and may experience more rapid and extreme changes in
value than investments in securities of U.S. companies. Financial
markets in foreign countries often are not as developed, efficient,
or liquid as financial markets in the United States, and therefore,
the prices of non-U.S. securities and instruments can be more
volatile.
New Fund Risk. The Fund is a recently organized
management investment company with no operating history. As a
result, prospective investors do not have a track record or history
on which to base their investment decisions
Distributed by Foreside Fund Services, LLC
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version on businesswire.com: https://www.businesswire.com/news/home/20240801130172/en/
Press contact: Chris Sullivan Craft & Capital
chris@craftandcapital.com
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