Monthly Commentary - Are We Next?

September 30, 2022

The Leatherback Long/Short Alternative Yield ETF (LBAY) (the “Fund”) net asset value (NAV) declined by 0.64% in August, compared to a decline of 4.08% for the S&P 500 Index. LBAY paid our twenty-first consecutive monthly distribution, at $0.07028 per share in August. This is a 2.53% SEC yield versus the S&P 500 Index dividend yield of approximately 1.65%, and the 10-Year US Treasury yield of 3.195%. Year to date as of August 31, 2022, NAV for the Fund has returned 12.58%, compared to a decline of 16.14% for the S&P 500 Index. NAV performance for the Fund to date since inception (November 16, 2020) has produced a 43.80% cumulative total return and a 22.51% annualized total return.

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Performance current to the most recent month-end can be obtained by calling (833) 417-0090. The gross expense ratio for the fund is 1.43%.

View LBAY standardized performance here.

The Fund’s NAV is the sum of all its assets less any liabilities, divided by the number of shares outstanding. The market price is the most recent price at which the Fund was traded.




We are unable to help ourselves but join in and examine what may be happening with our friends overseas. Is there a potential looming crisis in Europe about to unfold with the winter months fast approaching? The media and discussions are all being framed, and so the new “narrative” is that energy (read the power to heat homes) will be so expensive and in such limited supply that people may have to make life and purchasing decisions they never dreamed of before, under the risk of freezing. Some are suggesting that firewood will be the hot commodity.

Would the cause be due to tensions in the region, underinvestment in the energy sector, an underappreciation of the unintended consequences of policy decisions made in the name of ESG (Environmental, Social, and Governance), or a combination of all these factors? More important than the cause of this possible predicament, in our view, is not why; but if it will turn out to be as bad as feared. We are all about to find out in short order.


We wonder how it will look if consumers across Europe are forced to drain the bulk of their spend dollars (or even credit) on quality-of-life bills, in the form of paying for survival needs.

"This is no longer tenable for many families and companies3.” – Tinne Van der Straeten, Belgium Energy Minister

We have a feeling the hypothetical near future grinding toward the region could be a preview of what the next year could look like in America. The potential draw-down of income, savings, or credit required to finance these expenses may be a window we are already starting to peer through here in the U.S. We have talked about consumer budgets, the inflationary bite, and credit in many of our past insights, and specifically in May called out the discomfort many Americans are feeling when faced with seeing red numbers when opening monthly statements.   In early September, the Federal Reserve released the household change in net worth, and it wasn’t pretty. The change was the highest on record and declined by $6.1 Trillion! Going back to last month’s insight, we really must question whether a soft landing is in sight. The spending required to fuel this hopeful growth may not sustain, especially when a net worth reading like this could foreshadow sentiment that could shift on a dime.


As we are writing this, we find ourselves in the midst of what feels like a very important crossover event. We have discussed the concept in several of our past commentaries, but this may be a poignant time for many as we believe the market pricing mechanism is finally back in play. We have written at length in our past pieces about Central Bank liquidity, and what felt like a beta*-driven market for over the past decade or so.

We think it is likely that a considerable number of current investors and market participants haven’t witnessed a true rising-interest rate environment, higher interest rates in general, or even considered what a bear market could look like. One could argue it has been since the global financial crisis era when any of the three have manifested. We believe there are elevated levels of doubt and fear that are shaping the views of formerly risk-taking market participants. We are not surprised by the market distortions and suppose it will be a lengthy process to sort out. We think this is what will present the next opportunity set and are optimistic it will bode well for our long/short strategy. There is a sense that investors are desperately trying to work through, what is in the end, true price discovery.

We hope our investor partners enjoy our monthly perspectives, and we look forward to continuing our dialogue in the weeks and months ahead.

The skyrocketing electricity prices are now exposing the limitations of our current electricity market design,…” - Ursula von der Leyen, European Commission President

*Definitions: Beta is the percent change in the price of the security given a 1% change in the market index.

1 The S&P 500 Index includes 500 leading companies and covers approximately 80% of the available market capitalization. The S&P 500 Dividend Yield is the estimated sum of all dividends paid by the index’s stocks in the last 12 months, divided by the index market capitalization as reported by the S&P. The dividend yield does not represent or predict the performance of the Fund. Indexes are unmanaged and it is not possible to invest in an index.

2 The 30-day SEC yield is calculated from the 30 days ending on the last day of the previous month. This figure approximates the yield an investor would receive in a year, assuming that each bond in the portfolio is held until maturity. View the 30 day SEC yield here.

3Source:, Aug 29, 2022

4Ursula von der Leyen quote Source:, Aug 29, 2022

Opinions expressed are subject to change at any time, are not guaranteed, and should not be considered investment advice.