The Leatherback Long/Short Alternative Yield ETF (LBAY) (the “Fund”) net asset value (NAV) increased by 7.44% in the first quarter of 2025, compared to a decline of 4.27% for the S&P 500 Index. LBAY NAV decreased by 4.04% in April, compared to a decline of 0.68% for the S&P 500 Index. LBAY paid our fifty-third consecutive monthly distribution, at $0.076 per share in April. This is a 2.49% SEC yield versus the S&P 500 Index dividend yield of approximately 1.37%, and the 10-Year US Treasury yield of 4.163%*. NAV performance for the Fund to date since inception (November 16, 2020) has produced a 42.43% cumulative total return and an 8.27% 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 1.27%.
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.
*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. The 30-day SEC yield is calculated with a standardized formula mandated by the SEC. The formula is based on maximum offering price per share and does not reflect waivers in effect. The 30-day SEC yield is calculated from the 30 days ending on the last day of the previous month. This figure reflects income less expenses and approximates the yield an investor would receive in a 12-month period if a fund continues earning the same rate for the rest of the year. View the 30-day SEC yield here. The US Treasury yield reflects the interest rate the US government could expect to pay to borrow money for different periods of time.
MARKET PARTICIPANTS LOST AT SEA
After declining 4.27% in the first quarter, the S&P 500 Index1 whipsawed materially during the month of April. “Liberation Day” on April 2 marked the day President Donald Trump unveiled a sweeping tariff plan that initially brought the S&P 500 down 12% from April 2 to April 8. On April 9, President Trump announced a 90-day pause on most reciprocal tariffs, causing the S&P 500 to soar 9.5% in a single day. Subsequently, the market has recovered all its losses on the year. In April the S&P 500, which had been down over 11% intra-month, declined just 0.68%, while the NASDAQ Composite Index3 finished up 0.88%. Positive headline news on the China trade front along with better than feared April Consumer Price Index (CPI) readings have driven the market up over 19% from its April lows. Notably, this has coincided with a collapse in the CBOE Volatility Index (VIX)4, which fell from over 50 on April 8 to 17 in mid-May.
Meanwhile, investment bank strategists and economists seem to flip flop their recession and market direction calls on a daily or weekly basis on every Trump pivot. The year 2025 has not yet reached the halfway mark, and market moving headlines seem to happen regularly. In our opinion, the fluid narratives will remain for the near to medium term. We caution investors about knee jerk reaction to headlines. Given the environment, we are finding what we think are ample opportunities long and short.
EARNINGS PULLED FORWARD
Importantly, during the first quarter the S&P 500 delivered better than expected blended year-over-year earnings growth of approximately 13.6%5. Many companies reported a first quarter pull-forward of revenues and earnings due to anticipated upcoming tariffs and export policy changes. Notably, US 1st quarter GDP figures showed imports surged an annualized 41.3%6. Many company management teams attributed strong results to a pull forward in demand.
“The industry undoubtedly benefited from some pull-ahead demand from customers purchasing vehicles ahead of potential tariffs, particularly in March…”7 - Paul Jacobson, CFO of General Motors Company (GM)
“First quarter exceeded our expectations, driven in part by some pull-forward of activity from Q2 into Q1. Later in the quarter, shifts in trade dynamics, including tariff and regulatory uncertainty, prompted some farmers and consumers to act ahead of potential changes.”8 - Gregory Heckman, CEO of Bunge Global SA (BG)
As we approach the summer months, investors must decide if the earnings trajectory will continue or if the impacts of tariffs and higher interest rates might impact demand. Given the importance of the US consumer to the demand equation, we find recent data on consumer sentiment and inflation expectations concerning. According to a recent preliminary University of Michigan survey, year ahead inflation expectations rose to 7.3% in May up from 6.5% last month9. Yields on longer-term treasury bonds pierced 5% and mortgage rates have ticked higher as well. The US consumer credit data has weakened recently as shown in the credit card delinquency data chart below10.
In our opinion, fundamentals will likely drive the next leg up or down in the overall equity market. Will earnings respond favorably to Trump’s tax bill? How will the consumer hold up?
“My own view is where people feel pretty good because you haven’t seen an effect of tariffs. The market came down 10%, back up 10%; I think that’s an extraordinary amount of complacency” – Jamie Dimon, JPMorgan May 19 Investor Day
“Usually in recessions, the forward P/E of the S&P 500 falls into the single digits. It hasn’t done so this time because the stock market isn’t pricing in a recession. Neither are industry analysts, according to their latest EPS estimates. During the previous bear market, the forward P/E bottomed at 15.1 on October 22, 2022. That too was a relatively high P/E and occurred because the most widely anticipated recession of all times was a no-show. History may already be repeating itself in the performance of the stock market and the economy so far this year.”11** – Yardeni Research
Investors must decide what multiple to put on the market. While we are uncertain about whether or not the economy will fall into a recession, we think it is possible. We think 2025 is an ideal setup for long/short strategies. We encourage investors to focus on individual stocks.
PORTFOLIO REVIEW12**
We recently added to our long position in Vail Resorts, Inc. (MTN) on the back of recent weakness caused by poor snow conditions and a disruptive 13-day labor strike in Park City this past winter. We view MTN as an asset rich company undergoing temporary, fixable issues. MTN owns and operates a global network of 42 owned and operated ski resorts with over 2 million pass holders. It’s portfolio of destination resorts includes five of the top ten North American ski resorts as ranked by skier visits with Vail, Beaver Creek, Whistler Blackcomb, Breckenridge, Park City and Keystone all owned and operated by MTN. Additionally, MTN owns leading regional mountain resorts in the northeastern US, Tahoe, the Midwest, Mid-Atlantic, Australia and Switzerland. These assets are irreplaceable as demonstrated by the fact that no new ski resort of scale has been built in the last forty years!13 Presently, MTN stock trades for $146 per share with a market capitalization (market cap) of $5.5B and an enterprise value (EV) of $8.3B. The company hasn’t traded at this valuation since 2017. The company’s low end of its guidance range for fiscal 2025 calls for $854mn in EBITDA13, which at today’s share price levels equates to an approximately 9.7x EV/EBITDA multiple, a valuation level not seen in over a decade. Additionally, the company has been repurchasing shares13 and increasing its dividend and presently maintains what we think is a highly attractive 6% dividend yield.
We added to our position in Phillips 66 (PSX) on weakness in April. PSX is currently a $45B market cap and maintains an over 4% dividend yield. PSX was created when ConocoPhillips spun off its downstream assets in 2012 into Phillips 66. In 2023, an activist investor Elliott Management began pushing for change. At PSX’s May 21, 2025, annual meeting, investors voted to add two of Elliott’s four candidates to the Board of PSX. We view this development as positive as we believe the conglomerate structure at PSX has complicated the value of the company. We expect PSX to move forward with at least some of Elliott’s proposed divestitures and capital allocations ideas, and we think there could be material upside from today’s valuation.
On the short side, we have what we think are many richly valued consumer-related shorts with tariff exposure. We believe several of these companies could disappoint in the latter half of the year. The mid-to-low end consumer appears to be tapped out, in our opinion, which could lead to material downside in names such as SharkNinja, Inc. (SN) and Williams-Sonoma, Inc. (WSM).
View LBAY top 10 holdings here. Holdings are subject to change. Characteristics and metrics of the companies shown are for the underlying securities in the fund’s portfolio and do not represent or predict the performance of the fund. There is no guarantee that a company will pay or continually increase its dividend.
FINAL THOUGHTS
We hope our investor partners enjoy our monthly perspectives. We are finding many compelling ideas both long and short and we look forward to continuing our dialogue in the weeks and months ahead.
