Behind the Ticker

In this episode of Behind the Ticker, host Brad Roth speaks with Kirk McDonald, Portfolio Manager at Argent Capital Management, about his unique path from Air Force pilot to managing the Argent MidCap ETF (ticker: AMID). McDonald shares how his firm’s mission to deliver both strong investment performance and top-tier client service inspired their move into the ETF space. With a deep-rooted philosophy focused on “enduring businesses,” Argent seeks companies with consistent cash flow growth, durable competitive advantages, and strong capital allocation by management. Kirk dives into the construction of AMID, which holds a concentrated portfolio of 40–50 midcap names with low turnover—around 20% annually. What differentiates Argent’s approach is the integration of both quantitative modeling and fundamental research, a methodology McDonald calls “quantamental.” This framework is built on 25 fundamental factors that guide stock selection, continually refined to ensure alignment with their long-term investing philosophy. Kirk shares a memorable analogy comparing portfolio candidates to pigs at a trough—emphasizing the constant drive to prioritize younger, hungrier contenders that can generate future outperformance. McDonald also breaks down key portfolio holdings, including Copart and Fortinet, and explains how AMID performs across different market cycles. While the strategy may lag during market regime shifts, it tends to outperform once trends stabilize. He stresses the importance of risk management, drawing from his aviation background to describe a systematic process embedded throughout the stock selection lifecycle. Finally, McDonald explains how AMID fits into broader client portfolios, describing midcap stocks as a “forgotten” asset class underrepresented in most investor allocations despite historically delivering strong returns. He also previews Argent’s growing ETF lineup, which now includes large cap and small cap offerings and will eventually expand to cover SMID and high-yield strategies.

In this episode of Behind the Ticker, Brad Roth sits down with Rob Thummel, Senior Portfolio Manager at Tortoise Capital Advisors, to dive into the firm’s active ETF, the Tortoise Essential Energy Fund (Ticker: TPZ). Rob shares his decades-long journey in the energy sector—from working in gas stations and oilfields as a teenager to helping lead one of the most focused energy investment firms in the country. Tortoise Capital is devoted entirely to energy, aiming to deliver superior risk-adjusted returns by investing across the full spectrum of the sector, including infrastructure, utilities, and renewables—not just traditional oil and gas producers. TPZ, which recently transitioned from a closed-end fund to an active ETF, offers investors a dynamic approach to the evolving energy landscape. Rob explains how the fund is positioned to capture opportunities stemming from electrification and increased U.S. energy exports, with particular focus on natural gas and liquid infrastructure. He emphasizes that energy is no longer just about oil—natural gas and electricity are central to powering data centers and AI advancements, and TPZ is designed to align with that megatrend. The portfolio maintains an active share of 86%, reflecting its substantial divergence from traditional benchmarks like the S&P Energy Index or ETFs like XLE. TPZ typically holds 80-90% in equities and 10-20% in fixed income, with additional option overlays to generate income and reduce volatility. Rob describes the fund’s hybrid approach—combining top-down macro analysis with bottom-up fundamental research—to find undervalued names with strong cash flows and management quality. With a current dividend yield of about 5% and one-year performance exceeding 40%, TPZ has outpaced many passive energy benchmarks by leaning into secular shifts and tactically avoiding cyclical pitfalls. Rob positions TPZ as a core energy allocation for diversified portfolios, not just for total return potential, but for its robust income stream and long-term exposure to the energy-AI convergence.

In a recent episode of Behind the Ticker, Bob Elliott, co-founder and Chief Investment Officer of Unlimited, discussed the firm’s mission to democratize hedge fund strategies through innovative ETF structures. Drawing on his experience managing strategies at Bridgewater Associates and running a $125 million venture capital fund, Elliott launched Unlimited to address what he sees as fundamental inefficiencies in traditional hedge funds—high fees, limited access, and tax-inefficient vehicles. Unlimited’s approach uses proprietary technology to replicate hedge fund strategies at lower costs, inside liquid, tax-efficient ETFs. The firm’s latest offering, the Unlimited HFGM ETF (ticker: HFGM), seeks to replicate the returns of global macro hedge funds, offering a 2x exposure to the strategy at just 95 basis points. Elliott explained that global macro is one of the most attractive and diversifying hedge fund styles due to its flexibility across asset classes—currencies, commodities, rates, equities—and its historically low correlation to traditional 60/40 portfolios. By leveraging a machine learning-driven process, HFGM infers the positioning of roughly 500 macro hedge fund managers in near real-time, using public market data and return streams to replicate their exposures. Elliott emphasized that HFGM is fully systematic, with daily updates to inferred manager positioning and weekly average rebalancing. The ETF primarily uses futures contracts for efficiency, allowing both long and short exposure across global macro markets while benefiting from tax-friendly ETF structuring. Elliott stressed that the firm avoids “black box” opacity by grounding its machine learning in intuitive, transparent modeling—essentially scaling the same logic any investor might use to reverse-engineer a manager’s trades, but with far greater accuracy and breadth. He positioned HFGM and Unlimited’s broader ETF suite as part of a shift in portfolio construction—from the old 60/40 model to a more modern 50/30/20 framework, where 20% is allocated to alternatives, including both liquid and illiquid strategies. HFGM, with its manager-diversified exposure, ease of execution, and lack of paperwork or K-1s, offers a compelling way for advisors and institutions to gain hedge fund-like exposure without the drawbacks of traditional LP structures.

In a recent episode of Behind the Ticker, Brad Neuman, Director of Market Strategy and Portfolio Manager at Alger, joined the show to discuss the firm’s rich history in growth investing and the launch of their latest ETF: Alger Russell Innovation ETF (ticker: INVN). Neuman, who has a 25-year investment background spanning bottom-up and top-down roles on both the buy and sell sides, explained how Alger’s philosophy of “positive dynamic change”—a principle rooted in identifying growth opportunities amid market disruption—has remained consistent since the firm’s founding in 1964. Neuman described Alger’s long-standing emphasis on change as the foundation for identifying outperforming businesses. This philosophy is implemented through deep, fundamental research conducted by a seasoned analyst team that conducts proprietary field work—speaking directly with customers, competitors, and suppliers. While most of Alger’s strategies have been actively managed and bottom-up, INVN marks a shift toward a more systematic, top-down process designed to isolate innovation as an investable factor. The INVN ETF seeks to directly invest in innovation by identifying companies with strong R&D investment that is underappreciated by the market. Starting with the Russell 1000, Alger removes the bottom third of companies ranked by free cash flow margin to avoid early-stage or inefficient businesses. From the remaining universe, they select the top 50 companies based on R&D-to-enterprise value. The result is an equally weighted portfolio reconstituted quarterly to maintain exposure to what Neuman calls “HIPP” stocks—Highly Innovative, but Prudently Priced. This approach avoids overlap with typical growth benchmarks and excludes megacap names like Apple, whose R&D may be large in absolute terms but not relative to their vast market caps. Neuman positioned INVN as a mid-cap core exposure that can serve as a replacement for traditional passive or active mid-cap strategies, while solving for issues like overconcentration in large-cap tech and inflated market valuations. With low turnover, high active share, and a valuation profile significantly below traditional growth indices, INVN provides a unique, quant-driven solution for investors looking to allocate directly to innovation.

In a recent episode of Behind the Ticker, Wayne Penello, founder of NextGen EMP, shared the fascinating journey that led him to launch the NextGen Efficient Market Portfolio Plus ETF (ticker: EMPB). With over 40 years of experience as a commodity trader—including a decade on the floor of the New York Mercantile Exchange and years advising global trading firms—Penello developed a deep understanding of risk management. He later patented the Performance Risk Management System, which earned his clients over $13 billion in hedging profits and was detailed in his book, Risk as an Asset. After selling his firm, Penello turned his attention to equities, frustrated by the industry’s overreliance on diversification and lack of active risk management, ultimately leading to the creation of EMPB. EMPB is a long/short equity ETF designed to actively manage systemic market risk using a proprietary, statistically driven methodology Penello describes as a “foggy ball”—an imperfect but highly effective algorithm that identifies the weakest sectors (“nags of the market”) and shorts them to dampen volatility. Rather than attempting to predict market direction or time the best 90 days, the fund focuses on avoiding the worst periods, which historically have the most destructive impact on long-term performance. The ETF holds about 16 sector or thematic ETFs, balancing long and short exposures to achieve a Sharpe ratio above 2, with the aim of consistently outperforming the S&P 500 while maintaining a maximum drawdown of less than 10%. A key differentiator for EMPB is its accessibility: Penello was determined to build a sophisticated hedge-fund-like strategy for everyday investors, not just accredited institutions. By launching as an ETF rather than a private fund, NextGen EMP made the strategy available to anyone with $25, offering hedge-fund-caliber active management in a tax-efficient, low-minimum format. Despite an advertised expense ratio of 2.21%, Penello explained that the effective net cost to investors is closer to 1% or less when accounting for the offsetting interest income from short positions and dividends on long holdings. The fund is rebalanced monthly. Penello positioned EMPB as a core equity exposure solution rather than an alternatives sleeve, emphasizing its potential appeal to both young investors seeking equity growth with controlled risk and retirees who cannot afford major portfolio drawdowns. With a disciplined, systematic process that removes emotional decision-making and a structure that works efficiently within tax-advantaged accounts, EMPB represents what Penello calls the “next generation” of equity investing.