Up until just a few years ago the name Kevin O'Leary didn't mean much to most investors. But, with O'Leary starring on the hit TV show "Shark Tank", now most investors, as well as the general public at least, recognize the name. Furthermore, if you often watch Shark Tank you likely have a good idea of how "Mr. Wonderful", O'Leary's nickname on Shark Tank, likes to invest.
Mr. O'Leary often asks for a royalty deal, a few dollars every time an item is sold when giving entrepreneurs money. While some of the other investors on the show often criticize O'Leary for building in the royalty deal, claiming he is taking advantage of people, the idea behind the royalty is so that O'Leary can get his initial investment back in a reasonable amount of time. Furthermore, it acts as a safety net for O'Leary if the company he invests in is a massive winner at first but, doesn’t have the longevity to grow and become a long-term successful organization.
While the sarcastic nickname O'Leary has received on the show may not make him the best partner for an entrepreneur, it shows that he not only is a wise investor but someone that limits their risk as much as possible. For some investors, this sounds like the kind of guy they would love to be able to invest with. I mean honestly, who hasn’t watched Shark Tank and thought to themselves how cool it would be if they could partner with one of the investors on the show?
Well, you know can!
Sorry, not like that. We can't yet send O'Leary, or Daymond John, of Mark Cuban money so you can partner with them on deals during Shark Tank.
But you can now invest alongside Kevin O'Leary when it comes to the financial markets. Over the summer, O'Leary introduced three brand new ETF's which follow his personal investing principles.
The first ETF offered was the O'Shares FTSE US Quality Dividend ETF (OUSA) which began trading on July 14, 2015. This ETF is designed to track the performance of the FTSE US QUAL/Vol/ Yield Factor 5% Capped Index. In English, the ETF invests in high to mid capitalized dividend paying US issued companies. Furthermore, each company must meet specific requirements such as a certain market cap. A particular dividend level, a required liquidity level, a certain level of volatility, which in this case if low, and must be considered high quality.
OUSA currently only has $26.8 million assets under management, but that can be explained by its very recent inception date. OUSA also currently doesn't have an accurate dividend yield, due to its recent inception, but has paid a dividend three times since July 14. The first came on August 17th with a $0.023 payment, then on September 15 in the amount of $0.069, with the most recent payment on October 15 of $0.06. Just for argument sake, though, if OUSA keeps shelling out around $0.06 per share, per month, the ETF would be yielding roughly 3%. It currently also has an annual expense ratio of 0.48% and since its inception is actually down 1.16%, but that still outpaces the S&P 500 which is down 3.42% since July 14th.
Two other funds O'Leary recent launched are the O'Shares FTSE Europe Quality Dividend ETF (OEUR) and the O'Shares FTSE Asia Pacific Quality Dividend ETF (OASI). These ETF's began trading on August 18, 2015 and are essentially the same as the OUSA except for the region of the world they invest in. The OEUR invests in mid to high cap, high quality, dividend paying stocks issued on European exchanges, while the OASI does the same, just for companies that trade on Asia/Pacific exchanges.
Both OEUR and OASI currently have just $3.6 million in assets and carry an expense ratio of 0.58%. But, since inception, OEUR is down 1.4% while OASI is off by 2.04%, compared to the S&P 500 being down by 2.2% since August 18th. Similar to OUSA, both OEUR and OASI have payed dividends, OASI payed $0.134 per share back on October 15 while OEUR payed $0.013 per share on the same day, but similar to OUSA, due to the recent inception an accurate yield is not available at this time.
O'Leary personally has money in the OUSA fund and is on record numerous times telling investors that investing in quality companies which pay a healthy dividend is the best way to invest over the long term. While his Shark Tank deals may not follow his moto of "quality" companies, his insistence to build in a royalty during his negotiations obviously follow right along with his love of dividends. So remember, the next time you watch Shark Tank and think to yourself, "I wish I could invest with the sharks", well now you can.
Disclosure: This contributor had no position in any equity mentioned above. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.