The Inverse Jim Cramer ETF Has Officially Arrived

If you’re active in the markets, it’s almost a certainty that you’ve heard a joke about betting on the opposite of whatever non-stop-stock-picker Jim Cramer suggests to retail investors. 

Now, retail investors can do just that. There is a new pair of products coming to market this week called the Inverse Cramer Tracker ETF (ticker SJIM) and the Long Cramer Tracker ETF (LJIM) that will now allow investors to bet against (or with) the Mad Money host. 

The same group that brought you SARK, the inverse ARKK Fund ETF are the ones putting together the ETFs. The funds are the brain-child of Matthew Tuttle, CEO of Tuttle Capital Management. 

“If he specifically says either buy, buy, buy a stock, then we’re gonna go short that stock at the next practical moment,” he recently told Bloomberg. “If he tells you he hates a stock or sell, sell, sell or something like that, then we’re gonna go long that name again at the next kind of practical entry point.”

The inverse fund “is an actively managed exchange traded fund that seeks to achieve its investment objective by engaging in transactions designed to perform the opposite of the return of the investments recommended by television personality Jim Cramer,” the company said in a prospectus late last year. 

“Under normal circumstances, at least 80% of the Fund’s investments is invested in the inverse of securities mentioned by Cramer,” it says of its strategy. 

The filing continues:

The Fund’s adviser monitors Cramer’s stock selection recommendations throughout the trading day as publicly announced on Twitter or his television programs broadcast on CNBC, and sells those recommendations short or enters into derivatives transactions such as futures, options or swaps that produce a negative correlation to those recommendations.

The Fund’s portfolio generally is comprised of 20 to 25 equity securities not recommended by Cramer. To the extent possible, the Fund’s portfolio is equally weighted. The Fund may invest in securities with any market capitalization and in securities of issuers located in the United States and abroad.

Should Cramer recommend buying any of the securities in the Fund’s portfolio, the Fund will dispose of those holdings. Should Cramer recommend selling any of the securities in the Fund’s portfolio, the Fund will keep those holdings. If Cramer does not take any view on any of the securities in the Fund’s portfolio, the adviser retains discretion to sell positions once profit or loss targets are met, or market conditions such as large swings in either direction necessitate a sale and replace them with securities that meet the criteria of the Fund’s initial portfolio. Under normal circumstances, the Fund will hold positions no longer than a week.

As we said back in October, we’re sure the new ETF will have no trouble attracting attention and investors. Also, as contrarians, we also can’t help but wonder if this public acceptance of Cramer’s uncanny ability to get things wrong is finally a reason to start looking at taking him seriously.