![]() ![]() To download mods in there, you need to create an account. Pacer has also applied the Cash Cows strategy to other groups of stocks, including the Pacer U.S.Reminder: everything linked from here on can be found in any of the three storage sites mentioned above.įirst, go to and download a mod that you like. Read Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page. CompanyĬlick on the tickers for more about each company or ETF. Some have weightings above 2% because of share-price increases since the fund was last rebalanced in December. Here are the fund’s top 10 holdings as of March 8. Intel cut its dividend by 66% last month. For example, Cash Cows held shares of Intel Corp.įrom September 2020 until December 2021. In addition to identifying undervalued stocks and moving with broad economic trends, this type of stock screening can point to trouble ahead if a company’s free-cash-flow yield is declining or if analysts expect net losses ahead. ![]() ![]() O’Hara said free-cash-flow yields can be “a great predictor of what is going on in an economic cycle.”Įven before large technology companies were signaling slower growth rates, the Cash Cows portfolio had been leaning away from tech stocks, while companies in the energy, industrial, materials and healthcare sectors had “rotated in,” he said. These are weighted by free-cash-flow yield, with a maximum weighting of 2% for any stock. The remaining stocks are then ranked by trailing free-cash-flow yield, and the top 100 make the final list. Then there is a forward screen to remove any company expected to post any quarterly net losses over the following two years. Then all financial stocks are removed, since free-cash-flow yields aren’t typically available for the industry. Of the largest companies publicly listed in the U.S. The screen begins with the full Russell 1000 Index The Cash Cows portfolio is reconstituted and rebalanced every quarter. This is money that can be used to pay dividends, repurchase stock or expand organically or through acquisitions, or for other corporate purposes.Ī company’s trailing free-cash-flow yield is the sum of its free cash flow per share for its past four reported quarters, divided by the current share price. A company’s free cash flow is its remaining cash flow after capital expenditures. “It makes sense, when you think about the change in the economy from manufacturing to consumption, technology, brands, the health-based economy - those things thrive on intangibles,” O’Hara said.įor Cash Cows, the rules-based stock-selection approach is based on trailing free-cash-flow yields. And even today, the largest five companies held by the SPDR S&P 500 ETF Trust - Apple Inc. The broad stock-market indexes are weighted by market capitalization, so the largest tech names dominated during the liquidity-driven bull market. ![]() He cited Google parent company Alphabet Inc.Īs an example: The company’s market value is “based on the fact that they dominated search and figured out how to dominate it. But O’Hara and his colleagues at Pacer believe this measure doesn’t work very well, “because the vast majority of the stock market’s value today is based on intangible assets and not tangible assets,” he said. Traditionally, stocks are placed in the “value” camp if they trade low relative to book value. The idea for Cash Cows was to identify value stocks in a way better suited to the modern world. O’Hara said that when the ETF was launched in 2016 and for several years after that, stock valuations relative to earnings were at very high levels. You can see that it held up very well during the bear market of 2022 - and that for the five years through 2021, when interest rates remained very low and liquidity was elevated, the fund outperformed the iShares Russell 1000 Value ETFĬash Cows has $12.9 billion in assets under management. The Cash Cows ETF has been the best performer over the past five years. Let’s begin with four sets of total returns (with dividends reinvested) for the Cash Cows ETF against ETFs that track its benchmark, the Russell 1000 Value Index ![]()
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