I "Smote" Thee O' Mighty Nvidia

It might actually take an action of Biblical proportions to stop Nvidia from taking over the world.

I know the word “smote” was used in the Bible several times, and maybe in the movie Ten Commandments, but I never knew exactly what it meant. Apparently, good ole Moses smote a rock to produce water, and an angel of of the Lord smote King Harrod and he died and was eaten by worms.

I learned all this because I came across a relatively new Small/Mid-Cap (SMID) ETF with the symbol:

SMOT

This is the Van Eck Morningstar SMID Moat ETF. Let’s take that apart piece by piece. It is 100 stocks rebalanced quarterly.

Van Eck is a small mutual fund company that always did a nice job in the gold world. They used to have a fund with the term “hard money” it the title, but I guess it is now called just the Global Resources Fund - GLAAX. A quick review of that fund produced some interesting ideas, but that is a story for another day.

Van Eck partnered with Morningstar to form this new ETF. Morningstar contributes their equity research. I have a long, and bitter relationship with Morningstar, because they refused to give a star rating to our short-selling mutual fund. I also used a few interns one year to build a better mutual fund rating system. Morningstar, to this day, still does a bad job of rating value funds. So today, all I do is sit and stare at Morningstar’s $13 billion dollar market cap and grumble.

Morningstar does an above average job of equity research. The bar is not very high, but at least they generally take a longer-term prospective than Wall Street. I am not a big fan of Morningstar’s moat rating systems, but for SMOT a company only has to have a rating. In fact 90% of the fund is filled with stocks given a “narrow” rating.

The portfolio is an interesting collection of SMID stocks.

SMOT’s two largest holding are Corning and Teradyne, which are also my two favorite technology ideas.

SMOT owns Chart Industries, one of my top 10 stocks

SMOT owns Brunswick and Ingredion which used to be in my top 20 model portfolio.

SMOT does not own many banks, but they do own my second choice M&T Bank (Buffalo)

SMOT owns both advertisers Omnicom and Interpublic, both decent ideas

SMOT own Kroger and BorgWarner, both decent ideas

SMOT even owns Roblox, a growth stock owned by crazy Cathie Wood, but with an interesting story.

Most importantly, looking at the SMOT portfolio, I want to learn more about Mattel, Equitrans, Baxter, Lamb Wesson, and Norwegian Cruise. I give Morningstar credit for recommending stocks that have been poor performers.

If your wanted to own a SMID portfolio with a growth/value mix, you could do much worse than owning SMOT.