The Exchange


Interview Highlights

Kevin O’Leary
O’Shares ETF Investments

Can you tell us why you’re here today?
I'm here to celebrate the launch of a new ETF in the O’Shares family, OUSM. It’s the first time we've ever built something around the Russell 2000. What we’re trying to do with this new product, and I think we've been very successful, is we’re trying to de-risk the Russell 2000. Trying to make it less risky by looking at all the stocks and only picking about 330 of them that have the very best balance sheets. What better place to do it at than the NYSE, because this product is global, and the NYSE, that's global, too. A great merging of those two brands here today.

Tell us about the O’Shares lineup.
O’Shares is a product that I started building for myself, and then many other investors believed in it, too. What we’re doing with the O’Shares’ structure is creating a whole new family of actively managed ETFs so we crystallize a great practice. Let’s say you found a great manager. And she was doing a great job managing your stocks. We actually take her rules, crystallize them into an index that never has any style drift. So we take the very best managers and create actively managed ETFs.

We're all about quality so we define quality in a way that we want lower volatility, less debt on a balance sheet, higher return of assets, and all the things that I care about in a company. That's what we do with O’Shares. Every O’Shares ETF mandate is about quality, long-term mandates, about investing all around the world.

What makes your investment strategy different?
You know, you think about it investment strategy – mine is all about very long term mandates. I do this for my family’s trust, which is perpetual. Long after I'm gone I need O’Shares to do what it does.

We look at stocks every day, not just in America, all around the world. What we try and do is see are the companies doing better as they’re growing or not so much? (in which case we don’t want to own them.)

So we are basically setting rules up around volatility, about quality, about the actual distribution of the capital and dividends. And we’re picking from across all the world's markets, the very best balance sheets all the time. And that's what O’Shares is all about.

How should investors think about the current market, and their strategy for investments?
The current market is really interesting because we’ve got some really new currents. We’ve got trade currents. We’ve got political currents. And we’ve got earnings decisions to make around different sectors because the economy is changing, it’s starting to grow again.

So what you want to do is go multi-sector, which is great in an ETF like OUSA. OUSA looks at the S&P 500 and pulls out the very best balance sheets out of it in all sectors. OEUR, that's Europe. Same idea for Europe and Europe finally, after almost a decade, is starting to grow again. So I want to own some Europe. And Asia has been just kicking the lights out lately, and I like that, too…so that's OASI.

Each of these does something very special, mines the very best balance sheets in every sector, in every geography. And our new listing today – OUSM – is about the mid-cap and small-cap market domestically in the U.S. And that product is unique. It looks at all the 2000 stocks in the Russell 2000 and picks the best balance sheets – about 330 of them – and I love that product.

What makes dividend investing unique?
The thing about dividends that people forget - and this is very important - my mother taught me this: Over the last 44 years, 72% of the returns in the market came from dividends, not capital appreciation. So when you have a company that pays dividends every quarter, the Board of Directors has a different kind of discipline than one that doesn't. Return of capital turns out – over long periods of time – to be the whole thing, and that's why I only invest in dividend paying stocks.

But O’Shares isn't just about dividends, it’s about the quality of the company's ability to generate the cash. I love cash. I like those companies that are generating more cash. I want to own those ones.

Do you plan on growing your offering, or other investment classes?
You know O’Shares has been a rip-roaring success – I'm so proud of it. We’re going into all kinds of new ETFs. We just filed for 17 new ones. We just bought small and mid-caps. Next we’re going to be bringing an international product and also the emerging markets. We haven't brought our quality stylization to the emerging markets. Imagine if you could buy emerging markets with great balance sheets in every market, and that's coming from us, too.

Listen, I’m working FTSE Russell on this – the best indexer in the world – we’ve got 150 people doing the research. This is a heck of a team. O’Shares / NYSE / FTSE Russell – we’re a dream team.

How did it feel ringing the Closing bell today?
You know, every time I get up on that balcony, it sends shivers up my spine. I’ve rung the bell four times in my life.

It is every entrepreneur’s dream, all around the world, to be on that balcony at 4 o'clock and ring that bell and hit that gravel – because this is it. Just the celebration of what every entrepreneur wants: success! This is the place where you celebrate entrepreneurialism, business commerce, trade…it’s the epicenter of the globe in that one moment when you ring that bell. It's just special and it always will be. I'll never get tired of it.


Listen to Kevin O’Leary Extol the Benefits of Dividend Investing