Tommy Mancuso

There we go. Hey, we wouldn't want it any other way, especially with the bad mentality here.

I know. I'm super excited for this conversation. I think when we first talked, I was really excited to hear about your story, your background and kind of how you came up with the idea. So why don't we do that, Tommy? Why don't you tell me about your background and how you kind of got into this

Position that you're in today? Yeah, absolutely. So I guess we'll start from the beginning, which was in college. I started working at a mutual fund shop out in San Diego and then progressed and got on my securities license, started working at Merrill Lynch on the wealth management side, realized the wire house world was maybe not necessarily for me. So I joined a firm, Prime Capital Investment Advisors, in about 2016. And, me, I'm a little bit younger for to be an advisor in that world. I'm 31 right now. So I started doing this when I was 22. But it allowed me to kind of think differently when we look at the advisor world and see this whole world of technology and innovation, right? When I'm out trying to get friends to invest in a personal

We weren't far behind you. So, yeah.

So, what happened there was just a slow, kind of slow bleed here. But that's when also, I think a lot of retail investors, to some extent, got exposed in their portfolios. Yeah. And, as bad was down last year, but we did, at least beat the S&P 500 by a couple percentage and destroyed the Nasdaq. Right. So those are decent benchmarks to, have something in a challenging year, have a little bit of success there. So right now, we're in started year one at the beginning of 2023. Still, a lot of headwinds in here. the betting alcohol and drug ETF is essentially made up of, your largest gaming and casino

Where we're at. Yeah. And you answered a lot of my questions there. And it's funny, you and I have a similar path. I actually, I started my career in family office and then I went to Merrill. And I said the same thing. I was like this, no offense to anybody listening for Merrill Lynch, but it just wasn't for me. And I got, I went independent as fast as possible and got here. So I can definitely, assimilate with your story and your path. So what do you like to do outside of the office? Like what is Tommy doing when he's not, investing in alcohol and drugs?

I I'm doing a lot of market research. No, I'm, I'm kidding. I'm a lot of times I'm, I'm very social guy as you probably imagine, right. They kind of have the boldness of this. So big concert guy, big, big sports guy, hometowns, Kansas city was at the, had the opportunity to go to the Superbowl. So sorry to anyone from Philly on that one. But yeah, I like to, I kind of have a work hard and, honestly play hard mentality at the end of the day, but obviously there's the fine line of professionalism and, being too much of a screwball by any means.

That's awesome. Yeah. I, um, you guys have had some, uh, some luck and some good years here for Kansas city. So I, I don't think, uh, I don't think too many bad years are coming. And as long

As you have Patrick Mahomes. I agree. I agree. Maybe we, we can keep his brother out of the news.

Probably a good idea or off TikTok. Um, so you kind of answered, uh, like, I really want to know what made you start the bad company. You hit that perfectly. And, uh, we'll talk a little bit about the ESG and anti ESG kind of landscape, but does the firm, does your firm do anything other than, manage a single issue ETF at this time? Yeah. Right now we obviously do have some

Growth plans out there. Um, right now bad is our marquee or staple ETF. We're bouncing around a couple of different ideas right now. Not all of them are necessarily in the bad category. Um, but what we do like to focus on is, hard assets, core businesses that have cashflow, things that are going to be around the next hundred years, just like betting alcohol and drugs have been around the past. Hell, you could go back to the Roman empire when people were partaking in a lot of these things. Um, so we like to focus on things that have cashflow. People are going to utilize, um, there's a place in this world for, a lot of companies, I'd say

Excitement in there and creativity. Well, you're going to have a, uh, you're going to have a hard time picking the next ticker after, having maybe one of, if not the best ticker on the street at this point. So you're going to have to put a lot of thought into that.

Right. I am shocked that it was available when, when we went to submit that go, no one took that. I was thinking like bad boy motors. I was like, the bad, whatever it may be. Cause it's got appeal to it, right? The name sticks out. It jumps, it jumps at you. You obviously want to know what the hell is that right away. So it's definitely a great ticker and we've reserved a couple of other ones that we have in mind here. So we'll see what happens. Yeah. I make sure we can

Get away with them. So it'll be good. That's great. I, um, I should start to, I should get my, uh, any future plans I have, I should get out there and start reserving tickers. Like, people did back in the early two thousands with buying domain names and then flipping them. I, uh, I reserve them good. No, it's, it's real bizarre. Actually.

I thought that too. You can't actually sell a ticker. Oh, you can't. No, now it's bizarre. I thought you could too, but you've got to, you got to have some kind of deal because

I did ask that. Yeah. True entrepreneur, Tommy. That's exactly how we think is, can I make a business out of, out of buying tickers? Um, yes. Yeah. So you touched on it a little bit. Let's dive a little bit deeper into the investment strategy of bad, um, get it from a high level. So how are you screening? How are you running kind of the portfolio in terms of waiting? Let's talk about the balance structure. Like let's really dive into the underlying strategy.

Yeah. So we'll start off with the betting category to be in bad. Um, so it's primarily, we built an index essentially, um, with the partner of ours, EQM and indexes. And it was kind of based off of that sample portfolio that originally created and where we focused on what's going to give us the biggest and best companies in that area. So it's primarily based off of market cap. Now I wouldn't say we have discretion, but if a certain company and certain things don't seem right, we do have the flexibility to kind of remove them, make a couple of minor adjustments. So the market cap is going to be above at least a billion dollars. Um, they have some PE and all the stuff of that nature on the, on the gaming side. So again, betting is going to be

I'm understanding you're in those, in those buckets, right, let's just take betting gets 33% allocation. So are you, your market cap waiting within that 33%? Is that how you're

Building and designing the index? Yeah. Yeah. Yeah. So, if there's 10 companies or so in there, 3.3% in the betting in each one of those companies.

Okay. So you're going to equal weight inside. All right. So you're running inside of each sleeve, whether it be betting alcohol, drug, or cannabis, each one of those companies are then run equal weight. Yeah. Okay. Correct. Makes a ton of sense. Makes a ton of sense. And so when you were designing this index, it sounds like it, from the beginning of our conversation, it sounded to me as if you had the idea for the ETF before you actually ran the index. And so when you ran the index, you were trying to build, can we call it anti ESG? Is that fair?

It is fair. It is probably the roots of the idea. Now, I'm not going to say we're anti, we hate ESG by any means. There's a place for it. But at the end of the day, we don't think social stigma should be a factor when it comes to investing. At the end of the day, we are investing to make money. And I think some people, when they put these ESG scores, are misleading investors to some extent, right? Like maybe if people are trying to go green, which is perfectly fine, I think people should focus on that. But when you're trying to greenwash some stuff, when you're trying to, manipulate the scoring criteria so you can attract a certain side and kind of put a little

And I think, ESG had its, ESG had its run, I believe in, 2021. And even in, 2000, I believe in 2020, like the latter part of 2020, like it, it was consistently outperforming S&P. And it was really, to me, and again, could be wrong, it seemed like the flows were coming just because people wanted to do, the right thing. And they did get a lot of flows. And I think some of those biases or things that you had mentioned, people are starting to look into a little bit and you're starting to see some outflows in the ESG arena.

Exactly. Yeah. and a lot of that outperformance was because ESG, a lot of the social and governance stuff is in the tech world. We know what happened in 2020, right? Tech boomed, right? As that was the first round of cutoffs where people that had some of those, we'll say the woke department, let's just call it what it was. But again, I'm all good with that. And, the prior years before that, they did struggle and underperform major indexes. And then you see all these companies starting to pop up in there, right? You see Exxon's popping up and showing in there, right? And if people really knew what behind the curtain, what they're investing in, right? Where they're like, I don't want to invest in oil and gas,

System to some extent. So when I think about, aside from it having kind of an anti-ESG undertone, it seems as though this portfolio is building more of a recession proof type portfolio and could be valuable for an investor to, have in their portfolio currently in times like this, right? And just as, I don't want to call it a hedge, it's not a hedge, but to be able to have that kind of anti-recessionary basket inside of their portfolio. Yeah. A hundred percent, right?

At the end of the day, people are going to gamble, right? In some cases in recessions more, whether that's good for them or bad, I hope they win. Right. Oftentimes we don't. Yes. I know that too well. On the alcohol side, people are going to continue to drink, right? that's been a standard situation in case, again, sometimes in recessions, more often than not, they do. some of the disruptions we've had since we launched, right? There's a couple supply chain issues, but we've seen a couple of earnings here lately in alcohol companies and they're starting to get that figured out. And a lot of these smaller companies that they lost a lot of market share to, they're being able to acquire them at a discounted price because these

And that's the areas we want to be in. Yeah. Super interesting. Yeah. I can see this being, I'll ask you this later, but really as a placeholder in a portfolio, almost peeling from, would you peeling from kind of maybe large cap value exposure? If someone's

Kind of sitting in large cap, it's kind of fit that tilt. Definitely. I would say large cap value is definitely one of our, where we would fit in a portfolio at the end of the day, right? I wouldn't say we would, we do have some growth characteristics, I think too, which makes us a little bit unique, but yeah, large cap value is essentially our portfolio, right?

Yeah. So let's talk about the mechanics of getting bad to market, right? How long did it take you start to finish to get listed and have your, your first trade?

Yeah. the idea came, I would say the idea, as I kind of mentioned earlier, started a little bit before 2020 when I saw the ESG stuff happening. And then when I saw this craze of investing world and the power of the retail investor, that's when I went down the rabbit hole of how can I launch any, a fund with that has this, I actually went to my wealth management firm and asked them, I go, okay, do we, I know we have some ESG portfolios. I go, but how many people are utilizing those at this time? I'll just say it wasn't very many. I go, we should do the opposite. Yeah. And, and, that was, that was great. But they're like, Hey, Tommy, we like your,

Yeah. That's awesome.

And that was good. the couple of the challenges, with, I pushed the envelope with, with marketing to some extent. And, that's one of those unforeseen things I didn't anticipate, right? Because let's just say regulators don't like sarcasm and or some alternative marketing strategies by any means, which is fine. I totally respect that. You live and learn on those. It's, it was funny. They would always be like, Tommy, you can't do that. They're going to tell you no. I was like, okay, I get it.

That was going to be one of my questions is, not only did you have to get through your, your compliance department to tell you, okay, you can do this, which is a challenge enough. Now you have, out, you have a board on a, on a, on a trust it, it, it, a trust you don't own that. So you don't have too much control of the board. So you have all these, and then you have to deal with the distributor. So I'm sure you have, how many submissions do you have to put an ad in before they approve it? I guess is the question.

I've learned now where I can damn near get it without any kind of corrections. But there, I would say the biggest one that we kept going back was, man, I wouldn't be surprised if it was around 10 or 15. So, I, I, I, I somehow got this, if people are looking at this dare thing, past which is bad in their invest and betting, investing and betting alcohol and drugs.

That's right. The, the investing is important. People won't, people don't realize that. So we haven't had too much, uh, too many issues with distribution because we, our messaging is, is different, but I, I, that to me was one of the biggest surprises of launch was how high I knew it was going to be scrutinized, but really highly scrutinized. in down to like font size. Um, and I think a lot of people don't realize that.

Yeah. Crazy. Right. They're like, okay, well, that's that size. I go, you want the disclosure to be as big as that? I go, that's going to take up half the page. I go, we're just going to need a bigger page, I suppose.

So, uh, staying kind of on track of how we got, uh, how you got to market. So you launched in November, you decided to launch on the NYSE. You have other, you have other options, you have other alternatives. So it kind of, what drove that decision when you were picking exchange?

Yeah, I would say the people at the NYSE. Um, I've got great relationships with them. Whenever I'm in town and I give my main contact over there, him, him a call. Um, and we, they're just realistic and they support, they support the grant, the brand. Um, on, on that side of two, the, the pricing was fair, um, as, as well. And that's obviously a factor. And I think a lot of the support that they're able to offer you is, I'm not going to say superior to the Nasdaq, but I, I like just their overall brand a little bit more. Uh, not to say I would never do business with the Nasdaq by any means. And, I'm sure they're quality people as well, but I, I do

Really respect people at the NYSE. That was one thing that, um, surprised me when, uh, actually when we launched with the NYSE is I went in there like nervous, almost like I, I don't belong at the, at the, at the New York stock exchange. And they ended up being like the nicest, most down to earth, fun people on the planet. And, and that was a pleasant surprise. So.

I agree. I need them to give me the opportunity to ring that bell and I want to bring it.

It would be a party. I was going to say the party after that might be, can I come to that by the way? I would love to come to the after party. Yeah. I would love that. So, um, you're, you're not on your own trust. You're on, on UBS's trust. Um, yeah, U S bank. Or sorry, U S bank. I'm sorry. U S bank's trust. So when deciding whether you wanted to launch your own trust or join somebody else's, like, did you, was that in your decision-making process? Did you go back and forth on that?

Yeah, absolutely. Um, it be, I think it ultimately came down to scalability, right? With you working with U S bank, there's a lot of things that go on behind the scenes in terms of accounting and filings and all the metrics that make an ETF work, the, the emails and the paper notifications that investors receive. Um, that was, I needed to offload that work because at the end of the day, I want to focus on distribution, not to say I still spend my opinion, too much time on some of that stuff, but it's a part of the job. Um, and so, yeah, going through their U S series trust, it also allowed us to kind of leverage some of the relationships that they currently had,

Play into their already fine tune processes, I would say. Yeah. So now that you mentioned it, who are you using for, as your LLM, your lead market maker is GTS. They're great too. We use them as

Well. So yes, I couldn't have a better relationship with my contact over there. Great guy. Um, enjoy,

Enjoy talking with you too. So it are you, and I, before I lead into the next question, is it just you, are you a one man show behind the CTF or do you have a team?

Mostly I have some team members, um, as well that assist with a couple of things behind the scenes, but yes, I am basically one man show. I would love help anyone out there. So I'm getting a little bad. Um, we'll, we'll figure a way to get you compensated as we grow. But, uh, yeah, we, we would love, we would love a little bit of help for me to offload stuff so I can kind of get the creative marketing ideas flow and then focus on distribution, which is ultimately important.

Well, perfect. That, that was my next question. That's a heavy lift by yourself. So congratulations. I know, I have, I have some help, which makes things a little bit easier, but it doesn't matter. It's still a heavy lift. So how are you approaching distribution? Is it purely just kind of social marketing or what's, what's the idea behind distribution?

Yeah. So we did focus on, I think timing is everything. When we first launched, we were like, Oh wow, we're going to, we're going to capture a lot of this retail crowd. Well, you know what happened in 2022 and unfortunately retail investors, first ones to get out last ones to come back in. Um, so, we tried that social media, digital marketing stuff is pretty expensive. It becomes expensive and it's hard to really capture your, I would say it's hard to capture your leads and how successful some of those digital advertisement campaigns are because as you and I both know, I don't know who bought the ticker bad. I can't track that this person, went onto our website, saw it and then went

Yeah. I, well, I have a, uh, an advisor I talked to last week in Vegas who I actually told him about your fund and he, uh, he was on the website. So maybe he'll throw you some, uh, some volume here in the next couple of days. I sure hope so. So is you kind of touched on it there a little bit, as far as marketing goes, what do you think is working? What do you think is not working?

Like, how are you playing with that right now? Yeah, I would say it is passive marketing is not effective. It is having conversations is effective. Um, giving them a story of why they should invest, right. on the flip side, no one, there's not too many asset managers that have us. Well, why not be the first, right? If, if, if you believe in, in betting alcohol and drugs as a, as, as investment solutions for your clients, why not be ahead of there until you wait for someone else to jump in there? So I think giving people a story and, having, being candid with it, like, yeah, we're not for everyone. I understand that, but we are for a lot of people as well. Um,

300, 400, 500 years from now. Yeah. I've, I've, I've found the same thing, right? We, we tried to get a little cute in the beginning with, marketing and the old fashioned way is really been the only way that we have seen success, which is just talking to advisors and, and, uh, telling them the story and building relationships. And it's, it's really, it's a long game. And so I think you're on the right path there for sure. So, um, I've seen you do some media. Uh, I saw you on FinTech TV. Um, how are you, is that something new for you and,

And how are you handling the camera? Yeah. it's, I've, we started it early on the, when we first launched, uh, TD Ameritrade asked me to come on, on our launch date. I had a little bit of media training. We were working with a PR firm and I'll be honest, I w I was nervous. I was excited. Um, and then as time goes on, we scaled up and I, I, I have, I'm comfortable doing it. It makes me, I'd say even better public speaker when I'm out there. I was able to go on Bloomberg one day and what an experience that was, um, to kind of go in there. If you've ever seen the movie, the show Westworld, when you walk in there, you have like a

Yeah. I think media is, it gives you, I think, immediate, uh, credibility. One thing that's hard for, uh, hard for me with media is everything we do. Um, and even in your case, right? Like everything you're doing is passive in rules space. Everything we do is passive in rules space. And I, and one of the reasons why we started the show is to be able to have candid conversations. It might fit our story a little bit more. And they'll be like, so what do you think about, um, Apple's earnings? I like, I don't, I have no, I have no idea. So I just have to start like, I can't answer that question. I don't, I don't know. Um, it doesn't affect my investment

Strategy. I can't, I can't answer that. Yeah. We'd like Apple in the portfolio. it's,

It's worked for the past 20 years. Right. So, uh, last couple of questions here, what being a single issuer, what is one thing that kind of has been a frustration for you?

Yeah. I wish where someone says that, okay, you only have this one box. I wish we had another product we could offer them, with, with having, okay, I've got a Rolodex, right? That's something that, talking to other wholesalers in the ETF world, they've got a solution for everything, right? Cause their companies are massive and they have that thematic. They have that one. If that's not a good fit for you, what are you looking for? Right now? I'm, I'm trying to fit bad into some squares, right? If it's a circle, I'm trying to fit it into some squares. So finding those circles that we fit into is a challenge. I would say being a single ETF issuer, right. that's, I'd say the biggest challenge is with just one fund.

Well, even, even with that being said, if, if, you're going through relative underperformance for whatever reason, you can't pull something else out of your bag and, and do the, hey, look over here and kind of keep the assets on firm. And yeah, that, that can be frustrating. And so who are, if you have any, who are your competitors in the space? Are there any competitors

To the bad ETF? I would say our competitors maybe would be like the bets ETF by the roundhill guys. They've got a lot. Some of the cannabis companies, we get looped into the cannabis conversation quite a bit. And, if you look at that, we have destroyed the cannabis industry in, when I talk about that, I go, well, if you're looking for cannabis exposure, we're your best proxy for that. Because not only do we have a direct investment in there, we have indirect investment through the alcohol companies who are helping, Constellation has investment when those, and the drug companies too have investment because they're losing market shares with sleep medications and things of that nature to the cannabis.

So a final question here, Tommy. And, and I really, this was a great conversation. I'm, I'm so happy to have you on here. Yeah. So where can people and how can people learn more about you and, and the bad ETF and your, and your product and your offering?

Yep. Yep. So go to our website is going to be the number one spot. You can type in investbad.com or badinvestmentco.com. They'll direct you to both of those. There's an info email out there, info at investbad.com that will get sent to us and we'll get to you at some point. I'm, I'm, I'm available on LinkedIn. I'm active on there. Encourage people to reach out if they want to hear the story or have more questions about the fund itself. I'm happy to provide that insight on there. So yeah, investbad.com or go find me on LinkedIn.

All right. Well, that's how I found you. Yeah. That's how I found you. I get so frustrated with LinkedIn with all of the messages. And when I, when we decided to do this, I'm like the best way for me to get these people on LinkedIn and now I'm going to have to message them. The one thing I hate more than anything in the world is getting a random LinkedIn

Message. So, Oh yeah. Yeah. Well, the worst are the ones that are not even related to your business. You're like, I, if I'm trying to find someone, I'm like, I know they're in, they're in the investment world. I know they're an advisor. When I get some kind of email about, Hey, here, do you need new health insurance for your, I'm like, no, I don't need that.

Yeah. There's so many of those LinkedIn automations out there. People just, and then, then you'll get the follow-ups where it's, did I, can I, uh, when's a good time? And when, and they just keep hitting you and over and over and over again and spamming you,

But I like messing with them sometimes. That's a good way to kind of counter that.

I have, after a few cocktails, Tommy, I do, uh, I I'm supporting your fun indirectly. I will, I'm known to, uh, send a, a snappy one back a time or two, but I do get a laugh out of it. I shouldn't, but it is, it is fun. I love it. I love it. That's great. Tommy, again, thank you. Thank you so much for joining us. And, uh, I look forward to hopefully one day run into you in person and don't forget to invite me to the after party. Your bell ringing. Okay.

Absolutely. Brad. No, thank you so much for having me on here. I thought this has been a fun conversation, so I appreciate it. Thank you.

Thank you.

Thank you.