People Trying Hard To 'Outfox' S&P 500: Cutright

Brooks Cutright discusses his Hedgeye ETF/fund strategy that systematically buys stocks likely to be added to the S&P 500, and to a lesser extent other major indexes, before index inclusion and then sells on the inclusion close. He explains how index membership creates systematic demand from the nearly $27 trillion S&P 500-linked asset base and why active managers still struggle to beat the index. The conversation focuses on the upcoming Friday S&P 500 rebalancing announcement, with 36 candidates potentially entering and more than 110 existing members below market-cap hurdles. - Guest is Brooks Cutright, portfolio manager at Hedgeye Asset Management. - His fund buys likely index additions ahead of inclusion announcements and sells on the inclusion close. - The fund holds about 40 probabilistically weighted names across S&P 500, S&P 400, S&P 600, and Nasdaq candidates. - The S&P 500 rebalancing announcement is expected Friday, with 36 companies potentially qualifying. - More than 110 existing S&P 500 members reportedly no longer meet the index's market-cap hurdle. - Nearly $27 trillion is tied to the S&P 500, including about $13 trillion in indexed assets. - Index-inclusion front-running now shows after-hours moves of 8-10% versus historically slower multi-day impact. - Active managers continue to post poor beat rates despite the known inclusion effect.