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Big Tech, Magnificent 7 stock exposure: Time to reduce?

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Complimenting concentration risk

Big Tech’s historic gains could be affecting your portfolio’s makeup — especially if your goal is diversification.

Astoria Portfolio Advisors CEO John Davi warns the S&P 500 index tilts too far in favor of the so-called Magnificent Seven stocks: Apple, Microsoft, Nvidia, Amazon, Meta Platforms, Alphabet and Tesla.

“Those Mag Seven stocks are very expensive right now,” Davi said told CNBC’s “ETF Edge” this week. “You should rotate your portfolio, and rotate into other things beside ‘Mag Seven’ stocks.”

Davi thinks he has a product to help long-term investors. His firm is behind the Astoria US Equity Weight Quality Kings ETF (ROE). According to the Astoria website, it invests in 100 of the highest quality U.S. large and mid-cap stocks and avoids “concentration risks associated with market-cap weighting.”

“Our marginal contribution to risk and return is a lot higher,” said Davi.

As of Jan. 31, the top 10 stocks in the S&P 500 are mostly big tech. They accounted for about 36% of the index, according to FactSet.

In the Astoria US Equal Weight Quality Kings ETF, each stock is weighted around 1%, according to FactSet. Since the ETF’s launch on July 31, 2023, the fund is up more than 26%. Meanwhile, the S&P 500 is up 32% in the same period.

VettaFi’s Todd Rosenbluth highlighted ETF options beyond Astoria’s ETF for investors looking to diversify.

“If you wanted a more quality growth or quality filter on the S&P 500, Invesco has an S&P 500 quality ETF, SPHQ. If you wanted something that was more quality and growth and additional filters, American Century has an ETF. The ticker is QGRO. This is an ETF that’s going to filter based on quality and growth characteristics and a few other ones,” the firm’s head of research said. 

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Conservative cable channel Newsmax shares plunge more than 70% after a dizzying 2-day surge

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A Newsmax booth broadcasts as attendees try out the guns on display at the National Rifle Association (NRA) annual convention in Houston, Texas, U.S. May 29, 2022. 

Callaghan O’hare | Reuters

Shares of conservative news channel Newsmax plunged more than 70% on Wednesday as its meteoric rise as a new public company proved to be short-lived.

The stock tumbled a whopping 72% in afternoon trading, following a 2,230% surge in Newsmax’s first two days of trading after debuting on the New York Stock Exchange. At one point, the rally gave the company a market capitalization of nearly $30 billion — surpassing the market cap of legacy media companies like Warner Bros. Discovery and Fox Corp.

Newsmax was listed on the NYSE via a so-called Regulation A offering, instead of a traditional IPO. Such an offering allows small companies to raise capital without undergoing the full SEC registration process. The primary focus is to sell to retail investors, in this case It was sold to approximately 30,000 retail investors. 

The public offering indeed garnered the attention from retail traders, some of whom touted the stock as the “New GME” in online chatrooms. GME refers to the meme stock GameStop, which made Wall Street history in 2021 by its speculative trading boom.

Newsmax has a small “float,” or shares available for trading. Less than 6% of Newsmax shares, or 7.5 million shares out of a total of 128 million fully diluted shares, are available for public trading.

The conservative TV news outlet has seen its ratings rise with the election of President Donald Trump and other prominent Republicans — although it still falls behind the dominant Fox News. Overall, Newsmax ranks in the top 20 among cable network average viewership in both prime time and daytime, Nielsen said.

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Stocks making the biggest moves midday: TSLA, DJT, AMZN, RIVN

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Stocks making the biggest moves premarket: Tesla, Newsmax, nCino and more

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These are the stocks posting the largest moves in premarket trading.

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