With a value strategy that was extensively diversified across location, industry, and company size, the Tweedy, Browne Insider + Value ETF produced a 30% return in 2025.
It is difficult for money managers to develop original ideas when investors have so many exchange-traded funds to choose from. When Tweedy, Browne launched its Insider + Value ETF in late 2024, it did so.
Based in Stamford, Connecticut, Tweedy, Browne Co. is the successor to Tweedy & Co., which was established in 1920 by Forrest Berwind Tweedy. Currently, the company uses value techniques to manage over $7 billion for both individual and institutional clients through mutual funds and exchange-traded funds (ETFs).
Berwind, Forrest In the 1930s, Tweedy met Benjamin Graham, the founder of value investing and the author of “Security Analysis” and “The Intelligent Investor,” who went on to become the biggest brokerage client of Tweedy & Co.
John D. Spears and Robert Q. Wyckoff Jr. are two of the seven members of the investing committee that manages Tweedy, Browne’s portfolios. They spoke with BourseWatch about the Tweedy, Browne Insider + Value ETF COPY.
The ETF has only been around for a year. In 2025, it yielded a 30% return, while the MSCI World Index in US dollars returned 21.1% and the S&P 500 SPX returned 17.9%. In this article, reinvested dividends are included in all returns. LSEG supplied the information.
“The U.S. has been a tough place to find undervalued stocks over the past couple of years,” Wyckoff stated. Thus, there is a non-U.S.-centricity throughout our funds. Our tendency toward undervaluation has taken us overseas. We might have most of this fund in U.S. securities if markets shift. Where insiders are active determines this.
Investment plan
First, according to a proprietary model that includes “over 30 different investment characteristics,” Tweedy, Browne’s management team believes that equities that are trading below their real value are the focus of all of the company’s investment strategies, according to Wyckoff. Price/earnings, price to book value, and dividend yield are among the valuation ratios that are examined.
The Tweedy, Browne team chooses equities for the COPY ETF from companies whose insiders—officers, directors, or leading shareholders—have been purchasing shares with their own funds. Based on Tweedy and Browne’s value study, they will also choose stocks of businesses that are repurchasing their shares at favorable prices.
“We have been aware of other funds tracking insiders, but we are not aware of a fund that combines tracking the purchases of the insiders with the timing – shares trading at significant discounts compared with historical valuations,” Wyckoff stated. “We adore the information we are receiving from well informed business insiders. Nobody shares their perspective.
In reference to corporate stock repurchases, Spears stated that “the share count is the key.” If a business issues stock to raise money, finance an acquisition, or give executives newly issued shares as part of their compensation, the number of shares will increase. This results in dilution, which is a decrease in earnings per share due to an increase in the number of shares. A firm may occasionally fail to repurchase enough shares to prevent the number of shares from increasing. Thus, net buybacks—those that genuinely reduce the number of shares—are the focus of the Tweedy, Browne team.
Despite the fact that “everybody is enamored with the ‘Magnificent Seven’ stocks or megacap technology,” according to Wyckoff, the fund had fared better in its first year without owning any of those stocks. Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), and Tesla (TSLA) comprise the Magnificent Seven group.
With position sizes of a few points or less, we have accomplished this with about 180 [stocks]. He claimed that we have cheap stocks with insider trading and that they are also highly diversified by sector, region, and size of business. As of September 30, equities of U.S.-based companies accounted up 28.9% of the COPY portfolio. The remainder was dispersed throughout 21 nations, primarily developed ones, with the second-highest portfolio allocation (13.7%) going to enterprises based in the United Kingdom.
Additionally, Wyckoff noted that the most widely used broad stock-market indexes are dominated by corporations whose stocks are trading “at high statistical valuations” since they are weighted by the market capitalization of the company.
“What we are doing is virtually the opposite,” he stated.
The fact that an actively managed ETF with roughly 180 equities has done so well in its first year may surprise some investors. Money managers sometimes stress the value of “conviction,” which is symbolized by a portfolio consisting of a small number of stocks. However, according to Spears, a big group of stocks that are nearly equally weighted is a superior method to build a portfolio based on Tweedy, Browne’s long-term research on value pricing for those acquisitions, insider buying, and share buybacks.
In response to a follow-up email asking how the Tweedy, Browne team chooses which stocks to sell, Spears stated: “Our sell discipline seeks to increase the undervaluation of the entire portfolio.” With a two-year holding period for each stock, he added, the Tweedy, Browne team will wish to “refresh” the portfolio “unless there have been subsequent insider buys and the stock still looks cheap.”
Examining more closely the costs insiders or businesses incur when purchasing (or repurchasing) their own shares
Regardless of recent price changes, some corporations’ buyback schemes involve ongoing share purchases. Warren Buffett, the former CEO of Berkshire Hathaway, frequently criticized this practice in his yearly letters to shareholders. His letter from 2011 stated: “The first law of capital allocation – whether the money is slated for acquisitions or share repurchases – is that what is smart at one price is dumb at another.”
Buffett stated in the 1999 letter that a company should only repurchase its stock if it “has available funds – cash plus sensible borrowing capacity – beyond the near-term needs of the business” and if it “finds its stock selling in the market below its intrinsic value, conservatively-calculated.”
Buffett went on to say in that letter that repurchases “are all too often made for an unstated and, in our view, ignoble reason: to pump or support the stock price.” Naturally, any buyer, regardless of origin or motivation, benefits the shareholder who decides to sell today. Repurchases above intrinsic value, however, penalize the remaining shareholder.
Tweedy and Browne gave a list of businesses that had been repurchasing shares during the previous 12 months and whose stocks were trading at trailing price/earnings ratios higher than 40. The trailing P/E of a firm is calculated by dividing its current share price by its earnings per share over the last 12 months. It goes without saying that the Tweedy, Browne team thinks these businesses have been paying exorbitant sums to repurchase shares.
For instance, LSEG reports that Nvidia’s trailing P/E was 46.6 as of Monday’s close. Over the past year, the stock’s trailing P/E has fluctuated between 32.1 and 59. For comparison, as of Monday’s close, the weighted trailing P/E of the S&P 500 was 27.9.
Through October 26, Jay Hill, a managing director at Tweedy, Brown, examined the first three quarters of Nvidia’s current fiscal year as well as three whole fiscal years’ worth of disclosed data. Despite spending $90 billion on share buybacks during that 45-month period, Nvidia’s reported weighted diluted share count had only decreased by 2.4% after accounting for the 10-for-1 split in June 2024.
Nvidia “spent $90 billion on share repurchase, dwarfing $16 billion in recognized stock-based compensation expense over the same time period,” Hill wrote in an email to MarketWatch. “The dilution caused by large stock-based compensation awards has been successfully offset by Nvidia’s buybacks. In terms of money, shareholders have paid about $90 billion to maintain a comparatively stable ownership proportion.
Competing funds’ performance
There aren’t any exchange-traded funds that combine COPY’s strategy, which includes insider buying and buybacks of shares along with good stock acquisition pricing. However, 94 more funds are listed by LSEG as MEDI’s peers.
Tweedy, Browne uses the MSCI World Index in US dollars as a benchmark for COPY’s performance.
The iShares MSCI World ETF URTH, which is passively managed to replicate the MSCI World Index, comes after COPY in the following table. Then, five actively managed ETFs that are benchmarked to the same index and listed by LSEG as peers are arranged according to their annualized three-year total returns to the end of 2025.
Three further ETFs that are passively managed to track indexes that include buybacks in their stock selection process come after those. Additionally, these are arranged according to their average three-year returns.
