This ETF from a 106-year-old firm has crushed rivals while avoiding 'Magnificent Seven' stocks

By Philip van Doorn

The Tweedy, Browne Insider + Value ETF was a strong performer during 2025, as it took a unique approach to analyzing corporate insiders' stock purchases

The Tweedy, Browne Insider + Value ETF returned 30% during 2025 with a value strategy that was highly diversified across geography, industry and company size.

With so many exchange-traded funds for investors to chose from, it is not easy for money managers to come up with unique strategies. Tweedy, Browne did so late in 2024 when it established its Insider + Value ETF.

Tweedy, Browne Co. is based in Stamford, Conn., and is the successor to Tweedy & Co., which was founded by Forrest Berwind Tweedy in 1920. The firm now manages about $7 billion through mutual funds, ETFs and for individual and institutional clients using value strategies.

Forrest Berwind Tweedy met Benjamin Graham, the value-investing pioneer and the author of "Security Analysis" and "The Intelligent Investor," in the 1930s, and Graham eventually became Tweedy & Co.'s largest brokerage client.

Tweedy, Browne's portfolios are overseen by an investment committee of seven people, including John D. Spears and Robert Q. Wyckoff Jr., who discussed the Tweedy, Browne Insider + Value ETF COPY with MarketWatch.

The ETF is just over one year old. It returned 30% in 2025, compared with returns of 21.1% for the MSCI World Index in U.S. dollars and 17.9% for the S&P 500 SPX. All returns in this article include reinvested dividends. The data was provided by LSEG.

"The U.S. has been a tough place to find undervalued stocks over the past couple of years," Wyckoff said. "So across our funds, there is a non-U.S.-centricity. We are biased toward undervaluation, which has led us abroad. If markets change, we could very well have the majority of this fund in U.S. securities. It depends on where insiders are active."

Investment strategy

For starters, all of Tweedy, Browne's investment strategies are focused on stocks that its management team believes are trading below their intrinsic value, according to a proprietary model that encompasses "over 30 different investment characteristics," Wyckoff said. Valuations ratios that are analyzed include price/earnings, price to book value and dividend yield.

For the COPY ETF, the Tweedy, Browne team selects stocks of companies whose insiders (officers, directors or controlling shareholders) have been buying shares with their own money. They will also select stocks of companies that are repurchasing their shares at attractive prices, based on Tweedy, Browne's valuation analysis.

"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 said. "We love the insight we are getting from very knowledgeable corporate insiders. Nobody has the view that they have."

When discussing corporate repurchases of stock, Spears said that "the share count is the key." A company's share count will rise if it issues stock to raise cash or help pay for an acquisition, or if it hands newly issued shares to executives as part of their compensation. That causes dilution - an increase in the share count that lowers earnings per share. Sometimes when a company is buying back shares, it will not buy back enough to keep the share count from rising. So the Tweedy, Browne team is focused on net buybacks - those that actually lower the share count.

Wyckoff said that although "everybody is enamored with the 'Magnificent Seven' stocks or megacap technology," the fund had outperformed during its first year without holding any of those stocks. The Magnificent Seven group is made up of Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META) and Tesla (TSLA).

"We have done it with roughly 180 [stocks] with position sizes of a couple points or less. We have undervalued securities where insiders are active in their shares and at the same time significantly diversified" by industry, location and company size, he said. As of Sept. 30, 28.9% of the COPY portfolio was invested in stocks of companies based in the U.S. The rest was spread across 21 countries - mainly developed economies - with U.K.-based companies having the second-highest portfolio allocation, at 13.7%.

Wyckoff also pointed out that since the most commonly cited broad stock-market indexes are weighted by companies' market capitalization, they are dominated by companies whose stocks are trading "at high statistical valuations."

"What we are doing is virtually the opposite," he said.

It might surprise some investors to see that an actively managed ETF holding about 180 stocks has performed so well during its first year. You will often see money managers emphasizing the importance of "conviction," as represented by a portfolio made up of small number of stocks. But Spears said that a large group of stocks, roughly equally weighted, was a better way to construct a portfolio modeled on Tweedy, Browne's long-term research into insider buying, share buybacks and value pricing for those purchases.

When asked in a follow-up email about how the Tweedy, Browne team decides to sell stocks, Spears wrote: "Our sell discipline seeks to increase the undervaluation of the entire portfolio." He also wrote that the Tweedy, Browne team will want to "refresh" the portfolio with a two-year holding period for each stock, "unless there have been subsequent insider buys and the stock still looks cheap."

Looking deeper into the prices insiders or companies pay when buying (or buying back) their own shares

Some companies have buyback programs that feature continual purchases of shares regardless of recent price movements. Berkshire Hathaway's former chief executive Warren Buffett made many remarks critical of this activity in his annual letters to shareholders. In his 2011 letter, he wrote: "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."

In the 1999 letter, Buffett wrote that a company should only be buying back its shares 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."

Going further in that letter, Buffett added that repurchases "are all too often made for an unstated and, in our view, ignoble reason: to pump or support the stock price. The shareholder who chooses to sell today, of course, is benefited by any buyer, whatever his origin or motives. But the continuing shareholder is penalized by repurchases above intrinsic value."

Tweedy, Browne provided a list of companies whose stocks were trading at trailing price/earnings ratios above 40 and that had been buying back shares over the preceding 12 months. A stock's trailing P/E is the current share price divided by the past 12 months' earnings per share. Needless to say, the Tweedy, Browne team believes these companies have been paying high prices to buy back shares.

For example, Nvidia's trailing P/E was 46.6 as of Monday's close, according to LSEG. The stock's trailing P/E has ranged from 32.1 to 59 over the past year. For reference, the S&P 500's weighted trailing P/E was 27.9 as of Monday's close.

Jay Hill, a managing director with Tweedy, Brown, looked back at three full fiscal years of Nvidia's reported data as well as the first three quarters of its current fiscal year, through Oct. 26. For that 45-month period, Nvidia spent $90 billion on share buybacks, but its reported weighted diluted share count (adjusted for the 10-for-1 split in June 2024) had declined by only 2.4%.

During that period, Nvidia "spent $90 billion on share repurchase, dwarfing $16 billion in recognized stock-based compensation expense over the same time period," Hill told MarketWatch in an email. "Nvidia's buybacks have effectively neutralized dilution from generous stock-based compensation awards. In economic terms, shareholders have paid roughly $90 billion to keep their ownership percentage relatively flat."

Performance of competing funds

There are no exchange-traded funds that combine COPY's approach that incorporates buybacks and insider purchasing of shares while also factoring in attractive valuations for those stock purchases. But LSEG lists 94 other funds as peers to MEDI.

Tweedy, Browne benchmarks COPY's performance to the MSCI World Index in U.S. Dollars.

The following table starts with COPY, followed by the iShares MSCI World ETF URTH, which is passively managed to track the MSCI World Index. Then there are five actively managed ETFs listed as peers by LSEG that are benchmarked to the same index, sorted by their annualized three-year total returns through the end of 2025.

Those are followed by three more ETFs that are passively managed to track indexes that incorporate buybacks into their stock-selection methodology. These are also sorted by their average three-year returns.

   Exchange-traded fund                          Launch date    2025 return  Three-year average annual return  Net expense ratio 
   Tweedy, Browne Insider + Value ETF            12/26/2024           30.0%                               N/A              0.80% 
   iShares MSCI World ETF                        1/10/2012            21.3%                             21.3%              0.24% 
   Davis Select Worldwide ETF                    1/11/2017            30.5%                             24.8%              0.63% 
   FPA Global Equity ETF                         12/16/2021           25.5%                             23.3%              0.49% 
   Fidelity Disruptors ETF                       4/16/2020            13.7%                             20.4%              0.50% 

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