The investment objective of Guru Favorite Stocks ETF (“GFGF” or the “Fund”) is to seek long-term capital appreciation of the Fund. The investment strategy is to seek to grow the capital by investing in high quality companies that are favored by prominent long-term investors (“Gurus”) and at reasonable prices.

Charlie Tian, Ph.D., Founder and Chief Executive Officer of GuruFocus Investments LLC, GFGF’s sub-advisor, has been primarily responsible for the day-to-day management of GFGF since 2021. Dr. Tian provides his recommendations to Messrs. Wm. Joshua Russell and Richard Shaner, portfolio managers of EA Advisers the Adviser of GFGF, who have been also primarily and jointly responsible for the day-to-day management of the Fund since 2023 and 2021, respectively.

Dr. Tian is the author of the book “Invest Like A Guru: How to Generate Higher Returns At Reduced Risk With Value Investing”. He also contributed to the book “The Warren Buffett Shareholder: Stories from Inside the Berkshire Hathaway Annual Meeting” and has been actively involved in financial research since 2004. Dr. Tian holds a PhD in Physics from the Peking University in Beijing, China. He was a physicist and the inventor of more than 30 U.S. patents.

A large portion of Dr. Charlie Tian’s net worth is invested in GFGF. His three children also own GFGF shares.

Invest Like a Guru: How to Generate Higher Returns At Reduced Risk With Value Investing (Wiley, 2017) by Dr. Charlie Tian.

The book has also been published in Chinese, Japanese, Korean, Ukrainian.

1. Guru Test: We have been tracking the portfolio holdings of approximately twenty investors who have a long-term, publicly available track record. We then generate an initial universe of securities based on these investors’ portfolios.
2. Quality Test: We employ a proprietary quantitative methodology to determine the quality of the businesses behind each security that passed the Guru Test. Quality is a measure of the strength of the fundamentals of businesses. For the quality determination, we analyze each company using various financial measurements, such as the company’s return on invested capital (ROIC¹), profit margin, growth, and the predictability of the business, etc.
3. Value Test: We further screen the stocks that passed both the Guru Test and Quality Test with the Value Test. Value is a measure of a security’s price relative to our estimate of the fundamental value of that security. For the valuation determination, we analyze a different set of financial measurements, which include an analysis of a company’s price-to-earnings ratio², price-to-book value³, price-to-sales⁴, and discounted cash flow⁵.
4. Portfolio: We select approximately 25-35 equity securities for the Fund’s portfolio.
5. Rebalancing: Stock prices, earnings reports, and new business developments may affect the quality of the businesses and the valuation of the stocks. If we observe heavy Guru selling, revenue and earnings deviations from our expectations, or stock price moves that drastically change the valuations, we may consider rebalancing the portfolio.

1. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett
2. Good companies are those that are consistently profitable with high operating margins, have high return on invested capital, and are growing at higher rates.
3. Buy only good companies and buy them at reasonable prices.
4. The risk with buying poorly performing companies is the permanent loss of capital, though the price may look cheap.

Charlie Tian, Ph.D.