TRUESHARES

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AI Enablers vs. Sophisticated Users

TrueShares Technology, AI & Deep Learning ETF (LRNZ) seeks to provide thematic exposure to a concentrated portfolio of technology companies that are significantly involved in artificial intelligence. We spoke with Sam Kim, LRNZ Portfolio Manager, to learn more about the differences between AI enablers and sophisticated AI users and to offer examples of promising companies that might be found in the fund.

What kinds of companies does LRNZ focus on?

Our focus on AI-related names falls into two categories: AI enablers and the sophisticated users of AI. The AI enablers provide the critical components of AI technologies like Nvidia (NASDAQ:NVDA), MongoDB (NASDAQ:MDB), and Snowflake (NYSE:SNOW) for example.

The sophisticated users of AI are defined, at least for us, as the companies that integrate AI technology within their product lines or business models to gain a competitive advantage. A majority of our portfolio falls into this “users of AI” category.

What are some examples of sophisticated users of AI in the LRNZ portfolio?

Some of the sophisticated users of AI in the LRNZ portfolio are companies like Samsara (NYSE:IOT), Datadog (NASDAQ:DDOG) or CrowdStrike (NASDAQ:CRWD). These are companies that have fully bought into the benefits of AI technologies and how they can create competitive advantages. These businesses have consistently incorporated AI technologies into their product lines, enabling them to outperform their industry peers. ServiceNow (NYSE:NOW), another great example, decided to fully buy into AI a few years ago, and has been so successful at doing so that they have become the dominant market share leader in their industry.

What does AI do for those kinds of companies?

AI provides companies with the intelligence and flexibility to create additional software capabilities and dimensions. In the past, without AI, software programs were hard-coded, meaning they really had no way of adapting to new and changing environments or to learn from their mistakes. AI provides those important aspects of flexibility and adaptability that were missing.

These AI-enhanced programs now, in essence, become more intelligent. They can identify incorrect decisions when faced with new or unfamiliar conditions, and ideally learn from historical data to form the correct decisions when encountering similar situations in the future.

Can you highlight a company in the portfolio that has performed particularly well?

Most companies in the portfolio are not very well known to the public. They tend to be more B2B companies, serving other businesses instead of retail consumers.

A great example is a company called Samsara, which falls into the “sophisticated users of AI” category. This is a company uniquely positioned in the software sector. While most software companies are set to optimize some parts of the digital transformation process, Samsara provides a SaaS solution to optimize the physical supply operations like fleet management.

The company allows customers to collect data from physical assets like shipping containers and trucks in real time to closely monitor and optimize their physical operations. The company combines internet-of-things — IOT — devices, AI/ DL-based analysis and cloud-based software functionalities to provide the capability.

Since their founding eight years ago, the company has become dominant in the supply chain management software industry. It currently generates over $1 billion in annualized revenue run rate. Yet, Samsara has barely scratched the surface with a potential total addressable market of well over $100 billion globally.

For complete list of fund holdings, please visit: https://www.true-shares.com/lrnz/

Sam Kim is a Portfolio Manager for Black Hill Capital Partners, LLC. Mr. Kim has been in the investment management industry for over 25 years, specializing in investment, research and analysis of secular growth companies, largely in technology related sectors. Prior to founding BH Capital Partners, Mr. Kim was a Senior Analyst at Amerindo Investment Advisors, a top-tier Wall Street investment management company that focused on investing in long-term secular growth companies in the science and technology sectors. During his tenure at Amerindo, in addition to covering newly public companies, Mr. Kim was also active in analyzing and investing in late-stage private companies. Prior to his financial career, Mr. Kim acquired first-hand knowledge in designing large-scale, real-time software and communication systems as a Systems Analyst/Consultant at Teledyne Browne Engineering and a Software Systems Engineer at Raytheon Corporation. Mr. Kim received a B.S. in Bio-Medical Engineering; an M.S. in Computer Engineering from Boston University; and an M.S. in Management from the Sloan School of Management at MIT.

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