Ask the Manager: Adam Patti on Unlocking Income from Buffett’s Best Ideas

Welcome to Ask the Manager, ETF Central's series where we sit down with top experts, analysts and portfolio managers to dive into the latest investment trends, market updates, and economic insights.

This week, we sat down with Adam Patti, CEO of VistaShares, to explore how his firm is delivering high monthly income by blending Buffett-style investing with a modern options strategy through their new ETF, OMAH.

Why did you launch an Income Product based on Berkshire?

Warren Buffett is obviously one of if not the greatest investor of all time and the long-term performance of Berkshire Hathaway (BRK.B) has for decades made it one of the core portfolio holdings of choice for equity investors with long time horizons.

But Berkshire is also famous for not paying a dividend, so we asked ourselves the question, “how can we build an ETF that mirrors the largest holdings in the Berkshire portfolio while also paying high monthly income?”

The answer to that question wound up becoming the VistaShares Target 15 Berkshire Select Income ETF

Tell me about the ETF’s strategy

OMAH is actively managed with the equity component made up of exposure to BRK.B itself as well as Berkshire’s top 20 publicly disclosed equity holdings. Alongside that, the fund utilizes a proprietary data driven options strategy that is designed to deliver a targeted annual income of 15%, with monthly distributions of approximately 1.25%.

As excited as we are about this strategy, we’re equally excited about the team behind it. VistaShares may be a relatively new ETF brand, but I’ve been in the ETF and indexing space for the better part of three decades, as have many of my colleagues.

On the options side, the strategy is being run Jay Pestrichelli, Chief Trading Officer with Tidal Financial and one of the true pioneers of this fast-growing equity/options ETF category.

How do you achieve the 15% target income?

OMAH’s income strategy is constructed around the use of options strategies involving contracts on the securities that make up the equity sleeve of the portfolio. We sell Call Options and also make use of Call Spreads. 

It’s an approach that has gained a great deal of attention and a number of adherents in recent years, but this is the first time it’s been used to help investors “invest like Buffett” with significant potential monthly income.

How do you use OMAH in a portfolio?

Part of what makes OMAH such a compelling vehicle is the fact that it can play numerous roles in a portfolio.

OMAH’s large- and mid-cap equity exposures make it an ideal component of a core equity portfolio, while the 15% target income it seeks to deliver makes it a compelling addition to an income strategy, perhaps as a complement or replacement for other high-yielding exposures.

Interestingly investors who hold BRK.B have been migrating to OMAH to create a “synthetic dividend” for their existing BRK.B exposure. 

What is the role of an income product in today’s volatile markets?

I think OMAH is a great example of how much the definition of “income product” has changed in recent years.

The innovation in the ETF industry has really allowed investors and advisors to think much more creatively than the staid “this is my equity allocation… this is my bond allocation…” approach of old.

With OMAH, one now has the potential for both significant income generation and long-term capital appreciation. It’s possible to slot that just about anywhere in an investor’s portfolio and find a meaningful role for it.