How selectivity and valuation shape the search for future market leaders

By ERShares

The ERShares Private-Public Crossover ETF (Nasdaq: XOVR) seeks businesses with the potential to become enduring market leaders while evaluating business quality, competitive advantages, valuation and portfolio fit. Its investment approach rests on research and selectivity, including the discipline to pass when business economics or investment terms are less compelling.

That discipline includes deciding what to leave out. In a FOX Business discussion with Charles Payne, Eva Ados explained why XOVR avoided private investments in OpenAI and Anthropic while building exposure to SpaceX and Kalshi. Those choices illustrate our focus on where economic value could accrue and which businesses might retain it.

Why XOVR avoided private investments in OpenAI and Anthropic

OpenAI and Anthropic develop frontier AI models: systems competing at the leading edge of AI capability. ERShares’ concern, as expressed in the discussion, centered on the economics of maintaining that position. Staying at the frontier requires substantial investment, while competition from DeepSeek, Kimi and other lower-cost models could put pressure on pricing.

This creates a tension for investors. Cheaper AI can be valuable to customers, but it may make it harder for model providers to sustain attractive margins. Revenue growth alone does not resolve that tension if serving customers and developing the next generation of models remain expensive.

For XOVR, passing on those private investments reflected our assessment of the economics. A technology can transform an industry while the investment case remains less attractive. We seek opportunities where our conviction in the business is supported by the economics of owning it.

Why valuation matters alongside growth

An outstanding business can still be a disappointing investment if the purchase price assumes too much future success. XOVR’s research considers whether business quality, growth potential and valuation justify an allocation. The goal is to identify promising companies at terms the asset manager believes offer an attractive investment opportunity, rather than treating popularity or rapid growth as sufficient reasons to invest.

SpaceX and the infrastructure thesis

ERShares’ SpaceX thesis focuses on launch infrastructure and satellite connectivity. These are operating businesses that support access to space and communications, making the investment case different from a bet on which AI model will lead the next benchmark.

The attraction, in ERShares’ view, is the potential value of infrastructure that customers use. That thesis still depends on execution, demand and valuation. SpaceX faces technical, regulatory, competitive and capital-spending risks; infrastructure exposure does not eliminate investment risk.

XOVR obtained SpaceX exposure while the company was private. Current fund disclosures describe continued indirect exposure through an SPV after its public listing, until the criteria for distributing public shares have been met. Buying XOVR does not mean owning SpaceX shares directly.

Kalshi and the economics of an exchange

Kalshi operates a prediction-market exchange where participants trade event contracts tied to real-world outcomes. Kalshi describes its exchange as a CFTC-regulated Designated Contract Market. ERShares’ investment thesis considers the potential of regulated exchange infrastructure as well as growth in prediction-market participation.

The business question is whether greater participation and liquidity can support a scalable exchange. An exchange could potentially benefit as trading activity expands, but that outcome depends on competition, operating costs, customer retention and the regulatory environment. Regulatory designation does not guarantee commercial success or remove legal risk.

XOVR’s Kalshi exposure is held through Kalshi SPV, LLC, a wholly owned subsidiary of the fund. An investment in XOVR provides exposure to the entire portfolio, rather than a standalone investment in Kalshi.

Micron and HBM4 in the AI infrastructure discussion

The FOX Business discussion also addressed Micron Technology (MU) and HBM4, the fourth generation of high-bandwidth memory. HBM helps move data rapidly to the processors used in demanding AI workloads. Micron describes HBM4 as supporting applications including AI reasoning and multimodal systems.

ERShares’ thesis is that falling AI costs could broaden adoption and increase consumption, potentially supporting demand for memory and other infrastructure. This is a conditional demand argument. Efficiency gains, spending cycles and competition could offset it, and greater industry demand does not guarantee higher profits or stock returns for any supplier. Micron is an example from the discussion; consult XOVR’s current portfolio disclosures for holdings and weights.

How the XOVR ETF connects public and private markets

XOVR combines a public-equity portfolio with select private-company exposure. ERShares applies a venture-capital-style research lens to public innovators, guided by ER30TR Index research and the Entrepreneur Factor® framework, alongside a measured private-company allocation.

That structure provides a way to access selected businesses at different stages of development through one ETF. It also makes portfolio context essential: the fund’s returns reflect the combined performance of its holdings, their portfolio weights and fund expenses. A concentrated position can have a substantial effect on the overall result.

Seeking the next market leaders

XOVR’s VC Lens looks for the potential to build category leadership over time. Research considers leadership, innovation, competitive positioning, scalability, capital efficiency and valuation. We seek companies whose strengths could support lasting business value and contribute to long-term portfolio performance. We do not assume that the most visible company will be the strongest investment.

Frequently asked questions about XOVR and AI investing

Why did XOVR pass on private investments in OpenAI and Anthropic

ERShares’ stated concern was that intense model competition and substantial capital requirements could make durable investment returns harder to achieve. The decision reflected a view of business economics at the time of the discussion, rather than a forecast that either company would fail.

Can XOVR provide exposure to Kalshi

Yes. XOVR’s disclosed Kalshi exposure is held through Kalshi SPV, LLC. XOVR shareholders own shares of the fund, whose results reflect its entire portfolio; they do not own Kalshi stock directly. Holdings and weights can change.

SPV investments involve risks, including limited liquidity, valuation uncertainty, lack of certain regulatory protections, additional fees and expenses, and no assurance that the SPV will achieve its investment objective

Does XOVR invest based on hype

XOVR’s approach is to evaluate business quality, competitive advantages, growth potential, valuation and risk. A company’s relevance to a popular theme is not sufficient on its own. ERShares seeks investments it believes can become durable market leaders and contribute to portfolio returns, with the discipline to pass when the investment case is less compelling.

Research the portfolio behind the thesis

XOVR’s investment case rests on selectivity: examining where innovation could create durable economic value and being willing to pass when the investment economics are less compelling. The reasoning behind an allocation matters as much as the company name attached to it.

To explore the strategy, review the XOVR fund overview, the VC Lens framework and current holdings and weights. Read the prospectus before investing.

Explore the research and supporting information: XOVR fund materials | XOVR VC Lens | Kalshi in XOVR | Kalshi regulatory description | Micron HBM4

Important investment disclosures

Views are ERShares’ opinions, may change, and are not recommendations to buy or sell securities. Investment theses, selectivity and valuation discipline do not guarantee returns. Investing involves possible loss of principal; XOVR is subject to concentration, private-investment, liquidity, valuation and SPV-cost risks.

SpaceX and Kalshi exposure is indirect through SPVs; buying XOVR does not provide direct ownership of either company. ETF trading liquidity does not make private holdings liquid. Holdings may change. Avoiding OpenAI and Anthropic may result in missed gains. Prediction markets face regulatory and business risks. Micron is an illustrative discussion example; consult current holdings.

Investing can result in loss of principal. XOVR is non-diversified; concentration, private-company exposure and SPVs create liquidity, valuation and additional-cost risks. Private investment valuations are estimates and may differ from actual realized values. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV, and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

Consider the fund’s objectives, risks, charges and expenses before investing. Read the XOVR prospectus carefully.

Distributed by Foreside Financial Services, LLC.