Cathie Wood’s Ark Invest snaps back with near record inflows following a week of outflows amid tech decline

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • Cathie Wood’s Ark Invest bounced back from record outflows last week with near record inflows, according to data compiled by Bloomberg.
  • The Ark Innovation Fund saw $464 million in inflows on Friday, representing the second-biggest day of inflows on record.
  • Wood has stuck to her high-growth strategy amid the recent market volatility, selling shares of large cap names like Apple and Amazon to fund purchases of higher-risk stocks like Tesla.
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Investors aren’t abandoning Cathie Wood’s Ark Invest following a volatile week in the stock market, according to recent fund flow data compiled by Bloomberg.

The ARK Innovation ETF saw near-record inflows of $464 million on Friday, signalling that investors were willing to buy the near 20% dip in the ETF. The best day of inflows for the ARK Innovation ETF was more than $600 million in early January, according to Bloomberg.

The second-largest day of inflows for ARK came after record outflows, with the ARK Innovation ETF losing $465 million last Monday. Altogether, Ark Invest shed about $5 billion in assets under management last week, which is just a fraction of the firm’s more than $60 billion in ETF assets, according to Bloomberg.

The ARK funds struggled last week amid a tech-heavy sell-off that was spurred by a spike in interest rates and concerns about rising inflation. Wood’s most concentrated bets, Tesla and Bitcoin, traded down more than 20% amid the decline.

But Wood hasn’t backed down from her strategy of investing in highly disruptive companies amid the decline. Based on the firm’s daily trading activity, Ark Invest was consistently selling large-cap names like Apple and Amazon to fund purchases of riskier companies like Tesla and Palantir

Investors who bought the dip in the ARK Innovation ETF were rewarded on Monday, when the ETF surged nearly 5% amid a broad rally in the stock market. The Ark Innovation ETF is up 10% year-to-date as of Monday’s close.

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A complete guide to Cathie Wood’s mind-blowing success, her firm’s investing strategies, and the stock picks she’s betting on for the future

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • Cathie Wood has earned cult-like status on Wall Street due to her firm’s investing outperformance.
  • Her firm’s ETFs are attracting inflows that rival industry legends like Vanguard and BlackRock.
  • Insider is covering every angle of her career, investing strategies, and market outlook. 
  • Visit the Business section of Insider for more stories.

Cathie Wood emerged as the breakout star investor during one of the most chaotic years in Wall Street history. 

While her career dates back to 1981, 2020 was the year when her performance and fund inflows earned her a cult-like following in the industry. 

The $24.5 billion ARK Innovation ETF, her flagship exchange-traded fund, rose 150% last year, thanks partly to Tesla’s 730% gain. Her other funds that cover the fintech, genomic, and internet industries all landed on the list of the 10 best-performing ETFs of 2020. 

Retail and professional investors alike took notice of Wood’s performance: Last year, Ark’s family of ETFs grew at the fastest proportional growth rate of any ETF or mutual-fund manager in a Morningstar database that goes back to 2000.

Ark ETFs continue to command the industry’s attention in 2021 by attracting new investor money at a pace that rivals stalwarts like BlackRock’s iShares and Vanguard. Even her less-popular index funds are in the top 10% of flows year-to-date, according to Bloomberg data.  

Following Wood’s rapid rise over the past few years, there are questions about whether, and for how much longer, she can sustain her outperformance. The recent sell-off in high-growth stocks triggered a record one-day outflow of $465 million from her flagship innovation ETF. But in a sign of her staying power, investors poured a near-record $464 million back into the fund on the final trading day of February, Bloomberg data shows.

Insider will continue covering every angle of her cult-like status, from her ascendancy to the biggest investing bets she is making and the corners of the market she’s exploring next. 

Subscribe now to read Insider’s full coverage of Cathie Wood.  

Inside her meteoric rise: Cathie Wood made a career betting on the future. Insiders reveal how the ARK Invest founder won the funds (and hearts) of memelord traders and boomer investors alike.

Inside Ark Invest’s workplace, and what it’s like to work for Wood: Famed investor Cathie Wood has staffed her firm with analysts in their 20s and 30s as she looks to predict the future. 2 analysts break down what it’s like to work at Ark Invest.

Inside her stock-picking process: Cathie Wood’s firm built 3 of the world’s best ETFs, which all doubled in value within 3 years. She told us her 3-part process for spotting underappreciated technologies before they explode.

Why she was unfazed by the bond-induced sell-off in stocks: Cathie Wood breaks down why she was ‘very comfortable’ as the stock market got rocked by last week’s bond sell-off – and shares her outlook for what happens after the tech rout

Her views on the biggest market events of 2021 so far: Cathie Wood and her analysts discuss why Tesla’s $1.5 billion bitcoin purchase could trigger a wave of corporate investments, the fallout of the GameStop-AMC phenomenon, and their bullish views on the Chinese stock behind Clubhouse

Ark Invest’s 2021 outlook: Cathie Wood’s ARK Invest runs 5 active ETFs that more than doubled in 2020. She and her analysts share their 2021 outlooks on the economy, bitcoin, and Tesla.

The investment case for TeslaArk Invest, Tesla’s biggest bull, broke down its thesis on the electric-car maker ahead of its inclusion in the S&P 500

Her stock picks that crushed the market in 2020: We’re very surprised we didn’t underperform in the 4th quarter’: Cathie Wood and her analysts break down their stock-selection process and the top 10 picks that contributed to the outperformance of ARK ETFs in Q4 2020

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5 ways to hedge against an inflation spike, plus what it’s like to work for Cathie Wood

Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through what’s been happening in markets, as well as what to expect in the coming weeks. Here’s what’s on the docket:

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Your weekly recap/outlook

This past week was a total throwback. GameStop traders ran rampant. The US stimulus outlook caused significant market gyrations. It felt like the last week January all over again.

GameStop surged 104% in the final 30 minutes of trading on Wednesday and extended those gains to 311% at Thursday intraday highs. The spike was enough to cost short-sellers – apparently gluttons for punishment – another $1.9 billion in mark-to-market losses. The rally petered out on Friday, but it was refreshing for everyone’s favorite brick-and-mortar game retailer to get another couple days in the sun.

Strangely enough, the latest GameStop frenzy was largely overshadowed by a bond-market tantrum that saw 10-year Treasury yields climb to a more than one-year high. The culprit was renewed inflation fears stemming from President Biden’s proposed $1.9 trillion stimulus bill.

The worry is that consumer prices will overheat as the US economy snaps back into shape, and the Fed’s assurance that it will keep a loose monetary policy for the foreseeable future did nothing to soothe nerves. The most overvalued segments of the stock market – most notably mega-cap tech – sold off swiftly as the skyrocketing yields suddenly made bonds an attractive alternative.

At the center of all this going forward, per usual, is the economic recovery. The degree of progress will inform ongoing stimulus negotiations, which will stoke further debate about inflation risk. The narrative that prevails will determine whether the bond-market outburst was a flash in the pan, or a longer-term development that could upend portfolios and send stocks into another tailspin. Stay tuned.


5 ways to guard against inflation

Traders in the S&P 500 stock index futures pit signal offers near the close of trading at the Chicago Mercantile Exchange May 23, 2007

John Normand of JPMorgan is keeping a close eye on rates, and says a small increase could make a huge difference because the economy is so leveraged. Normand says he’s still “comfortable” investing today, but that might change if real rates pick up. He laid out five asset classes that will protect investors if inflation ramps up.

Read the full story here:

JPMorgan says these 5 cross-asset hedges are the best ways to protect portfolios from stimulus-driven inflation


Working at Cathie Wood’s Ark Invest

cathie wood ceo ark invest profile 2x1

All eyes were on Cathie Wood’s Ark Invest this past week amid volatility in tech stocks. In recent interviews, two Ark analysts share how Wood has built the firm to weather pullbacks – and their responses provide insights into what it’s like to work at the reputed firm.

Read the full story here:

Famed investor Cathie Wood has staffed her firm with analysts in their 20s and 30s as she looks to predict the future. 2 analysts break down what it’s like to work at Ark Invest.


SPAC winners and losers 

Traders and clerks at the CME Group toss confetti to celebrate the final trading session of the year December 31, 2010

The red-hot SPAC craze isn’t slowing as 154 SPACs have raised $48.5 billion so far this year. JPMorgan’s Michael Cembalest studied 85 SPACs to examine the winners and losers in the ecosystem. He also shared why it will be important to monitor the SPAC market over the next two years.

Read the full story here:

The chairman of investment strategy at JPMorgan’s $2.2 trillion asset management arm studied 85 completed SPAC IPOs – and lays out the winners and losers in the ‘significant wealth transfers’ within the ecosystem


Stock pick central

Seeking experts who are willing to name names? Look no further:

Read the original article on Business Insider

Tesla climbs 4% as Cathie Wood and others buy the dip after a multi-day skid

GettyImages 1130590361
Elon Musk’s Tesla soared in 2020

  • Tesla rose as much as 4% on Wednesday as investors bought the stock’s recent dip.
  • Ark Invest CEO Cathie Wood said her firm “bought a lot” of Tesla shares on Tuesday, when the electric automakers stock dropped as much as 13%.
  • Tesla closed Tuesday 11% lower over a two-day period.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Tesla shares recovered on Wednesday as investors bought a recent dip in the stock that saw the electric automaker’s 2021 gains wiped out.

The firm’s shares climbed as much as 4%, paring an 11% loss over the prior two trading days. 

The rebound came after Ark Investment Management CEO Cathie Wood said on Tuesday that she had “bought the dip” on Tuesday, or purchased shares at a discounted price after a decline. Tesla stock tumbled as much as 13% at intraday lows during the session.

“We bought a lot of Tesla today across any strategy that holds Tesla,” Wood told Bloomberg Radio.

She added: “All I know is we are keeping our eyes on the prize and the prize just got a little bit more interesting.”

Tesla soared more than 670% in 2020 as investors wagered heavily that it will be one of the foremost winners of the electric-car revolution as global institutions increasingly focus on climate change. Yet investors have gone off Elon Musk’s car company in recent days amid worries about sky-high valuations and the scaling-back of certain production lines.

Rising inflation expectations and bond yields have also made expensive tech stocks look less attractive – especially those that are yet to produce much in the way of profits.

Tesla rose 2.1%, to $713.65 per share, at 9:55 a.m. ET.

Screen Shot 2021 02 24 at 8.57.34 AM
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Cathie Wood’s ARK Invest now holds more than 7 million shares in the Grayscale Bitcoin Trust

Cathie Wood

The asset manager ARK Invest boosted its holdings in the Grayscale Bitcoin Trust in the fourth quarter of 2020, according to a recent filing with the Securities and Exchange Commission.

Cathie Wood’s ARK, which manages assets of about $50 billion, bought 2.14 million additional shares in Grayscale’s digital-currency investment product, bringing its total holdings to 7.31 million shares.

Grayscale Bitcoin Trust, the world’s largest bitcoin fund and the first of its kind, enables investors to speculate on and gain exposure to bitcoin in the form of a security without having to buy or store the digital token directly. Shares in the investment vehicle are part of a range of traditional finance products that track bitcoin prices.

The trust holds over 649,130 bitcoins, or roughly 3.1% of bitcoin’s supply, according to CoinDesk. Its website says its assets under management are about $31 billion.

As of Tuesday, ARK’s new share position in the Grayscale product was about $351 million. The firm’s Next Generation Internet ETF holds shares in the trust.

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them – and the group has already nearly doubled over the past 3 months

The price of bitcoin rose to $49,998 on Tuesday before slipping back. Interest from Wall Street institutions added momentum to its rally.

Wood predicted earlier this month that bitcoin would shoot higher this year. “Bitcoin is only [at] roughly a $600 billion market cap,” she told Yahoo Finance. “So even half the size of Apple or Amazon, right now. Doesn’t that put it into perspective? And yet, it is a very big idea, I think. A much bigger idea than Apple or Amazon.”

ARK has five exchange-traded funds run by Wood and her team of analysts that actively invest in companies they believe will change the world through “disruptive innovation.”

Other companies that Ark invested in during the fourth quarter were Tesla, Square, Roku, Pinterest, DocuSign, Alibaba, Snapchat, PayPal, and Netflix.

Read more: Canadian regulators just approved the world’s first Bitcoin ETF. Here are the 5 things investors need to know about the outlook for a US version.

Read the original article on Business Insider

JPMorgan rolls out a supercharged tech trade designed to amplify gains in stocks like Tesla, report says

Nasdaq exchange
  • JPMorgan is selling investment products that allow clients to augment their bets on high-flying tech stocks.
  • The notes track three exchange-traded funds from Ark Investment Management leveraged 1.5 times over a six-year period, Bloomberg reported Monday.
  • The underlying ETFs have all rallied at least 150% in 2020. Two reaped the benefits of Tesla’s 660% year-to-date surge.
  • The product’s rollout comes as investors shift out of tech stocks and into cyclical sectors amid hopes for a vaccine-fueled recovery.
  • Visit the Business Insider homepage for more stories.

Tech stocks have already led the stock market to several record highs in 2020. JPMorgan thinks investors want to double down on the sector.

The bank is letting investors in on a new trade that amplifies bets on three tech-focused exchange-traded funds, Bloomberg reported Monday. The product tracks three ETFs from Ark Investment Management leveraged 1.5 times over a six-year period. JPMorgan has already sold $589,000 of the notes.

The funds – Ark’s Innovation, Genomic Revolution, and Next Generation Internet ETFs – are among the year’s best performers. Large stakes in Tesla boosted the Innovation and Next Generation Internet funds in 2020, as the automaker’s shares have rallied more than 660% throughout the year.

The Genomic Revolution ETF is up 194% year-to-date. The Innovation and Next Generation Internet ETFs have rallied 154% and 153%, respectively.

Read more: JPMorgan unveils its 50 ‘most compelling’ stock picks to buy for 2021 – and details why each one will be a top performer

JPMorgan has debuted the product as investors begin to rotate out of tech stocks. The sector’s insulation from the virus fallout led them to outperform through much of the year, but hopes for a vaccine-fueled recovery in 2021 have prompted mass shifts into value stocks and previously neglected sectors. A prolonged rotation could drag tech stocks lower and weigh heavily on the new products’ gains.

The structured products also only track the worst-performing of the three ETFs, meaning one’s plunge would cancel out any gains across the other two funds. Still, those holding the notes are protected against the first 20% decline in any of the ETFs, Bloomberg reported.

Ark’s Innovation, Genomic Revolution, and Next Generation Internet ETFs trade under the tickers ARKK, ARKW, and ARKG, respectively. Though all three broadly track tech themes, the Genomic Revolution fund focuses on innovations in health care including CRISPR, gene editing, and agricultural biology.

Read more: ‘We are very confident that the stupid is currently alive and well in this market’: Jeremy Grantham’s heir apparent Ben Inker breaks down how GMO plans to profit from the growth bubble through a new long/short equity strategy

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