ARKK - Ark Innovation ETF

[JRM]

Anybody look at this ETF?  I'm wondering if shorting this would be a good "basket" approach to hedging some of the froth in the market.  Tesla is a 10% position, and I think they are getting a lot of negative attention right now by posting their Tesla spreadsheet to GitHub and videos like this:

 

They are basically regurgitating Elon's fantasies as their Tesla investment thesis.  I'd love to see their analysis on other profitless cash burners in their portfolio.

 

Here is the list of their current holdings: http://portfolios.morningstar.com/fund/holdings?t=ARKK&region=usa&culture=en-US

[Gregmal]

Yup. I've traded ARKG at times for exposure to the genomics stuff, but with all of the ARK ETFs, I can't help but think that these were created for the sole purpose of capitalizing on the easiness of marketing a dot com like portfolio during a bull market.

[JRM]

Near the end of the interview she says "...Tesla can centralize their computing better than competitors."  I think she's throwing big words together to make pretty sounding word salads.  One of my degrees is a B.S. in computer engineering.  I don't think she has any clue what she's talking about.  It sounds like she's taking talking points from other people and regurgitating them.

[james22]

+125% since late May.

 

:o

[BG2008]

Anybody look at this ETF?  I'm wondering if shorting this would be a good "basket" approach to hedging some of the froth in the market.  Tesla is a 10% position, and I think they are getting a lot of negative attention right now by posting their Tesla spreadsheet to GitHub and videos like this:

 

They are basically regurgitating Elon's fantasies as their Tesla investment thesis.  I'd love to see their analysis on other profitless cash burners in their portfolio.

 

Here is the list of their current holdings: http://portfolios.morningstar.com/fund/holdings?t=ARKK&region=usa&culture=en-US

 

Honestly, aside from Tesla, the other stuff that she owns actually kind of makes sense.  I have heard of Elliot Turner talk about Roku and he sounded reasonable.  In light of that, it's probably not the worst thing to own as a basket.  The success of the ETF likely leads to these names performing better as it attracts additional capital which creates more demand for shares. 

[JRM]

+125% since late May.

 

:o

 

I guess I'll stick to my day job.

[Read the Footnotes]

I looked in to it a bit and almost started a thread on the topic. You may have noticed me making some jokes about them elsewhere on CoB&F.

 

This is all original thinking on my part, so I'm curious to get feedback.

 

JRM says "I don't think she has any clue what she's talking about." Well I too have questions. Here are a couple of examples.

 

She rather famously was a giant Tesla bull and gave interviews where she reassured investors and said it was IMPOSSIBLE for Tesla to go bankrupt. Literally a couple of weeks later Musk came out and said something LIKE "whew, that was a close one, we would have gone bankrupt in a couple of days if we didn't pull a rabbit out of a hat." I think Musk can be extremely optimistic and promotional, so why shouldn't I just take his word over hers on this matter? Sounds like she might not know much about cash burn, repayment schedules, etc.

 

Then back in the spring, she tweeted some stuff saying basically that COVID-19 was overblown and we should just not worry about it. So not only did that belief not age well, the one source that she used to back up her reasoning was someone with statistics background that wasn't that relevant and he was not a specialist in virology or epidemiology. In addition the resume had all sorts of red flags, which was quickly followed up by his former academic institution listed on his resume putting out a statement saying that he never taught there. At a minimum it seems like someone at ARK doesn't know how to read an academic resume, doesn't know how to read a scientific resume, doesn't know how to read a medical resume, or doesn't know the relevant fields of expertise. Of course, it could be they have no respect for expertise.

 

I found a bunch of other stuff, but I'll leave it at two examples that made me question whether anyone at the ARK knows finance or science, both of which should be relevant.

 

My biggest question about ARK is whether or not they are actually operating as a feedback mechanism in two different ways.

 

First, I am curious if they are either intentionally or subconsciously crowd sourcing their investment decisions rather than using some other basis. What I mean by that is that they are more involved with social media engagement with investors than any other organization I have ever seen. In their case it would be pretty easy to use your own media engagement numbers to understand what your investors like. So ARK could send out some tweets about individual stocks. Then they could look at which tweets stocks their investors engaged with the most and whatever stock that is, THAT is what they buy for the fund.

 

Second, with their current size, whatever they buy will get driven up in price so could the fund becom a "self-fulfilling double beauty pageant feedback loop"? (just made that term up especially for ARK and I'm kind of proud of it.

 

The problem I ran in to with going short or buying puts was that I, like BG2008, concluded that there were a few good positions in the fund or at least some positions I didn't think would be fun to bet against.

 

 

Two other nuggets just for fun.

 

1. Check out the video about halfway down the page linked below, but don't just watch it. Watch it two or three times minimum. If you're not laughing by the third time, you're not paying enough attention.

https://ark-invest.com/

2. The pitch marketing pitches are frighteningly well done. A couple of times I found myself watch her in interviews or whatever and thinking wow this sounds really exciting, I should get out my checkbook and then after a couple of seconds of reflection I'm asking myself what the heck was I just listening to? That makes no sense to me. Well done pitches, but not much connection to the earth under my feet in my opinion.

[JRM]

lol

 

You forgot to mention that they don't hire "traditional" financial analysts with "formal" accounting and finance training so they are not constrained by "fundamental" analysis.

[Spekulatius]

Boomers had Janus funds and the Millennials have ARKK.

[Pondside47]

 

Two other nuggets just for fun.

 

1. Check out the video about halfway down the page linked below, but don't just watch it. Watch it two or three times minimum. If you're not laughing by the third time, you're not paying enough attention.

https://ark-invest.com/

 

you mean when she says the traditional financial world is very siloed and specialized while her firms is focused "only on disruptive innovations" and it seems she's copying Trump's hand gesture? 

[Read the Footnotes]

lol

 

You forgot to mention that they don't hire "traditional" financial analysts with "formal" accounting and finance training so they are not constrained by "fundamental" analysis.

Not an issue, they can teach them whatever they don't need to know.  ::)

 

Check out that video i linked to some more and then we can have some real fun, although I'm worried we will need to take it to the politics sections since that is apparently the correct place to say anything offensive you want. They are basically so on trend that they need their own politics thread too.

 

Also be sure to check out what is going on or possibly NOT going on on the large video monitor mounted on the wall in the background. I've got two really funny observations about that.

[Read the Footnotes]

 

Two other nuggets just for fun.

 

1. Check out the video about halfway down the page linked below, but don't just watch it. Watch it two or three times minimum. If you're not laughing by the third time, you're not paying enough attention.

https://ark-invest.com/

 

you mean when she says the traditional financial world is very siloed and specialized while her firms is focused "only on disruptive innovations" and it seems she's copying Trump's hand gesture?

 

There's even better material than that. Give it a couple more watches and watch for different things, not just verbal content, but style, interactions, etc. I guarantee your third or fourth viewing will make a very different impression if you watch in a detached analytical way.

[Castanza]

It’s what you would expect if r/wallstreetbets hired a professional PR firm to handle marketing.

[JRM]

I was thinking about shorting with both hands, but I see they have an "open" layout concept in their office. I may need to transfer my 401k to ARK funds.

[BG2008]

I looked in to it a bit and almost started a thread on the topic. You may have noticed me making some jokes about them elsewhere on CoB&F.

 

This is all original thinking on my part, so I'm curious to get feedback.

 

JRM says "I don't think she has any clue what she's talking about." Well I too have questions. Here are a couple of examples.

 

She rather famously was a giant Tesla bull and gave interviews where she reassured investors and said it was IMPOSSIBLE for Tesla to go bankrupt. Literally a couple of weeks later Musk came out and said something LIKE "whew, that was a close one, we would have gone bankrupt in a couple of days if we didn't pull a rabbit out of a hat." I think Musk can be extremely optimistic and promotional, so why shouldn't I just take his word over hers on this matter? Sounds like she might not know much about cash burn, repayment schedules, etc.

 

Then back in the spring, she tweeted some stuff saying basically that COVID-19 was overblown and we should just not worry about it. So not only did that belief not age well, the one source that she used to back up her reasoning was someone with statistics background that wasn't that relevant and he was not a specialist in virology or epidemiology. In addition the resume had all sorts of red flags, which was quickly followed up by his former academic institution listed on his resume putting out a statement saying that he never taught there. At a minimum it seems like someone at ARK doesn't know how to read an academic resume, doesn't know how to read a scientific resume, doesn't know how to read a medical resume, or doesn't know the relevant fields of expertise. Of course, it could be they have no respect for expertise.

 

I found a bunch of other stuff, but I'll leave it at two examples that made me question whether anyone at the ARK knows finance or science, both of which should be relevant.

 

My biggest question about ARK is whether or not they are actually operating as a feedback mechanism in two different ways.

 

First, I am curious if they are either intentionally or subconsciously crowd sourcing their investment decisions rather than using some other basis. What I mean by that is that they are more involved with social media engagement with investors than any other organization I have ever seen. In their case it would be pretty easy to use your own media engagement numbers to understand what your investors like. So ARK could send out some tweets about individual stocks. Then they could look at which tweets stocks their investors engaged with the most and whatever stock that is, THAT is what they buy for the fund.

 

Second, with their current size, whatever they buy will get driven up in price so could the fund becom a "self-fulfilling double beauty pageant feedback loop"? (just made that term up especially for ARK and I'm kind of proud of it.

 

The problem I ran in to with going short or buying puts was that I, like BG2008, concluded that there were a few good positions in the fund or at least some positions I didn't think would be fun to bet against.

 

 

Two other nuggets just for fun.

 

1. Check out the video about halfway down the page linked below, but don't just watch it. Watch it two or three times minimum. If you're not laughing by the third time, you're not paying enough attention.

https://ark-invest.com/

2. The pitch marketing pitches are frighteningly well done. A couple of times I found myself watch her in interviews or whatever and thinking wow this sounds really exciting, I should get out my checkbook and then after a couple of seconds of reflection I'm asking myself what the heck was I just listening to? That makes no sense to me. Well done pitches, but not much connection to the earth under my feet in my opinion.

 

I'll bet you're the kind of person who claims that the Kardashians have no skill and is only famous for being famous

[BG2008]

I looked in to it a bit and almost started a thread on the topic. You may have noticed me making some jokes about them elsewhere on CoB&F.

 

This is all original thinking on my part, so I'm curious to get feedback.

 

JRM says "I don't think she has any clue what she's talking about." Well I too have questions. Here are a couple of examples.

 

She rather famously was a giant Tesla bull and gave interviews where she reassured investors and said it was IMPOSSIBLE for Tesla to go bankrupt. Literally a couple of weeks later Musk came out and said something LIKE "whew, that was a close one, we would have gone bankrupt in a couple of days if we didn't pull a rabbit out of a hat." I think Musk can be extremely optimistic and promotional, so why shouldn't I just take his word over hers on this matter? Sounds like she might not know much about cash burn, repayment schedules, etc.

 

Then back in the spring, she tweeted some stuff saying basically that COVID-19 was overblown and we should just not worry about it. So not only did that belief not age well, the one source that she used to back up her reasoning was someone with statistics background that wasn't that relevant and he was not a specialist in virology or epidemiology. In addition the resume had all sorts of red flags, which was quickly followed up by his former academic institution listed on his resume putting out a statement saying that he never taught there. At a minimum it seems like someone at ARK doesn't know how to read an academic resume, doesn't know how to read a scientific resume, doesn't know how to read a medical resume, or doesn't know the relevant fields of expertise. Of course, it could be they have no respect for expertise.

 

I found a bunch of other stuff, but I'll leave it at two examples that made me question whether anyone at the ARK knows finance or science, both of which should be relevant.

 

My biggest question about ARK is whether or not they are actually operating as a feedback mechanism in two different ways.

 

First, I am curious if they are either intentionally or subconsciously crowd sourcing their investment decisions rather than using some other basis. What I mean by that is that they are more involved with social media engagement with investors than any other organization I have ever seen. In their case it would be pretty easy to use your own media engagement numbers to understand what your investors like. So ARK could send out some tweets about individual stocks. Then they could look at which tweets stocks their investors engaged with the most and whatever stock that is, THAT is what they buy for the fund.

 

Second, with their current size, whatever they buy will get driven up in price so could the fund becom a "self-fulfilling double beauty pageant feedback loop"? (just made that term up especially for ARK and I'm kind of proud of it.

 

The problem I ran in to with going short or buying puts was that I, like BG2008, concluded that there were a few good positions in the fund or at least some positions I didn't think would be fun to bet against.

 

 

Two other nuggets just for fun.

 

1. Check out the video about halfway down the page linked below, but don't just watch it. Watch it two or three times minimum. If you're not laughing by the third time, you're not paying enough attention.

https://ark-invest.com/

2. The pitch marketing pitches are frighteningly well done. A couple of times I found myself watch her in interviews or whatever and thinking wow this sounds really exciting, I should get out my checkbook and then after a couple of seconds of reflection I'm asking myself what the heck was I just listening to? That makes no sense to me. Well done pitches, but not much connection to the earth under my feet in my opinion.

 

I'll bet you're the kind of person who claims that the Kardashians have no skill and is only famous for being famous

 

Read the Footnote, these are great observations.  That last comment was obviously tongue in cheek

[Gregmal]

I'll bet you're the kind of person who claims that the Kardashians have no skill and is only famous for being famous

 

Oh they definitely have some skills. Skills that half the population would certainly appreciate. Watch the video!

[Spekulatius]

I was thinking about shorting with both hands, but I see they have an "open" layout concept in their office. I may need to transfer my 401k to ARK funds.

 

Nobody wears masks in the office

[TREVNI]

 

Two other nuggets just for fun.

 

1. Check out the video about halfway down the page linked below, but don't just watch it. Watch it two or three times minimum. If you're not laughing by the third time, you're not paying enough attention.

https://ark-invest.com/

 

you mean when she says the traditional financial world is very siloed and specialized while her firms is focused "only on disruptive innovations" and it seems she's copying Trump's hand gesture?

 

There's even better material than that. Give it a couple more watches and watch for different things, not just verbal content, but style, interactions, etc. I guarantee your third or fourth viewing will make a very different impression if you watch in a detached analytical way.

 

I think what convinced me to get out my checkbook was the side angle camera shots and the guy writing on glass. If that doesn't do it for you, the close-up of the guy spinning a pen on his fingers is also evidence of superior analytical ability.

[MattR]

Well ARK hat a terrific run last year, but this is mostly due to the bull market and increased inflows. Sven Carlin made a video where he argues that since ARK mostly invested in small cap, each inflow would increase the stock price.

 

I am subscribed to their daily trade notification and have noticed that since their extreme inflows in November/December they started to invest into much bigger companies whereas before they were much smaller.

 

Personally while Cathie is skilled and I enjoy her outlook videos -  I think that over the long run they will under perform the market -  just like most innovation, future or whatever they call themselves funds do.

[Gregmal]

https://seekingalpha.com/news/3651297-space-sector-on-watch-ark-invest-said-to-be-starting-etf

 

LOL, good for them.

[Jurgis]

Well ARK hat a terrific run last year, but this is mostly due to the bull market and increased inflows. Sven Carlin made a video where he argues that since ARK mostly invested in small cap, each inflow would increase the stock price.

 

I am subscribed to their daily trade notification and have noticed that since their extreme inflows in November/December they started to invest into much bigger companies whereas before they were much smaller.

 

Personally while Cathie is skilled and I enjoy her outlook videos -  I think that over the long run they will under perform the market -  just like most innovation, future or whatever they call themselves funds do.

 

I also subscribed to their daily trade notification - thanks for a pointer.

And I also see that they are buying a lot of slower growing old companies. E.g. NVS, Roche, etc in ARKG and CAT, DE, LMT, NXPI, etc in ARKQ.

This of course lowers the valuation of their holdings, but also hits the expected growth of the holdings.

We'll have to see how it's gonna ultimately play out. Just pretty clear that ARK funds are no longer holding just high-growth revolutionary companies.

[Read the Footnotes]

 

Two other nuggets just for fun.

 

1. Check out the video about halfway down the page linked below, but don't just watch it. Watch it two or three times minimum. If you're not laughing by the third time, you're not paying enough attention.

https://ark-invest.com/

 

you mean when she says the traditional financial world is very siloed and specialized while her firms is focused "only on disruptive innovations" and it seems she's copying Trump's hand gesture?

 

There's even better material than that. Give it a couple more watches and watch for different things, not just verbal content, but style, interactions, etc. I guarantee your third or fourth viewing will make a very different impression if you watch in a detached analytical way.

OK. Getting back to this fun promotional video:

 

https://ark-invest.com/

 

Here are a couple of fun nuggets:

• @ 1:36 when they are sitting in the conference room teleconferencing in other team members, the video is a still image, and a pretty goofy one at that.
  
• @ 1:44 a computer monitor has been swung out of the way and hidden behind a plant so that they can make it look like the analysts are hanging on Cathie Wood's every word.
  
• @ 1:45 the analyst flies away like every second counts and markets hang on Cathie Wood's every thought.
  
• @ 1:55 what the heck is playing on the large column mounted monitor? It looks like a CCTV recording of someones living room played on 16x speed
  
• @ 2:04 at the happiest conference table in the world, the vibe looks to me like "everybody is just so happy and everybody thinks exactly the same thing, which is of course exactly what you, dear investor, think"
  
• @ 2:33 we are back in the happiest conference room on the planet and nobody notices that the video conference is still frozen.
  

 

One of the biggest questions is why are they conferencing in colleagues I think we just saw in the next room? Compare the guy seen on the video screen at 2:33 to the guy seen drawing on the glass wall at 0:59. Isn't that the same guy we say at 0:19 and 0:59. It's pretty clear that this was staged, which makes sense, but the choices they made to stage it are pretty hilarious.

 

I could keep going regarding funny visual stuff in the video, but maybe this will inspire some fun goofing off and sleuthing for other board members.

 

On the topic of the verbal content, Cathie Wood's intro about silos and specialization is just a mash of garbldy goop, in my opinion. About all I can understand from it is ARK good, everyone else bad. She basically says silos (specialization) is bad, but then goes on to explain how their good because they are focused (specialized)? Am I correct?

 

The narration sounds good on the surface, but as soon as I scratch the surface, it doesn't make any sense to me. The video like everything else from ARK seems to imply a bright shiny future with no risk, but since there's no discussion of valuation or risks, I have a feeling its quite the opposite.

 

At two minutes the an analyst says:

• We publish all our research online
  
• Weekly newsletter
  
• Podcast
  
• Uses social media outlet like twitter
  

She goes on to say that they are seeking feedback from on their research to get to the truth. That just helps to strengthen my belief that ARK is full of all kinds of crowdsourcing BS, circular thinking, social proof, and self-fulfilling prophecies.

 

Cathie Woods closing statement is that investment firms not set up like Ark are going to be depriving investors of the biggest opportunities of our lifetime. That's an interesting statement. Sounds very carefully phrased to elicit FOMO to me.

 

Has anyone spent any time in their research center? They say they publish "all their research". If that is true, it would seem like they don't do a lot of research based on what I see published on the website. I just checked out some of the "models" they published. Let's say it was interesting. Has anyone else taken a look? I'm interested to hear others thoughts?

 

https://ark-invest.com/category/analyst-research/

[peridotcapital]

It seems like the correct bull bet on Tesla is essentially the sole reason for their recent success. Before TSLA began its run, they were lagging the QQQs.

 

I went back and looked to see what portion of their outperformance over QQQ since TSLA's IPO was attributable just to TSLA. Assuming they have had a 10% allocation to Tesla their entire run (about what they have in it now), roughly 100% of the alpha (more than 20%/year) is due to Tesla alone.

 

So, this is a tech index fund that made a big, fairly risky bet on one stock and nailed it. Now that AUM has grown from below $100M to $40B on that bet, how do they keep this up? Doesn't seem likely they can.

 

And now that they are so big, and thus have to start buying mega caps like BMY, it will only drag down their alpha even faster.

[JRM]

Good stuff.  I like Cathie's comment about how if people don't get in on this opportunity then they will miss out on the biggest opportunity ever.  Talk about FOMO.

 

They published their Tesla model a while back.  It got pretty well torn apart by various folks with "traditional" accounting and finance background. If I remember correctly if you zeroed out the sales it still gave Tesla an insane valuation.