The last few weeks have been a wild ride for high-tech growth stocks,
driving some of the most innovative companies in the market down to bargain-basement prices before
having them rally 10% or more. I don't often focus on the short term, but the way the market
and ARK Invest's holdings moved this past month revealed something surprising to me
about the medium and long-term. So, now that all of ARK Invest's trading data is in for May,
I'd like to show you a clear pattern in their highest conviction positions
and what it could mean for the future of their funds, specifically ARKK, ARKG, and ARKW.
If you enjoy this type of commentary and analysis, consider liking this video and subscribing to the
channel with all notifications turned on. That way, you'll be the first to know when I come out
with new research, regardless of how YouTube tunes its algorithm. Let's get right into it.
The first thing I always look at is how ARK Invest's total assets under management have
changed. When money flows out, the stocks Cathie Wood doesn't sell become just as important as the
stocks she buys. For example, if ARK Invest's funds shrink by 20% but their Tesla position only
shrinks by 5%, that's actually a big net increase in Tesla's weight, relative to the other holdings.
Cathie Wood actively manages 6 thematic funds. At the start of May, those funds
totalled to about $47.5 billion dollars in assets under management, or AUM. Over the next two weeks,
ARK's AUM collapsed by over 20% to $38 billion dollars. By the end of the month,
their total AUM rebounded by 10%, still ending the month more than 10% below where they started.
NOW that we have that data point, let's walk through the changes in their holdings between
the first and last trading days in May and the pattern that I'm seeing. Each row in this table is
a stock ARK holds and the table is ordered by the amount of money they had in that stock on May 28th
when I combine their 6 actively managed funds. I can only combine ARK Invest's funds like this
because they are all conviction weighted and have the same fund manager,
Cathie Wood. You can't just do that with any set of funds.
Since their AUM ended down by about 10% over the month, each row in this table is colored
so that positions that shrank by less than 10% are green and those that shrank by more than 10%
are in red. Any row in white shrank roughly by the same amount as their overall funds.
These colors just help me quickly see the relative changes in the way ARK weighs their positions.
Here's where things get interesting. Let's take a look at the companies
that are now in ARK Invest's top 25 positions, which make up about half
of their total assets under management. First, I'll cover the special cases.
Coinbase, ticker symbol C O I N, is special because it just IPOed on April 14th and ARK
Invest already has a combined $1.1 billion dollars in it, which is the fastest rising position I've
seen since I started this channel. Coinbase was ARK Invest's 14th biggest combined position
at the start of the month but is now their 7th after they increased their share count by almost
70%. There are a few quick things I want to point out about this stock. Stick with me.
ARK Invest has been buying up Coinbase stock since the second it IPOed. They didn't
wait. Cathie Wood has a very bullish long-term vision for Bitcoin specifically and, apparently,
Coinbase as a platform in general. I wouldn't be surprised to see ARK Invest keep buying now
and then make aggressive trades around it's upward price action later this year.
Also, something like 8% of Tesla's cash is currently in Bitcoin. 1% of all of Square's assets
is currently in Bitcoin. Coinbase's revenue is very sensitive to Bitcoin. So, even if you're
not interested in crypto, you should be aware that 3 of ARK Invest's top 10 positions are affected
by Bitcoin and it's an increasingly important part of their funds performance. Don't sleep on this.
If we look at a chart of Coinbase since it IPOed, we can see it's down by over 25%, and
down about 20% for the month of May. The trend on Coinbase is currently still downward. Bitcoin
dropped from around $60 thousand dollars near the beginning of May to under $40 thousand at the
end. In my opinion, if you believe in Coinbase's long-term future, and you're bullish on Bitcoin,
there's an opportunity to get into Coinbase for a better price than Cathie Wood. That's pretty rare.
I'm not a financial advisor and this isn't a recommendation to just go out and buy Coinbase
stock. If you want to know my thoughts on Coinbase and ARK's massive position in it,
I'll leave a link to my Coinbase video in the top-right corner of your screen
right now and in the description below.
Quick side note: ARK always reports their previous days positions on the next market open. So if
you're checking my math and wondering why these tables don't match Google's prices exactly, it's
because you have to shift everything back one day. My table shows coinbase's share price
falling by 16.98 percent for the month. Here's that same 16.98 percent on Google, but from April
30th to May 27th. The way ARK reports their data is what's causing these small differences.
The other special stock on this list is UiPath, ticker symbol P A T H, which IPOed on April 21st,
just one week after Coinbase. UiPath is special because it's the only stock to
be in all 6 of ARK Invest's funds. I'll cover it in a separate episode, just like Coinbase,
so hit that notification bell if you're interested in stock-specific research like that.
Over the last month, ARK Invest has more than doubled their total position in UiPath.
If you look at it's chart since it IPOed, everything is a little choppy and volatile,
just like Coinbase's. After some initial excitement,
there was a big drop in the first half of May, then a rally in the second half.
Let me show you that same pattern in price action among ARK Invest's biggest buys.
Twilio, ticker symbol T W L O, was ARK Invest's 11th biggest position at the end of April but
is now their 6th biggest position at the end of May. If we look at the 1-month chart for Twilio,
it shows a 20% drop over the month and then roughly a 20% rebound, ending the month about
7% down. ARK now has 32% more shares of Twilio than they did at the start of May.
Twitter, ticker symbol T W T R, declined by 8% in the first 2 weeks of May before rallying over 15%
in the last 2 weeks. ARK Invest has 40% more shares in it than a month ago,
making it their 16th biggest position overall.
Palantir, ticker symbol P L T R, almost the same story,
dropping 17% in the first half of the month before rallying 25%
in the second half. ARK's position in Palantir is close to 40% bigger now as wlel.
Draftkings, ticker symbol D K N G,
almost the same story. Big drop in the first half, about 28%, big rally in the second half,
about 21%. These are huge swings. ARK's position in Draftkings is up over 50%.
The last one on our list is Skillz, ticker symbol S K L Z, down about 17% in the first half of the
month and then up 23% in the second half. ARK Invest's position in Skillz stock now is almost
double what it was a month ago. They have just under $400 million on Skillz stock now,
moving it from their 61st biggest position to their 31st in just 1 month.
In each of these cases, I thought Cathie Wood was buying simply because they dipped hard in
the middle of the month, but I was wrong. If you zoom out and look at the big picture,
ALL of ARK's funds are moving this way, which means that, on average,
so are the stocks they're made up of. ARKG, their genomics fund, shows this same pattern.
ARKQ, their autonomy and robotics fund, shows this same pattern, and so on.
Just to drive the point home, here's this same pattern in Tesla, ticker symbol T S L A,
Teladoc, ticker symbol T D O C,
and Square, ticker symbol S Q, ARK Invest's current top 3 positions.
A LOT of high-tech growth stocks across all of ARK Invest's themes are showing this pattern,
signaling what could be the start of a market-wide rotation back into growth stocks. A lot of other
indicators are pointing to this rotation to growth as well. So, if most of their stocks are showing
a similar pattern in price AND there could be a rotation back into growth stocks in geneal,
why rebalance the funds so heavily into these stocks specifically?
I think this shows the link between ARK's research, conviction,
and investment decisions. Out of all the companies they research, these must be the
stocks that dipped the hardest relative to ARK's future expectations of them. That's
the only reason to pick them when every stock is moving more or less same way and you don't know
where the bottom will be. We can only see this potential bottom for growth stocks in hindsight.
To Cathie Wood and her team, these stocks were the ones at truly bargain-basement prices
when everything was falling together in the moment. That's what makes this
data set worth talking about; we get to see what they chose
to buy when all of the options became cheaper due to larger market forces.
Remember what I said earlier: the positions Cathie Wood doesn't sell are as important
as the ones she buys. Likewise, the positions Cathie Wood doesn't buy when they drop in price
are as important as the ones she sells, since both of those result in a smaller weighting of
that position in ARK's funds. So, what were they selling or letting drop in price without buying?
Twist Biosciences, T W S T,
dropped from their 15th biggest position to their 23rd over the month.
Novartis, ticker symbol N V S, dropped from 23rd to 29th.
Iovance Biotherapeutics, I O V A, dropped from 21st to 34th
after ARK's combined holdings in it dropped over 40%.
Regeneron Pharmaceuticals, R E G N, almost the same story, dropping from 25th to 36th.
Pure Storage, P S T G, same thing.
There are definitely other types of positions that shrunk further down the list but, in my opinion,
the pattern among ARK Invest's BIGGEST positions is pretty clear: they are now much more weighted
toward advanced internet technology companies than genomics companies. In my opinion, this is because
stay-at-home stocks got hit just as hard during this rotation from growth to value stocks, even
though the underlying web technology is much more mature than genomics or blockchain technologies.
This pattern becomes even more clear when we focus on the changes just in ARKK, ARK
Invest's $21 billion dollar flagship fund filled with their highest-conviction stock picks from
across every disruptive innovation theme they cover. All of the biggest buys and sells I
highlighted throughout the episode are reflected there. ARKK now overlaps a lot less with ARKG
than it did before and a lot more with ARKW than it did before. Everything I'm seeing in this data
makes me a lot more bullish on next generation internet companies than I was a couple months ago.
Based on everything I've shared, I think we're going to see ARKW, ARK Invest's fund
themed around advanced internet technologies, become a higher performing fund in the short
and medium term. I'll leave a link to my extended episode exploring some of the technologies behind
ARKW in the top-right corner of your screen right now and you can find it in the description below.
If you want to see the full list of ARK Invest's changes in positions
over the course of this crazy month-long bounce in prices, I've shared a Google Sheet with them in
the description below as well. I'm also rolling out the dashboards to my supporters on Patreon
and channel members right here on YouTube, so you can explore and interact with ARK's
data for yourself instead of hoping I cover something you're looking for in a future
video. In my opinion, better information today means better investments tomorrow.
And if you found my coverage of ARK Invest's biggest positions shifting from genomics to
internet technology companies, or the associated resources in the description below valuable,
let me know by investing in the like button and subscribing to the channel with all
notifications turned on. That's a great way to invest in the channel that invests in you.
Until next time This is ticker symbol you, my name is Alex, reminding you,
that the best investment you can make is in you.