Easy come, easy go.
The carnage continued for Cathie Wood's ARK Invest funds on Thursday as the NASDAQ failed to do what it is supposed to, which is go up every day fueled by Fed cash with no rhyme, reason or mind paid to the fundamentals of its components.
The firm's flagship ARKK fund saw over $200 million in outflows, breaking with a trend it had been setting in the 18 months prior of continued, seemingly endless, inflows.
Between five of ARK's ETFs, Wood saw outflows of $443 million on the day.
Additionally, Jesse Felder noted yesterday on Twitter that more people now, than ever, were either lining up specifically to bet against Wood, or using her funds as a levered ShitCo-specific vessel for positioning short the index itself. After all, what speculative names go up, must come down.
'The number of put options outstanding on the ARK Innovation exchange-traded fund — which would pay off if the ETF’s price declines — has hit a high of 368,000 contracts.' https://t.co/lAIbzUIeAP pic.twitter.com/6FyDEOkvin— Jesse Felder (@jessefelder) February 25, 2021
Doubts about Wood's stock picking acumen seem to be growing. Short bets against ARK continue to rise - a trend we first pointed out that had started weeks ago.
It appears as though due to Wood's recent positioning - which we noted two days ago included selling out of well known liquid names and piling into some speculative tech small caps - that liquidity could be an issue.
@ARKInvest is facing daily fund outflows of 1.4% of their AUM this week. They're trimming all positions as this happens.— Motorhead (@BradMunchen) February 26, 2021
ARK's most illiquid positions are shitco's, listed here by the number of days it would take ARK to exit, based on avg daily volume. ur welcome. $TSLAQ pic.twitter.com/srg7OHkb36
This is likely what the above put buyers are betting on.
As we noted this week, one thing Wood hasn't had to deal with over the last 18 months during her meteoric rise has been a serious sell off in Tesla. And, over the last few sessions, Tesla - one of the main driving forces behind Wood's investing "genius" - has continued to look shaky while, at the same time, Bitcoin - another asset with numerous ties to Wood's portfolio and positions - is almost 30% off its recent highs.
We noted several weeks ago that short interest in ARK funds had "exploded" after ARK's banner 2020. Short interest as a percentage of shares outstanding for the firm's flagship $21 billion ARK Innovation ETF spiked to an all time high of 1.9% from just 0.3% two months ago, according to data from IHS Markit Ltd. and Bloomberg. That number now stands at nearly 3.5%, as evidenced in the chart above.
We were one of the first to highlight how the law of large numbers could eventually stand in the way of Cathie Wood's success.