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Executives Of ARKK-Owned Companies Are Unloading Billions In Stock

Tyler Durden's Photo
by Tyler Durden
Monday, Jan 10, 2022 - 01:15 PM

Could that bag that Cathie Wood is holding have been passed to her directly from the very same company insiders she is publicly supporting? It sure looks that way.

That's because executives of companies held by Wood's ARKK Innovation Fund are selling shares at a "swift clip", according to a new report from the Financial Times

The report notes that insiders have sold a stunning $13.5 billion in stock while purchasing just a paltry $11 million over the last six months. The sales are "far higher than in any previous period," the report notes. 

When you ex out the $10.7 billion recently sold by Elon Musk, the figure still stands at $2.8 billion versus $11 million in purchases. These are still "levels well above historic norms, having averaged nearer $500m per six-month period between 2015 and 2020," FT notes. 

Vincent Deluard, global macro strategist at StoneX commented: “The spike in insider sales and the lack of buying interest is worrying. The median ARKK holding has lost 55 per cent since its 52-week high: if insiders are not buying now, why should investors?”

He continued: “Company insiders tend to be quite contrarian in their actions. They buy after a big drop. We have had a big drop and we have seen a lot of selling and not much buying. If the smart people are not buying, why should anyone else? Bubbles are always and everywhere a transfer of wealth from the public to insiders.”

Ben Johnson, director of global ETF research at Morningstar, told FT that the data “would seem to indicate that Cathie and team have more conviction in these firms than the people running them”.

Recall, we pointed out just hours ago that ARKK's investors have, in aggregate, lost money since the fund's inception. 

Zero Hedge contributor Simon Lack of SL Advisors wrote yesterday:

Last Thursday Jim Cramer described the performance of the ARK Innovation ETF (ARKK) run by Cathie Wood as “atrocious”. This caught my attention – Cramer, whether you love him or not, doesn’t often criticize other asset managers.

It turns out that the demise of ARKK highlights what happens too frequently in finance. To wit, because inflows to ARKK followed strong performance, as is usually the case, it turns out that the cumulative P&L on ARKK is negative. It peaked last February at just under $12BN and has been in steep decline ever since. At the beginning of this year it crossed into negative territory. The average dollar invested in ARKK has lost money.

ARKK has started the year down close to 10%, Zero Hedge contributor Quoth the Raven wrote last week.

"In addition to horrific returns to start the year, Wood is once again underperforming her benchmark, already -5.92% lower than the NASDAQ is tracking," he noted

Outside of Tesla, ARKK's 9 other Top 10 weightings were all down between -2.46% and -16.25% heading into the end of last week. 

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