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Short Interest In Cathie Wood's ARK Innovation Fund Has Plunged

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by Tyler Durden
Thursday, May 26, 2022 - 01:22 PM

In "signs that Cathie Wood's ARKK fund is likely still nowhere near a bottom", it was reported yesterday that the interest in shorting the fund is starting to fall - almost as fast as the fund itself continues to plunge. 

"Traders are taking bets against [Wood] off the table," a new report from Bloomberg said this week, noting that short interest as a percentage of shares outstanding in Wood's flagship fund has dropped in recent weeks.

Just 9.2% of the fund is out on loan, compared to a scorching high of 17% back in April. The decline in short interest has come as the fund has fallen 28% over the last month, the report notes.

James Pillow, managing director at Moors & Cabot Inc., told Bloomberg: “The fund remains in a clear downtrend, so normally traders would have continued to press such a short. It is likely that the broadly covered inflows spooked some of the less-committed shorts.”

Since December, ARKK is down about 60%, the report notes. Matt Maley, chief market strategist for Miller Tabak + Co. added: “Maybe they just wanted to take some profits now that it has fallen so much.”

Chris Gaffney, president of world markets at TIAA Bank added: “High rates hurt growth stocks. In turbulent times -- it’s volatile, and the volatility is going to continue, especially in the short term -- you don’t want to be investing in speculative companies, you don’t want to be investing in companies that just don’t have a proven earnings record.”

And while ARKK continues to plunge, the Tuttle Short Innovation ETF (SARK) has been seeing outflows. Investors yanked about $39 million from the inverse Cathie Wood fund in the latest session where data was available. 

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