Skeptics Are Circling Cathie Wood As ARKK Continues To Underperform For 2021

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by Tyler Durden
Friday, Aug 20, 2021 - 08:30 AM

By now, you already know that The Big Short's Michael Burry has placed a big bet against "active manager" Cathie Wood over at ARK Invest. We detailed Burry's position in this recent article.

But it isn't just Burry that is lining up to publicly offer his skepticism about Wood's capital management style. Others have followed suit in criticizing Wood of late, leading many to wonder if the borrowed time her "strategy" has been on is finally up.

Semper Augustus Investments Group LLC’s Chief Investment Officer Chris Bloomstran also took to Twitter to announce his skepticism of ARK by putting together a scathing takedown of Wood, Bloomberg noted this week. 

In noting the insane valuations of many of Wood's stocks, Bloomstran dryly wrote: “What I concluded is you and your team must be counting on growth. Lots of it."

The report notes that Laurion Capital Management LP, GoldenTree Asset Management LLC and Cormorant Asset Management LLC also hold short positions in Wood's ARKK "Innovation ETF". Short interest for the ETF in general is up to 4.6%, near its record high of 5.3% which it hit in March of this year.

Ark became everyday news last year after Wood's fund - the likely beneficiary of organized gamma squeezes by Bill Hwang, in certain names, and SoftBank, for the entire NASDAQ - brought in billions of dollar of new inflows.

That momentum hasn't continued into 2021, Bloomberg notes. Coincidentally, SoftBank has admitted and since is under investigation for their call option buying and Bill Hwang has since blown up his fund. We're sure it's just a coincidence that ARK isn't wildly outperforming this year. 

ARKK is instead down 6% this year after returning 149% in 2020. The ETF was hit by outflows of $238 million on Tuesday of this week, which was the largest daily outflow for the ETF this month, the report notes.

Wood responded to Burry on Twitter, claiming that Burry didn't understand “the fundamentals that are creating explosive growth and investment opportunities in the innovation space.”