Author Topic: Any ARKK/ARKW ETF holders?  (Read 5516 times)

gutts

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Any ARKK/ARKW ETF holders?
« on: February 19, 2018, 11:23:29 PM »
Hey folks,
I have at least several years before I can push the big red rat race escape button. I am going to exercise a more aggressive investing approach. Already converted VFFVX to VFIAX (Vanguard SP500 Index) in my 401K and I don't really feel any urge to keep adding VTSAX on top of that. So, I am considering to buy something else, with higher potential risk/reward ratio. I've been watching ARKK and ARKW for 3 months now and I really like both ETFs:

https://ark-funds.com/arkw
https://ark-funds.com/arkk

As for ARKW, I put a lot of faith in the cloud technologies. I would also like to add ARKK just to have exposure to a larger hi-tech blend.
However, I am a bit concerned about the trading volumes of these ETFs. No one gave a damn thing about both until May 2017 and then suddenly the daily volumes spiked to the moon. There are even bigger spikes started in Nov, 2017. Both are 50+% Institutional owned. The fees suck but last year performance was crazy however I feel like it might have been the accumulation process...

So, does anyone hold any of them? Any thoughts?

Boll weevil

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Re: Any ARKK/ARKW ETF holders?
« Reply #1 on: February 20, 2018, 06:24:55 AM »
I currently hold ARKK.

I got into it in sort of a roundabout way... I wanted more exposure to 3D printing so I bought into two of their other. ETFs, PRNT and ARKQ. PRNT wasn't doing as well as I liked and the more I thought about it, I figured there's a lot of overlap between the 2. The other thing is that ARKK tries to cover multiple types of innovation, while ARKW, ARKQ, and the other one I can't think of at the moment are more focused, and of the three sectors, I really don't know which one is going to perform best over the long term.

So about a month ago I sold off my PRNT and ARKQ and bought into ARKK. This was right before the recent drop, but I'm planning on a long term holding so I'm not that worried about it.

I'd say if you think one sector is going to outperform the others, then buy into that sector. If you want to hedge your bets a bit, ARKK may be a better choice (and I think they cherry pick off of the sector-specific funds to get their performance to date).

As to the expense ratio, I don't worry about it all that much. Yeah it's high when compared to pretty much anything from Vanguard, but it's baked into the ticker price, so to me it's out of sight/out of mind.

One thing I don't like about ARK's ETFs is there's no way to automatically reinvest the distributions (at least when held in a Vanguard brokerage account). I haven't totally figured out what I'm going to do with them, but am leaning towards manually adding them to my main Vanguard index fund holding.

gutts

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Re: Any ARKK/ARKW ETF holders?
« Reply #2 on: February 20, 2018, 11:25:41 PM »
Thank you for your insight! I do believe in the bright future for the cloud, however, the market is still overpriced currently, so there is no guarantee that the bubble won't explode. Anyway, I wanted to invest more aggressively and shoot for a higher risk/reward ratio. You pay for what you get =). So, yeah, ARKW+ARKK to have more exposure. I am gonna use Robinhood instead of Vanguard to hold ETFs, because it has no fees and I am in love with their mobile app. And actually, having no fees solves the problem with distributions as it opens possibilities to add smaller amounts of stocks/ETFs to your portfolio at no cost.

chicklets123

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Re: Any ARKK/ARKW ETF holders?
« Reply #3 on: January 26, 2021, 01:55:14 PM »
Has anyone been purchasing lately?


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guitar_stitch

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Re: Any ARKK/ARKW ETF holders?
« Reply #4 on: January 26, 2021, 01:58:53 PM »
Has anyone been purchasing lately?

I have been loading up ARKW, and it's been paying pretty well.

GreenEggs

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Re: Any ARKK/ARKW ETF holders?
« Reply #5 on: February 04, 2021, 05:39:08 PM »
After the Spring crash, I started looking for better ETFs to invest in besides VTI.  I discovered ARK Funds and Invesco's TAN solar energy ETF.  I nervously watched them for a couple of months, thinking that there might be a second crash.  I finally decided to buy some ARKW on 6/29/20 for $81.75 per share.  It kept climbing quickly, so I decided to try all of the other ARK ETFs and began buying on 7/6/20 and also purchased some VGT on the same day for comparison.


Here are the gains as of today 2/4/21:


VGT      29.6%
ARKW   87
ARKK    89
ARKF    66
ARKG    95
ARKQ    89


I finally began buying TAN on 8/5/20  It has gained 126%


I recently realized that Invesco has another alternative energy ETF  "PBW"  which has performed slightly better than TAN has.  I started buying it on 12/25/20 and it's already gained 19.4%


The last lots of ARK that I purchased were ARKQ on 12/15/20,  ARKG on 12/29/20, and ARKF on 1/4/21.




I gave my daughter some money to invest around the first of the year.  I helped her register with Vanguard and choose some ETFs.  She chose ARKG, ARKQ, ARKK, TAN, PBW, & QQQM on 1/8/21.  It just happened to be a terrible day to get into the market....  Her account has been negative for many of the days since then, but is finally up 2.94% overall today.  Her TAN holding is still down 3.4%.


She's still in college and I wanted to get her interested in investing & following the market.  I figure it will be easier for her to "see" the value of saving and investing if she has some seed money to follow.  Since I have the same funds it's something we can follow together & chat about. 

Steeze

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Re: Any ARKK/ARKW ETF holders?
« Reply #6 on: February 04, 2021, 06:26:40 PM »
Just traded 10% of my net worth for equal parts VGT/VHT/ARKK by selling VTSAX around new year. I like the vision of Kathy Woods, I hope what she believes is true. At first I balked at the fees, but after reading a bit of ERE I feel better about investing in a fund manager that shares your values. If nothing else she has attracted billions to invest in cutting edge technology which I think is overall positive.

Also sold another 10% worth and picked up some small cap value last spring. Part of an overall strategy of having more tilts / asset categories to rebalance between. Either to decrease volatility or for my own entertainment, canít tell which yet :)

ice_beard

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Re: Any ARKK/ARKW ETF holders?
« Reply #7 on: February 05, 2021, 04:52:09 PM »
I buy ARK funds weekly like I buy VTSAX, just not as much of an allocation. 
A friend who was early into Telsa told me about ARK last year and ARKK as an opportunity to get some TSLA exposure.  I started buying ARKK around $67, so I'm a fan.  I have much smaller holdings in their other funds, with ARKF as my second largest holding in ARK.  Yes it costs more, but the gains have covered that.  They also had a capitol gains payout in December which I wasn't expecting and was really some icing on an already good cake. 

I'm well aware this rocketship could come crashing back to earth, but I also feel that ARK funds is like any other investment broker out there and is filling a lucrative void in the current investment environment.   YMMV.

minority_finance_mo

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Re: Any ARKK/ARKW ETF holders?
« Reply #8 on: February 05, 2021, 05:01:03 PM »
Hmm, given it's up 4x+ since March, is it too late to get in? Have the gains mostly been had this last year? Anyone buying in first-time - would love to get a second opinion.

ice_beard

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Re: Any ARKK/ARKW ETF holders?
« Reply #9 on: February 06, 2021, 09:56:31 AM »
Hmm, given it's up 4x+ since March, is it too late to get in? Have the gains mostly been had this last year? Anyone buying in first-time - would love to get a second opinion.

Well, if it hits $200 in 2021, will you think that then is a good time to get in, or now was better?

No one can really answer this question except you.  It's up to you as an investor, to decide if that decision is correct for you and your situation, or not based preferably upon your personal research and not what others say on an internet forum. 

Painters Brush

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Re: Any ARKK/ARKW ETF holders?
« Reply #10 on: February 06, 2021, 11:05:56 AM »
I read that ARK is quickly becoming the largest holder of several stocks. If stocks rise and fall based on the sentiments of (guessing here) 10%(?) 5%(?) of the available float then ARK is pushing up the stock values of some of their portfolio. This is the making of a bubble or at least an over valuatiion that will correct harshly.

With highly, very highly, recommend that anyone who holds this ETF package use a stop loss order to lock in your profits. I'm not saying sell but after a run up like the ARK funds have had, its wise to lock in your profit. Others might have better advice than me on how to do that but if you've had a 40 or 80% run up, a 15% trailing stop might be reasonable. I tend to have tighter stops for my own reasons. I haven't quite figured out the alchemy so do your own research but... please do lock in your profits.

Some history... many years ago an investment guru, Frank Mersch ran a resource mutual fund with a company called Altamira. Once the fund became famous for its amazing run up under Frank's guidance, it made the news and I bought some. I got in too late and rode it down for a while. There is nothing in the ARK story that tells me this will end differently. The ONLY question I have is... WHEN will it plateau and then tank.

Use stops.

GreenEggs

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Re: Any ARKK/ARKW ETF holders?
« Reply #11 on: February 06, 2021, 07:49:36 PM »
I just noticed that ARK's 3-D printing fund, PRNT, which never gets mentioned has been on fire. +39.29 YTD

MustacheAndaHalf

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Re: Any ARKK/ARKW ETF holders?
« Reply #12 on: February 07, 2021, 06:29:20 AM »
Has anyone been purchasing lately?
I read that a year ago ARK Invest (the company) had $3 billion assets under management, and they now have $50 billion.

It may help to peek at what the companies are buying.  Both ARKK and ARKW have Tesla as their top holding, at 10% of assets in both funds.

bermudasq

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Re: Any ARKK/ARKW ETF holders?
« Reply #13 on: February 09, 2021, 09:06:35 AM »
I've been buying ARK fund options (on Etrade) and it's been quite lucrative.  Also PRNT and IZRL options.  I recently sold (closed) all of the ARK holdings with Tesla as I thought there might be a Tesla bubble.  I'm sure I'll be buying ARK options for years to come.

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Re: Any ARKK/ARKW ETF holders?
« Reply #14 on: February 09, 2021, 09:52:07 AM »
I've been watching ARKK and ARKW for 3 months now and I really like both ETFs:

Would you be interested in them, or would your screening technique have found them, if they had not gone up 300% in the past 11 months and they were not all over the financial media?

Bear in mind that even buying Amazon.com - arguably the best stock market pick of the past 2 decades - in March of 1999 for $86 would have been followed by a loss of 93% over the next 2.5 years.

Boll weevil

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Re: Any ARKK/ARKW ETF holders?
« Reply #15 on: February 09, 2021, 04:59:50 PM »
I read that ARK is quickly becoming the largest holder of several stocks. If stocks rise and fall based on the sentiments of (guessing here) 10%(?) 5%(?) of the available float then ARK is pushing up the stock values of some of their portfolio. This is the making of a bubble or at least an over valuatiion that will correct harshly.

With highly, very highly, recommend that anyone who holds this ETF package use a stop loss order to lock in your profits. I'm not saying sell but after a run up like the ARK funds have had, its wise to lock in your profit. Others might have better advice than me on how to do that but if you've had a 40 or 80% run up, a 15% trailing stop might be reasonable. I tend to have tighter stops for my own reasons. I haven't quite figured out the alchemy so do your own research but... please do lock in your profits.

Some history... many years ago an investment guru, Frank Mersch ran a resource mutual fund with a company called Altamira. Once the fund became famous for its amazing run up under Frank's guidance, it made the news and I bought some. I got in too late and rode it down for a while. There is nothing in the ARK story that tells me this will end differently. The ONLY question I have is... WHEN will it plateau and then tank.

Use stops.

Couple of points:
1. The Ark funds are supposed to have no more than 10% of their assets in 1 company, so I would expect if that one company grows much faster than the others to become, say 15% of the assets, the fund should be selling off that company and buying something else to keep within that 10%. I donít know how frequently they check for this though (daily, weekly, monthly, quarterly, etc).

2. The Ark funds are supposed to be investing in innovation. Once it looks like a technology has matured, theyíre supposed to divest and look for the company thatís going to make the next big advance.

Expect their growth to be uneven over time. Thereíll be times where the technology is being developed and the related stocks will be treading water (or drowning), and other times where the technology is finally ready for market and lots of people think they have to have it, and the related stocks explode.

effigy98

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Re: Any ARKK/ARKW ETF holders?
« Reply #16 on: February 09, 2021, 05:16:39 PM »
I have them all in my M1 taxable account. So far they are the 2nd best performers behind MSTR. I am for the most part a terrible stock picker and get nervous and sell at the wrong times and cannot stop tinkering. Realized some time ago that Cathy and crew do it much better then I and I will gladly pay them for the service. I tried being a value investor for over 10 years and got crushed over and over and over again. I have given up and joined the heard and sticking with innovation in my taxable account as I am tired of seeing everyone around me get rich while my portfolio stayed stagnant. I'm sure it will crash now that I have capitulated.
« Last Edit: February 09, 2021, 05:20:06 PM by effigy98 »

ice_beard

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Re: Any ARKK/ARKW ETF holders?
« Reply #17 on: February 10, 2021, 10:16:16 AM »
I read that ARK is quickly becoming the largest holder of several stocks. If stocks rise and fall based on the sentiments of (guessing here) 10%(?) 5%(?) of the available float then ARK is pushing up the stock values of some of their portfolio. This is the making of a bubble or at least an over valuatiion that will correct harshly.

With highly, very highly, recommend that anyone who holds this ETF package use a stop loss order to lock in your profits. I'm not saying sell but after a run up like the ARK funds have had, its wise to lock in your profit. Others might have better advice than me on how to do that but if you've had a 40 or 80% run up, a 15% trailing stop might be reasonable. I tend to have tighter stops for my own reasons. I haven't quite figured out the alchemy so do your own research but... please do lock in your profits.

Some history... many years ago an investment guru, Frank Mersch ran a resource mutual fund with a company called Altamira. Once the fund became famous for its amazing run up under Frank's guidance, it made the news and I bought some. I got in too late and rode it down for a while. There is nothing in the ARK story that tells me this will end differently. The ONLY question I have is... WHEN will it plateau and then tank.

Use stops.

Couple of points:
1. The Ark funds are supposed to have no more than 10% of their assets in 1 company, so I would expect if that one company grows much faster than the others to become, say 15% of the assets, the fund should be selling off that company and buying something else to keep within that 10%. I donít know how frequently they check for this though (daily, weekly, monthly, quarterly, etc).


Yes, no particular stock can make up more than 10% of an ETFs market cap.
ARK has been re-balancing TSLA a lot of the past year and a half as you can imagine.  Every time they make a sale to re-balance, some dolt on twitter screams out "Look!! ARK is getting out of TSLA, they sold x-thousands of shares!"  They re-balance regularly. 

chicklets123

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Any ARKK/ARKW ETF holders?
« Reply #18 on: February 25, 2021, 08:40:50 PM »
Not sure what to think about ARKK right now...anyone buying the lows?


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« Last Edit: February 25, 2021, 08:59:24 PM by chicklets123 »

DaveSch

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Re: Any ARKK/ARKW ETF holders?
« Reply #19 on: February 26, 2021, 01:40:38 PM »
I bought some ARKK in Q3 and early Q4 2020. I bought a little under the amount to equal 1% of my liquid investment accounts. I won't buy any more. I probably won't sell any. This is a bit out of my comfort zone, but with that amount, it won't make any difference.
6 years ago I bought a similar amount of PNQI, the Internet ETF. That is 3.5 times what I paid for it currently. I kept these amounts low, so in the event they got too large, I would be tempted to sell some to rebalance and thus incur LTCG. I am here to buy, not to sell. I have 5 years living expenses in the credit union. I may be 71 next month.

MustacheAndaHalf

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Re: Any ARKK/ARKW ETF holders?
« Reply #20 on: February 26, 2021, 10:30:32 PM »
I'm confused by ARK Next Generation Internet ETF (ARKW):

"The stated goal of ARKW is to invest in companies that are poised to profit from advances in cloud computing, e-commerce, big data, artificial intelligence, mobile technology, social platforms and financial technology. The fundís biggest holdings include familiar names like Tesla, Square, Amazon and Roku, as well as lesser-known firms like Splunk and 2U."
https://etfdb.com/etf/ARKW/#etf-ticker-profile

Despite Tesla's share price drop, it's still the largest holding by far:
https://etfdb.com/etf/ARKW/#holdings

I don't follow why Tesla is next generation internet.

bwall

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Re: Any ARKK/ARKW ETF holders?
« Reply #21 on: February 27, 2021, 05:49:46 AM »
Tesla checks the boxes; AI & mobile technology. Perhaps also big data and financial technology with the bitcoin splurge.

I'm not a TSLA bull, so I can't give the breakdown on the how and why.

vand

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Re: Any ARKK/ARKW ETF holders?
« Reply #22 on: February 27, 2021, 08:15:04 AM »
Not sure what to think about ARKK right now...anyone buying the lows?


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chicklets123

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Re: Any ARKK/ARKW ETF holders?
« Reply #23 on: February 28, 2021, 07:31:05 AM »
Not sure what to think about ARKK right now...anyone buying the lows?


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lol.. you wish
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soccerluvof4

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Re: Any ARKK/ARKW ETF holders?
« Reply #24 on: March 01, 2021, 05:02:21 AM »
Not sure what to think about ARKK right now...anyone buying the lows?


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On strength , in my fun 2% portfolio I have been shorting ARKK. I dont recommend shorting anything to anyone unless its something you know and have been doing but at least for now I think with all the EV's coming to Market and the buying of so many high flyers the fund has a higher chance of downside than upside. Way to much Tesla for sure. But thats just my opinion and why I only play around with a 1-2% of my total portfolio. The funds have had a great run and we have seen these type of funds over many many years and they usually dont end well. Maybe it will be different this time. Indexing takes alot of that fear away.

bwall

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Re: Any ARKK/ARKW ETF holders?
« Reply #25 on: March 01, 2021, 10:43:22 AM »
Not sure what to think about ARKK right now...anyone buying the lows?


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On strength , in my fun 2% portfolio I have been shorting ARKK. I dont recommend shorting anything to anyone unless its something you know and have been doing but at least for now I think with all the EV's coming to Market and the buying of so many high flyers the fund has a higher chance of downside than upside. Way to much Tesla for sure. But thats just my opinion and why I only play around with a 1-2% of my total portfolio. The funds have had a great run and we have seen these type of funds over many many years and they usually dont end well. Maybe it will be different this time. Indexing takes alot of that fear away.

Big up day today for ARKK; up 4.8% vs. market at 2% up. Are you going short any today?

vand

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Re: Any ARKK/ARKW ETF holders?
« Reply #26 on: March 03, 2021, 11:30:52 PM »
These funds could essily get cut by three quarters imo.

Those recently piling in are the "buy the top" crowd who 12 months ago had never even heard of Cathie Wood.

Ask yourself do you really want to be buying with them? Suggest you google Janus fund for a lesson from history
« Last Edit: March 03, 2021, 11:35:28 PM by vand »

soccerluvof4

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Re: Any ARKK/ARKW ETF holders?
« Reply #27 on: March 04, 2021, 03:02:31 AM »
Not sure what to think about ARKK right now...anyone buying the lows?


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On strength , in my fun 2% portfolio I have been shorting ARKK. I dont recommend shorting anything to anyone unless its something you know and have been doing but at least for now I think with all the EV's coming to Market and the buying of so many high flyers the fund has a higher chance of downside than upside. Way to much Tesla for sure. But thats just my opinion and why I only play around with a 1-2% of my total portfolio. The funds have had a great run and we have seen these type of funds over many many years and they usually dont end well. Maybe it will be different this time. Indexing takes alot of that fear away.

Big up day today for ARKK; up 4.8% vs. market at 2% up. Are you going short any today?


Been in and out of the short and have done well. The outflows of the fund have been staggering as well. I would not be in these funds right now that is just my .02$ Dont take my word for it do your own homework

vand

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Re: Any ARKK/ARKW ETF holders?
« Reply #28 on: March 04, 2021, 03:32:21 AM »
Yes, inflows and outflows into ETFs can have a very pronounced effect on the price. The ETF structure means they have to put new money to work, they can't hold it in cash, so as new money comes in they have to buy buy buy at the prevailing market price, which creates a virtuous loop. But then when people want to pull their money out they have to sell sell sell to meet redemptions which creates a negative loop.

this is why I much prefer closed ended active funds.

vand

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Re: Any ARKK/ARKW ETF holders?
« Reply #29 on: March 04, 2021, 04:08:34 AM »
I have them all in my M1 taxable account. So far they are the 2nd best performers behind MSTR. I am for the most part a terrible stock picker and get nervous and sell at the wrong times and cannot stop tinkering. Realized some time ago that Cathy and crew do it much better then I and I will gladly pay them for the service. I tried being a value investor for over 10 years and got crushed over and over and over again. I have given up and joined the heard and sticking with innovation in my taxable account as I am tired of seeing everyone around me get rich while my portfolio stayed stagnant. I'm sure it will crash now that I have capitulated.

Without wishing to be unkind to @effigy98 , I think this post will mark the high watermark of the "Tech is the future, value is dead" trade, and the next few years will see a lot of mean reversion.

bwall

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Re: Any ARKK/ARKW ETF holders?
« Reply #30 on: March 04, 2021, 05:03:26 AM »
Been in and out of the short and have done well. The outflows of the fund have been staggering as well. I would not be in these funds right now that is just my .02$ Dont take my word for it do your own homework

Excellent! Well done.

As long as US Treasury yields are rising (currently 1.47%, up from sub 1%) then growth stocks will not perform well. Thus you have got an 'all-clear' signal to short all ARK funds to your heart's content since they're growth only.

Question: why not just buy puts instead of shorting?

bwall

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Re: Any ARKK/ARKW ETF holders?
« Reply #31 on: March 04, 2021, 06:19:12 AM »
Yes, inflows and outflows into ETFs can have a very pronounced effect on the price. The ETF structure means they have to put new money to work, they can't hold it in cash, so as new money comes in they have to buy buy buy at the prevailing market price, which creates a virtuous loop. But then when people want to pull their money out they have to sell sell sell to meet redemptions which creates a negative loop.

this is why I much prefer closed ended active funds.

ETF managers generally are aware of this also and have a work-around in place.

Most ETF's will have a large cap or two (or three) in the fund that at first glance might look out of place. I'm thinking of AAPL, GOOG, AMZN, or even MSFT or something along those lines. These stocks serve as a sink for cash and that's why they're in the fund. Thus, they hold little cash but can still be fully invested in stocks that are serving as a cash proxy. Thus, the loops are mitigated, if not broken.

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Re: Any ARKK/ARKW ETF holders?
« Reply #32 on: March 04, 2021, 08:22:51 AM »
I have them all in my M1 taxable account. So far they are the 2nd best performers behind MSTR. I am for the most part a terrible stock picker and get nervous and sell at the wrong times and cannot stop tinkering. Realized some time ago that Cathy and crew do it much better then I and I will gladly pay them for the service. I tried being a value investor for over 10 years and got crushed over and over and over again. I have given up and joined the heard and sticking with innovation in my taxable account as I am tired of seeing everyone around me get rich while my portfolio stayed stagnant. I'm sure it will crash now that I have capitulated.

Without wishing to be unkind to @effigy98 , I think this post will mark the high watermark of the "Tech is the future, value is dead" trade, and the next few years will see a lot of mean reversion.

Agreed. The reversion has already started.

MustacheAndaHalf

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Re: Any ARKK/ARKW ETF holders?
« Reply #33 on: March 04, 2021, 09:28:01 AM »
Last year a lot of tech stocks benefitted from a surge in stay at home internet use.  The problem is most people bought after that performance, and they're unlikely to see a repeat this year.  This year, if Covid-19 recovery comes to fruition, you'll have huge numbers of people stopped from traveling for over a year, all of whom will want to travel at about the same time.  So in my view, there's a combination of people chasing performance in tech stocks (when 2021 isn't 2020), and a surge in getting away from home.

I'm biased in that most of my portfolio is tied up waiting for the recovery.  So maybe that causes me to see things from the perspective of someone who is not buying tech stocks until a recovery is almost complete - hopefully in a few months.

soccerluvof4

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Re: Any ARKK/ARKW ETF holders?
« Reply #34 on: March 04, 2021, 02:42:07 PM »
Been in and out of the short and have done well. The outflows of the fund have been staggering as well. I would not be in these funds right now that is just my .02$ Dont take my word for it do your own homework

Excellent! Well done.

As long as US Treasury yields are rising (currently 1.47%, up from sub 1%) then growth stocks will not perform well. Thus you have got an 'all-clear' signal to short all ARK funds to your heart's content since they're growth only.

Question: why not just buy puts instead of shorting?


I never short Equites to be honest. I just buy long, averaging always BUT on the very rare occasion if I just think something stinks I will short it. And that is so slim. I dont know the first thing about Puts and I like getting in and out as I dont feel even comfortable shorting. But I have seen things like this before and I really think her ETF's are going to be in trouble-

Good Stuff From The Bear Cave Letter on Ark Invest
Potential Liquidity Issues at ARK Invest

- Bad Performance Might Expose a Liquidity Problem

"We love a wall of worry. We saw it on social media, lot of chatter, some of it just waiting for our fund in particular to take a tumble, maybe to buy and some happy to sell and short and all that."On February 16, The Bear Cave highlighted potential liquidity issues at ARK Invest, the hot active ETF firm founded by Cathie Wood that has seen assets grow from around $10 billion to $60 billion over the last 12 months. On February 23, The Bear Cave reiterated liquidity concerns about ARK Invest. Later that day, Cathie Wood said,

ARK's flagship Innovation ETF is now down 20% from its highs and is beginning to face outflows. The illiquidity risks are serious and worsening.

ARK's illiquid holdings are problematic because as ARK faces redemptions, hedge funds could take predatory short positions in ARK's illiquid holdings and create a performance death spiral. A review of ARK's illiquid holdings shows that could be happening:



(Ownership data from Bloomberg as of February 13.)

How bad can it get?

Copper River Capital provides an example of what large forced transactions can do to markets. In September 2008 the short-focused fund faced margin calls after Goldman deemed its cash held at Lehman Brothers invalid. The firm was forced to cover large short positions quickly and drove positions upwards of 40% against themselves within days. Part of the short-term upwards jerk was hedge funds front-running with their buying.


(Source: "Anger at Goldman Still Simmers" from NYT)

Replace margin calls with forced selling, and you could have the same thing happen in reverse with ARK. What makes ARK's situation potentially worse is the heavy retail participation in many of its names. Retail investors may be fickler and have price drive sentiment. As a result, any declines in ARK's illiquid names may drive copycat selling by retail traders playing with momentum.

In addition, Bloomberg recently reported that Nikko Asset Management, a Japanese firm, copies many of ARKs strategies for Japanese investors. This makes ARK's illiquidity even bigger than it seems. For example, when accounting for the shares owned by Nikko, ARK + Nikko own "at least 25% of three firms" according to Bloomberg.

In a YouTube video last Friday (February 26) Cathie Wood addressed some of the illiquidity concerns and said:

"There is a misunderstanding of illiquidity when it comes to ETFs..." (33:38)

"As a portfolio manager, I know the difference between an ETF wrapper and a mutual fund wrapper. A portfolio manager in the ETF does not need to worry about flows..." (36:23)

"I have been surprised by some of the ETF commentators. They should know better, but they haven't managed money..." (37:31)

Ms. Wood highlighted that ETFs have different inflow and outflow structures than mutual funds. ETFs grow and shrink as authorized participants create or redeem shares of the ETF. If an ETF trades below NAV, an authorized participant can buy the ETF, generally convert the ETF into the underlying holdings, and then sell the holdings. This helps the ETF trade up to NAV, but it does not change the selling pressure in illiquid names. Read more on the ETF creation/redemption process here and here.

ARK Invest sends daily emails to investors with its ETF trading activity. On Friday, February 26, ARK Invest expanded its disclaimer to 718 words compared to 163 words on Thursday, February 25. Below are two new additions:

"Additional risks of investing in ARK ETFs include market, management, concentration and non-diversification risks."

"There can be no guarantee that an active trading market for ETF shares will develop or be maintained, or that their listing will continue or remain unchanged."

In Friday's daily trade email ARK also disclosed increasing its stakes in Repare Therapeutics (NASDAQ: RPTX), a $1.2 billion drug company, Vuzix (NASDAQ: VUZI), a $1 billion tech company, and Atlas Crest Investment (NYSE: ACIC), a $600 million SPAC.

Short-sellers appear to smell trouble brewing. According to one trader, the borrow rate on ARK's Innovation ETF (ARKK) reached 19% yesterday.

Reddit traders are raising alarms too. One post titled, "Investors beware: $ARKK is a liquidity disaster waiting to happen" was upvoted over three thousand times. It read:

"I ran an analysis on the weekly net flows into ARKK over the last 60 weeks, and found that portfolio performance of the ETF was highly correlated with ETF inflows... lack of liquidity becomes a much bigger problem when investors are selling and when the broad equity/tech markets have a correction... I am concerned that many people may not be aware of these risks, and unfortunately the small investors in Cathie's funds will be the ones who bear the brunt of any crisis."

A separate post in the WallStreetBets subreddit titled, "The Real Big Short: Passive Investing, Positive Feedback Loops, and The Massive Ark Bubble" recommended buying ARKK puts.

ARK Invest derives its name from the Ark of the Covenant, a gold chest that contained the Ten Commandments, according to an interview Ms. Wood did with the Christian website Jesus Calling. In that interview, Ms. Wood reflected on her prayers during the tough early days of ARK and said,

"And I would kneel down and say, 'Okay, God, You're in control. Even if this company fails, I know I've done the right thing. This is a walk of faith for me. Your will be done.'"

PDXTabs

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Re: Any ARKK/ARKW ETF holders?
« Reply #35 on: March 05, 2021, 08:39:48 AM »
If you like ARK you might also be interested in MOON. I don't currently have either but I'm interested in both.

soccerluvof4

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Re: Any ARKK/ARKW ETF holders?
« Reply #36 on: March 05, 2021, 03:00:09 PM »
Just talking to my neighbor who is very successful and represents a large firm . He was just saying that all reps received an email to encourage there clients to get out of the ARK funds.

hodedofome

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Re: Any ARKK/ARKW ETF holders?
« Reply #37 on: March 05, 2021, 08:33:24 PM »
Just talking to my neighbor who is very successful and represents a large firm . He was just saying that all reps received an email to encourage there clients to get out of the ARK funds.

Sounds like itís time to buy.

soccerluvof4

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Re: Any ARKK/ARKW ETF holders?
« Reply #38 on: March 06, 2021, 03:16:10 AM »
Just talking to my neighbor who is very successful and represents a large firm . He was just saying that all reps received an email to encourage there clients to get out of the ARK funds.

Sounds like itís time to buy.



If you believe it can support the outflows. Bit different then blood in the water on Stocks vs and ETF. That is why Funds are dropping it. Personally I think and hope it will be fine , dont want to see anyone get burned BUT its had a great run and a whole lot of High Flyers, not for me.

vand

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Re: Any ARKK/ARKW ETF holders?
« Reply #39 on: March 08, 2021, 03:36:37 AM »

ARK Invest derives its name from the Ark of the Covenant, a gold chest that contained the Ten Commandments, according to an interview Ms. Wood did with the Christian website Jesus Calling. In that interview, Ms. Wood reflected on her prayers during the tough early days of ARK and said,

"And I would kneel down and say, 'Okay, God, You're in control. Even if this company fails, I know I've done the right thing. This is a walk of faith for me. Your will be done.'"

ARK holders are going to have to show a lot of FAITH to withstand the rollercoaster they're about to endure. My guess is that in 12 months time we're going to look back and say "how could I be so dumb as to buy this after its already run up 500%"

Here in the UK we have a similar fund, Scottish Mortgage Trust SMT.L which has been the top performing fund, heavily invested in the likes of TSLA and NIO. It's now lost 1/3rd of its price from its peak just a month ago. 

My expectation is that a lot of people who have jumped on board and cost averaged up are going to be sent scurrying when they see an overall loss on their holdings. Although in SMT's case, I do think they have a bit of good sense about them to know when to take some money off the table, having recently halved their holding in Telsa, as opposed to Cathie Wood who just "bought a lot more".

« Last Edit: March 08, 2021, 03:38:26 AM by vand »

soccerluvof4

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Re: Any ARKK/ARKW ETF holders?
« Reply #40 on: March 08, 2021, 07:24:59 AM »
Mar 08, 2021 | 09:02 AM
Wooda, Shoulda, Coulda!
* ARK is this generation's template for growth investing (over value investing) and, like Robinhood, is the standard bearer for the democratization of our markets and market participation

* With the pivot moving to value (see chart below) ARKK shares (and that of the other ARK Invest ETFs) remain vulnerable in price

* Watch ARK Invest's fund outflows for a sign of more weakness as the virtuous cycle transforms into a possible vicious



Woulda, shoulda, coulda is an expression of dismissiveness or disappointment concerning a statement, question, explanation, course of action, or occurrence involving hypothetical possibilities, uncertain facts, or missed opportunities.

Which gets us back to Cathie Wood's ARK Invest (ARKK) .

 ARK Invest and its exchange traded funds operate in the arena and frontier of disruptive innovation.

The problem is the growing size (at its peak near $60 billion), the portfolios' growing illiquidity and the ("200 miles per hour) investment strategy practiced by ARK - may be a recipe for disaster should the pivot from growth to value continues. I have compared ARK to the Marsico Funds, Janus Funds, First Hand, the Manhattan Fund, Executive Life, Alger Funds, etc. - none of which ended well.

I remain short ARKK but do not recommend others to do so without doing there own homework!
« Last Edit: March 08, 2021, 07:29:29 AM by soccerluvof4 »

ChpBstrd

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Re: Any ARKK/ARKW ETF holders?
« Reply #41 on: March 08, 2021, 09:49:29 AM »

* ARK is this generation's template for growth investing (over value investing) and, like Robinhood, is the standard bearer for the democratization of our markets and market participation

IDK, my boomer brokerage offers free trades from my cell phone, and I don't need a fund with a 0.75% ER to day trade five or six headline-making tech names. A simpler explanation is that when a bubble is inflating, it makes sense to buy in and place a trailing stop-loss order. Heads I win big, tails I lose a little. It's the same gambling that people were doing on E-trade with Yahoo and Cisco stock 22 years ago.

MustacheAndaHalf

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Re: Any ARKK/ARKW ETF holders?
« Reply #42 on: March 08, 2021, 01:19:51 PM »
I remain short ARKK but do not recommend others to do so without doing there own homework!
Have you considered a bear put spread?

It's probably a bit late to switch, since ARKK lost -21% in the past 4 weeks (according to etfdb).  That tends to make put options cost more.

For example, you buy $110 put on ARKK expiring Jan 2020, then sell a $100 put.  Unfortunately it costs $7 to possibly make $10, but if you're confident of a -10% drop you can cash in whenever the stock is below $100 (below $100 the puts cancel each other, leaving a $10 gap).

When sentiment turns, it's cheaper to buy against the crowd.  So if someone was optimistic on ARKK, they could buy a $115 call and sell a $130 call for an investment of $6.40/sh (giving it 2.3x potential for the full $15 spread).  I think that investment has a better return because the market believes it's unlikely.

ice_beard

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Re: Any ARKK/ARKW ETF holders?
« Reply #43 on: March 09, 2021, 01:57:17 PM »
Well, 1/3 of the recent losses to ARKK came back today.

That's gotta be some serious inflows.  Would like to see that number.  I wonder if it will hold?
 

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Re: Any ARKK/ARKW ETF holders?
« Reply #44 on: March 09, 2021, 08:06:19 PM »
...it makes sense to buy in and place a trailing stop-loss order. Heads I win big, tails I lose a little.
Such EXCELLENT advice!

MustacheAndaHalf

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Re: Any ARKK/ARKW ETF holders?
« Reply #45 on: March 10, 2021, 06:48:53 AM »
Note that with very volatile stocks, a temporary drop can trigger your stop loss order.

ARKK's February peak was $159.70/sh, and it went from there gradually down to $106.25/sh on March 5.  That 33% loss off the peak can trigger a lot of stop loss orders (It has recovered back to $121.75/sh before the open).
https://finance.yahoo.com/quote/ARKK/history?p=ARKK

effigy98

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Re: Any ARKK/ARKW ETF holders?
« Reply #46 on: March 13, 2021, 11:55:33 PM »
I really like these funds, but took the 100% profit and waiting for better entry. Kind of excited about commodities right now because of the 25%! currency debasement that happened and more to come. I mean, you have to be in companies that basically return 25% to break even and even more to make a profit!!! This could turn out really bad...
« Last Edit: March 13, 2021, 11:58:26 PM by effigy98 »