Mentioned in Video:

#Tesla (#TSLA), #ARK Invest's BIGGEST holding by a large margin, is now in two major indexes, the S&P 500 and the NASDAQ. Catalyst after catalyst is causing the price to skyrocket and #ARKInvest has over $2 BILLION in it, which is over 60% more than their next biggest position. What does this mean for how #CathieWood and ARKInvest manage their risks, since Tesla is the biggest holding in 3 of their 5 actively managed ETFs: #ARKK, #ARKQ, and ARKW? This past week, ARK Invest also suggested #bitcoin may rise to $500,000, sold the last of their Illumina ($ILMN) stock, as well as picked up much more #Nintendo ($NTDOY), in an otherwise relatively quiet week due to the Thanksgiving holiday.

Video Transcript:

Hey there. Alex here, and welcome to Ticker Symbol: You, the channel that invests in you. ARK Invest's position in Tesla is crossing two billion dollars and it's over 60 percent bigger than their next biggest position. Is this extreme position warranted even for ARK Invest? Speaking of extremes, Cathie Wood recently suggested that if institutions keep buying Bitcoin, its price could reach half a million dollars. ARK Invest recently broke up with Illumina and now holds over two hundred million dollars in Nintendo.

Has the world turned upside down or does ARK Invest see something that the rest of Wall Street is missing? Oh, I put a ton of research and effort into each one of my videos, so I'd appreciate the early thumbs up and let's dive right in. Welcome to Episode five of the Weekly Market Recap. My weekly series attempts to add context to ARK Invest's predictions of the future and position sizes of their five actively managed ETFs. To do so, I discuss the overall market's economic situation and of course, ARK Invest specific news.

In my opinion, some of ARK's bigger predictions about innovation and the future of technology are already starting to come true. And I'll show you what I mean. These predictions are reflected in ARK Invest's buys, sells and trades for this past week, ending Friday, November 27th, 2020. Note that this past week was a short trading week as the market was closed for Thanksgiving on Thursday, November 26th, and the market closed early on Friday, November 27th.

Sources for everything I discuss can be found in the description below and time stamps for this video are enabled for your convenience. In previous videos, I covered Tesla's inclusion to the S&P 500 and we saw that its weighting moved from one percent to one point two percent as the result of a recent rally. It is the largest ever new inclusion to the index. This past week, Rob Maurer of Tesla Daily did an amazing breakdown of how the changes in Tesla's share price affects us waiting in the index and how it is now estimated to come in at one point four percent of the index.

This means that after its conclusion, it would be the S&P 500 eighth biggest holding, putting it above Johnson and Johnson. Tesla has many near-term catalysts that may affect its stock price and entry position into the index. Here is a list of just some of them. If and this is a big if, the price is driven into the seven hundred dollar range, Tesla could enter the index even above Warren Buffett's Berkshire Hathaway. Last week, we saw ARK Invest's overall position in Tesla rise from one point four billion dollars to one point six billion dollars as Tesla popped over 16 percent on the news of its S&P 500 inclusion.

As a result, ARK Invest had to sell about three point two percent of their overall position, or one hundred and ten thousand shares. What you're seeing here is a table of ARK Invest's top five positions broken out by the funds that they're included in. So, for example, Tesla is included in ARKK, ARKW and ARKQ. Tesla is the number one position in all three of these ETFs, and it is their number one position overall. Two weeks ago, they had one point six billion dollars of Tesla overall, and that was one point one five billion in ARKK,

three hundred and fifty million in ARKW and one hundred and ten million and change in ARKQ. And if you thought that rally was eye popping, you may want to hold on to your seat. This past week, ARK Invest's position in Tesla rose from one point sixty two billion dollars, all the way to just under two billion dollars. That marks a twenty three percent increase in their position in Tesla, attributed to a almost three percent increase in shares and an over seventeen percent rally in the stock.

That almost three percent increase in shares amounts to a buyback of 93000 of their shares. As you know, ARK Invest are active fund managers, not retail investors, and they have rules for how their funds are managed. One important rule is that no position may exceed 10 percent of the total fund for a long period of time, since overweighting a position introduces several different kinds of risks, which we've discussed in previous videos. Tesla now makes up almost 11 percent of ARKK, ARK Invest's now 13 billion dollar Disruptive Innovation Fund, and now makes up over ten point six percent of ARKW, ARK Invest's next generation Internet fund.

And a whopping twelve point nine percent of ARKQ, ARK's Autonomous Revolution Fund, which I just made a long but hopefully engaging video on. Let me know in the comments below, if you like the way I break down ARK Invest's funds or if you'd like me to make some changes before I cover the next one. A quick note about my data. I'm not seeing the new Tesla shares show up in ARK Invest's daily buy and sell emails. I pull all of my information from their daily holdings and spreadsheets,

not these emails. What you're seeing here are therefore most recent emails for this past trading week, there's no email for Thursday because that was Thanksgiving and these most recent Tesla buys are not in any of them. You can see that this is a 50 million dollar discrepancy, which is much bigger than many of the purchases that get a lot of coverage elsewhere. Please make sure to do your own due diligence if you're basing any financial decisions off anything you see on YouTube.

Of course, this includes my channel as well. What you're seeing here is a bar chart of ARK Invest's biggest holdings across all five of their actively managed ETFs, as of market close on November 27th. As you can see, Tesla is their number one holding by a large margin with two billion dollars invested. In fact, it is sixty seven percent bigger than their second biggest position, representing almost one twelfth of all of the dollars they manage. And it is over that 10 percent limit in every single fund that it's in.

So is this massive bullish firm wide position on Tesla madness or is it genius? Let's see what Cathie Wood, the chief executive officer, chief investment officer and head portfolio manager on all five of ARK Invest's thematic funds has to say about these relative position sizes.

These are the next big index stocks or benchmark stocks. And we think that we are in the early days of scaling each of our five platforms in the early genomics is the earliest to be sure, maybe block chain and genomics. And the others, as I mentioned, retail is only now in the United States begun to enter that sweet spot of the S curve. So I think that the next five years is going to be scaling these exponential growth trajectories and learning that this wasn't a niche strategy.

This was a strategy that understood that five major innovation platforms evolving at the same time, again, involving 14 technologies. We're going to transform the world completely. And, you know, you have to be on the right side of change. So I believe we're going to scale exponentially during the next five years. And a lot of people ask us about capacity. If we're right, if our research is correct, then we should be able to scale exponentially as well.

It's worth remembering that ARK Invest are thematic investors focused on five core platforms of disruptive innovation. I know. I know I'm starting to sound like a broken record, but understanding the context of their buys, sells and holdings is the whole point of these market recaps and this entire channel. The five core platforms, which are disruptive technologies of their own, are underlined in this chart on the right. These clusters of major innovation platforms show the 14 technologies that ARK believes are going to see exponential growth in the next decade.

The nine non underlined bubbles represent the disruptive technologies that are growing out of one or more of these innovation platforms. So one thing we can ask ourselves is how does ARK's two billion dollars in Tesla map onto their overall vision of the future? As you can see, Tesla overlaps a huge portion of their major innovation platforms. There's no doubt that Tesla is a leader in robotics, energy storage and artificial intelligence, all of which play a major role in mass scale manufacturing of fully self-driving battery electric vehicles, which I talked about extensively in my recent video focusing on ARKQ, ARK Invest's fund themed around the autonomous revolution, not even mentioning Tesla's potential market position as a top streaming platform once their cars are capable of driving themselves and commute time turns into free time.

If you were in a Tesla, which in last week's episode was the reason I proposed that Tesla takes the top spot in ARKW, ARK Invest's fund themed around next generation Internet. So putting all of this together, I believe that this seemingly oversized two billion dollar position reflects ARK Invest's overall views of the future. And I bet that this number will only continue to rise over time as Tesla continues to innovate in every aspect of their business, like we saw on Battery Day.

The way we handle financial transactions is changing. And a big part of that change is cryptocurrency and its backbone, blockchain technology. A couple months ago, Square invested fifty million dollars in bitcoin. Square is ARK Invest's fifth largest holding with one point one billion dollars invested across ARKK, ARKW and ARKF, their financial technology fund. PayPal is also buying up bitcoin at an increasingly massive rate, there will only ever be twenty one million bitcoins ever mined and eighteen point five of them already exist today.

Cathie Wood believes that as big financial institutions like banks and payment systems buy them up, demand will far outweigh supply, causing bitcoin's price to rise to four hundred or even five hundred thousand dollars, it currently trades at around 20000 dollars, making this prediction a twenty to twenty five times increase in bitcoin price. ARK Invest talks extensively about the rivalry between Square's Cash App and PayPal's Venmo. Other investors are beginning to track this major financial rivalry as well. For example, Dumb Money, which used social signals like trends in search terms and app reviews to see which platform is being adopted at a higher rate.

Another such example is ARK Invest's most recent newsletter, which talks extensively about videogames. More on that in a minute. And how Square and PayPal's digital wallets are competing against major card networks as money increasingly changes hands through Square and PayPal but never leaves their platforms. Just this week, Yassine Elmandjra, ARK Invest's blockchain and crypto asset analyst sat down for a two hour interview with Dave Lee, a youtuber I really respect for his thoughtful and patient investing philosophy. Yassine Elmandjra is the primary author on three of ARK Invest's white papers covering bitcoin, which in my opinion makes him a world expert on the subject.

As you can see, these are fairly recent papers and they will be my next research focus because block chain technology is represented in ARKW and ARKF, the next two thematic funds I plan on covering over the next few weeks. And if you're interested in ARK's views on these topics, sooner than I'm able to cover them, they make all of their research freely available on their website, linked, of course, in the description below. Speaking of ARKW, one thing I think the community around ARK Invest may not be talking about enough is the rise of gaming.

In case it's not obvious, I may or may not be a total nerd with a lifelong passion for video games. What may be even less obvious is that ARK Invest holds over two hundred million dollars in Nintendo, ticker symbol NTDOY, making it their thirty fifth biggest holding overall? Their most recent newsletter highlights the increasingly social trends in gaming, which mirrors similar trends I've covered in the past, such as social commerce. There's definitely a love letter, I mean full video about Nintendo in this channel's future.

What you're seeing here is a survey of market participants from two weeks ago for the trading week ending Friday, November 20th, 2020. And we saw a sharp decrease in bullishness following a massive rally from the week before that. Even after that massive decrease, four in nine people were bullish, about three in 10 more neutral and about one in four were bearish. Market participants were largely positive. But remember, markets don't move by sentiment. They move by change in sentiment,

and the average market participant was much less bullish than the week before that. And this is what we saw in the markets, slightly red across the board. What you're seeing is a map of the S&P 500 where each square represents one company and the size of that square represents the company's weight. In the index, the math is broken out by sector, with technology being in the top left, financials in the bottom left, consumer defensives in the top right and so on.

And this map is showing you the one week performance of the S&P 500 as a whole for the week ending November 20th 2020. And this past week, we saw the market return most of those losses and then some. This past week, market participants became less neutral. And as of Friday's close, the average market participant is still largely bullish. In fact, nine point three percent more bullish than historically average. I am not a financial advisor, but in my opinion, large rises in bullishness tend to be unsustained.

And I'll show you why I suggest practicing caution. One of the big news items that may not be fully priced into the market yet are recent headlines concerning a second stimulus check. In my opinion, the market reacts strongly to stimulus news. In my very first market recap word on the street was that a new stimulus bill wouldn't get passed until early 2021. And the map of the S&P 500 clearly shows how the market took that news. The next week, the week of the US presidential elections, headlines showed that the stimulus may come sooner than expected.

That is, late 2020 instead of early 2021. And the map of the S&P five hundred clearly showed how the market took that news. And this is why we can't have nice things. After Friday's market close, we've begun to see new headlines introducing more uncertainty about whether or not we'll get stimulus checks by the end of the year. That, combined with the overall uptick in market bullishness, makes me want to practice caution in the days and possibly weeks to come.

Great. Now let's move on to ARK Invest buys and sells for the week. Here's a plot tracking the size of their funds week over week. And as you can see, each one of their funds are now over a billion dollars, even ARKQ, their smallest fund. In total, at the end of last week, they managed just under twenty one and a half billion dollars, and at the end of this most recent week, they managed over twenty three.

That marks an almost nine percent increase in assets under management in a single week, continuing an already astronomical rise in overall assets under management. I like to track this because many of their buys each week are simply associated with more money coming into their funds. What you're seeing here is the change in position size for each one of their holdings over the previous trading week. As you can see, this short week has been a quiet week for ARK Invest. Most of their holdings increased by roughly three to five percent, and some of their biggest changes otherwise are they have finally dumped all of their Illumina shares and they've picked up a bunch of shares of Regeneron, REGN, FLIR Systems, FLIR and Nintendo, NTDOY, and they've sold a little bit of DOUYU

International, BYDDY and XONE. And this is just them selling out of Japanese yen. Just for some context, here are the changes in holdings from the previous episode. As you can see, ARK Invest is usually much more active in their trades over a given week. That's what I mean when I say this week is a quiet one for ARK Invest. So here are their biggest buys and sells for the trading week. And what I like to do is track the change in the number of shares that they hold, as well as any changes in the rank of the holding across all of their funds and the price change to see if they were buying and selling around the price or if there might have been some increase in conviction.

So for Regeneron, they increased their position size by an additional one hundred and twenty seven percent. They now hold a total of thirty five million dollars in Regeneron, making it their 91st biggest position. So still an overall relatively small position size. They hold sixty eight thousand shares total and the share price has moved sideways over this most recent trading week for FLIR Systems, they increased their position by an additional 45 percent. They now hold thirty five million dollars in it, and it is now their 92nd largest position right behind Regeneron.

And the share price moved largely sideways. And interestingly enough, they're picking up more and more shares in Nintendo. If you've been following along with the series, Nintendo has usually been on the buy list. They now hold over two hundred million dollars in Nintendo, which is almost three million shares. And it has moved up one position and is now their thirty fifth biggest holding overall. On the selling side, they've been selling DOUYU International week over week and it is their one hundred and thirty first biggest position again out of one forty five.

So this is quite a small position. Exxon or X1, however you say it, they sold at ten percent of their position and that was probably due to a twenty percent increase in price. And finally, BYD. They sold an additional fifteen percent of their position. They now have less than 30 million dollars in it overall. ARK Invest started one new position this week in a company called Longview, ticker symbol LGVW, and they put seven point seven two million dollars into that position.

That makes it ARKs one hundred and fortieth biggest position. So almost their smallest holding. And ARK Invest has finally broken up with Illumina. ARK Invest has sold the remainder of their shares and now owns no Illumina at all. And finally, we can put all this data together to look at their most recent buys and sells over the course of the past few weeks, as well as stocks to watch based on recent movements. So at the top of the buy list, based on data week over week is Teladoc, then Fastly, then Nintendo, then Nano Dimensions, then Shopify. On the selling side,

ARK Invest has sold entirely out of their position in Illumina and they've been selling these other two holdings week over week. The watch list now consists of Roku, Castle, Exact Sciences and their new position in Longview. If you've made it this far in the video, you're awesome. This is Ticker Symbol: you, my name is Alex, reminding you that the best investment you can make is in you.

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Alex Divinsky

💰 Investing in our future through disruptive innovation, ☕ lover of coffee, 📺 host of Ticker Symbol: YOU on YouTube

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