Mentioned in Video:

😨 #CathieWood made BIG changes to #ARKK, the flagship #ARKInvest innovation fund, indicating huge shifts in conviction among top holdings like Tesla stock (TSLA), Palantir (PLTR), Skillz (SKLZ), Coinbase (COIN), and more! Let me show you the pattern I'm seeing as growth stocks rebound, so you can decide for yourself on the best stocks to buy now.

Video Transcript:

The last few weeks have been a wild ride for hightech growth stocks, driving some of the most innovative companies on the market down to bargain basement prices before having them rally 10% or more. I don't often focus on the short term, but the way the market and ARK Invest Holdings have moved this past month revealed something very surprising to me about the medium and long term. So now that all of ARK Invests trading data is in for the month of May, I'd like to show you a clear pattern in their highest conviction positions and what that could mean for the future of some of their biggest funds, specifically ARKK, ARKG, and ARKW.

If you enjoy this type of commentary and analysis, consider liking this video and subscribing to the channel with all notifications turned on. That way, you will be the first to know when I come out with new research,

regardless of how YouTube tunes its algorithm. Let's get right into it. Cathie Wood actively manages six thematic funds. When money flows out, the stocks Kathy Wood doesn't sell become just as important as the stocks she buys. For example, if ARK Invest's funds shrink by 20%, but their Tesla position only shrinks by 5%, that's actually a big net increase in Tesla's weight relative to their other holdings. The first thing I always look at is how ARK Invest's total assets under management have changed.

At the start of May, those funds totaled about $47.5 billion in assets under management, or AUM. Over the next two weeks, ARK's AUM collapsed by over 20% to $38 billion. By the end of the month, their total AUM rebounded by 10%, still ending the month more than 10% below where they started. Now that we have that data point, let's walk through the changes in their holdings between the first and last trading day in May, and I'll show you the pattern that I'm seeing.

Each row in this table is a stock ARK Invest holds, and the table is ordered by the amount of money they had in that stock on May 28, when I combine their six actively managed funds. I can only combine ARK Invest's funds this way because they're all conviction weighted and they all have the same fund manager, Cathie Wood. You can't just do that with any set of fund since their AUM ended down by about 10% for the month, each row in this table is colored so that positions that shrank by less than 10% are green and those that shrank by more than 10% are red.

Any row in white shrank by roughly the same amount as their overall funds. These colors help me quickly see the relative changes in the way ARK weighs their positions.

Here's where things get interesting, let's take a look at the companies that are now in Arc Invests top 25 positions, which make up about half of their total assets under management. First, let's cover the special cases. Coinbase ticker symbol. COIN is special because it just IPO'ed on April 14 and ARK Invest already has a combined $1.1 billion in it, which is the fastest rising position I've seen since I've started the channel. Coinbase was ARK Invest's 14th biggest combined position at the start of the month, but it's now their 7th after they increased their share account by almost 70%.

There are a few quick things I want to point out about this stock.

Stick with me. ARK Invest has been buying up Coinbase stock since the second it IPO'ed. They didn't wait. Cathie Wood has a very bullish longterm vision for Bitcoin specifically, and apparently Coinbase as a platform in general. I wouldn't be surprised to see ARK Invest keep buying now and then make aggressive trades around its upward price action later this year. Also, something like 8% of Tesla's cash is currently in Bitcoin.

1% of all of Square's assets is currently in Bitcoin. Coinbase's revenue is very sensitive to Bitcoin, so even if you're not interested in Crypto or Bitcoin, you should be aware that three of ARK Invest's top ten positions are now directly affected by Bitcoin's price, and it's an increasingly important part of their fund performance. Don't sleep on this. If we look at a chart of Coin base since it IPO'ed, we can see that it's down by over 25% and down 20% for the month of May. The trend on Coinbase is still currently downward.

Bitcoin dropped from around $60,000 near the beginning of May to under 40,000 at the end. In my opinion, if you believe in Coinbase's longterm future and you're bullish on Bitcoin, there's a great opportunity to get into Coinb ase for a better price than Cathie Wood herself. That's pretty rare. I'm not a financial adviser and this isn't a recommendation to just go out and buy Coinbase stock. If you want to know my thoughts on Coinbase and ARK's massive position in it,

I'll leave a link to my Coinbase video in the top right corner of your screen right now, and in the description below. Quick sidenote: ARK always reports their previous days positions on the next day's market open. So if you're checking my math and wondering why these tables don't exactly match Google's prices, it's because you have to shift everything back by one day. My table shows Coinbase's share price falling by 16.98% for the month. Here's that same 16.98% on Google, but from April 30 to May 27. The way ARK reports their data is what's causing these small differences.

Anyway, the other special stock on this list is UIPath, ticker symbol PATH, which IPO'ed on April 21, just one week after Coinbase. UIPath is special because it's the only stock to be in all six of ARK Invest's funds. I'll cover it in a separate episode, just like Coinbase, so hit that notification bell if you're interested in stock specific research like that. Over the last month ARK Invest has more than doubled their total position in UIPath.

If you look at its chart since it IPO'ed, everything is a little choppy and volatile, just like Coinbase's. After some initial excitement, there was a big drop in the first half of May and then a big rally in the second half. Let me show you that same pattern in price action among ARK Invest's biggest buys for the month. Twilio, ticker symbol TWLO was ARK Invest's 11th biggest position at the end of April, but it's now their 6th biggest position at the end of May. If we look at the one month chart for Twilio, it shows a 20% drop over the first half of the month and then roughly a 20% rebound in the second half, ending the month about 7% down overall.

ARK Invest now has 32% more shares in Twilio than they did at the start of the month.

Twitter, ticker symbol TWTR declined by 8% in the first two weeks of May before rallying over 15% in the last two weeks. ARK Invest has 40% more shares than it did a month ago, making it their 16th biggest position overall. Palentir, ticker symbol PLTR: almost the same story, dropping 17% in the first half of the month before rallying 25% in the second half. Arcs position in Palantir is close to 40% bigger now as well. DraftKings, ticker symbol DKNG, almost the same story.

Big drop in the first half, about 28%. Big rally in the second half over 20%. These are huge swings. ARK Invest's position in DraftKings is bigger by more than 50%. The last one on our list is Skillz, ticker symbol SKLZ.

It was down about 17% in the first half of the month and then up 23% in the second half. ARK Invest's position in Skillz stock is now almost double what it was a month ago. They have just under $400 million in the Skillz stock now moving it from their 61st biggest position overall to their 31st, just one month later. In each of these cases, I thought Kathy Wood was buying simply because they dipped hard in the middle of the month. But I was wrong.

If you Zoom out and look at the big picture, all of ARK Invest's funds are moving this way, which means that on average, so are the stocks they're made up of. ARKG, their genomics fund shows the same pattern. ARKQ, their autonomy and robotics fund, shows the same pattern and so on. Just to drive the point home. Here is the same pattern in Tesla, ticker symbol TSLA, Teladoc, ticker symbol TDOC and square ticker symbol SQ, Arc Invest's current top three positions.

A lot of high tech growth stocks across all of ARK Invest themes are showing this pattern, signaling what could be the start of a market wide rotation back into growth stocks. A lot of other indicators are pointing to this rotation to growth as well. So if most of their stocks are showing a similar pattern in price, and there could be a rotation back into growth stocks in general, why rebalance the fund so heavily into these stocks specifically?

I think this shows the link between ARK Invest's research, conviction and investment decisions. Out of all the companies they research, these must be the stocks that dip the hardest relative to ARK's future expectations of them. That's the only reason to pick them when almost every stock is moving more or less the same way and you don't know where the bottom will be, we can only see this potential bottom for growth stocks in hindsight. To Cathie Wood and her team, these stocks were the ones that were truly at bargain basement prices when everything was falling together in the moment.

That's what makes this data set worth talking about.

We get to see what they chose to buy when all of the options became cheaper due to larger market forces. Remember what I said earlier? The positions Cathie Wood doesn't sell are just as important as the ones she chooses to to buy. Likewise, the positions Cathie Wood doesn't buy when they drop in price are just as important as the ones she sells, since both of those result in smaller weighting of that position in ARK's funds. So, what were they selling or letting drop in price without buying?

Twist Bioscience, ticker symbol TWST, dropped from their 15th biggest position to their 23rd over the course of the month. Novartis, Ticker symbol NVS dropped from 23rd to 29th. Iovance Biotherapeutics, ticker symbol IOVA dropped from 21st to 34th after ARK Invest's combined holdings in it dropped over 40%. Regeneron Pharmaceuticals, REGN, almost the same story dropping from 25th to 36th. Pure Storage, PSTG, same thing.

There are definitely other types of positions that shrunk further down the list, but in my opinion, the pattern among ARK Invest's biggest positions is very clear. They are now much more weighted towards advanced Internet technology companies than advanced healthcare and genomics companies. In my opinion, this is because stay at home stocks got hit just as hard during this rotation, from growth to value stocks, even though the underlying technology is much more mature than, say, genomics or blockchain technologies, this pattern becomes even more clear when we focus on the changes in just ARKK, ARK Invest's $21 billion flagship fund filled with their highest conviction stock picks from across every disruptive innovation theme they cover.

All of the biggest buys themselves I highlighted throughout this episode are reflected here. ARKK now overlaps a lot less with ARKG than it did before, and a lot more with ARKW than it did before.

Everything I'm seeing in this data makes me a lot more bullish on the next generation Internet companies than I was just a couple months ago. Based on everything I've shared, I think we're going to see ARKW, ARK Invest's fund themed around advanced Internet technologies, become a higher performing fund in the short and medium term, I'll leave a link to my extended episode exploring some of the technologies behind ARKW in the top right hand corner of your screen now, and you can find it in the description below as well.

If you want to see the full list of ARK Invest's changes in positions over the course of this crazy month long bounce in prices, I've shared a Google sheet with them in the description below. I'm also rolling out the dashboards you saw in this episode to my supporters on Patreon and channel members right here on YouTube. So that you can explore and interact with ARK Invest data for yourself instead of hoping I cover something you're looking for in a future video. In my opinion, better information today means better investments tomorrow.

And if you found my coverage of ARK Invest's biggest positions shifting from genomics to Internet technology companies or the associated resources in the description below valuable, let me know by investing in the like button and subscribing to the channel with all notifications turned on. That's a great way to invest in the channel that invests in you. Until next time. 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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