Mentioned in Video:

The 2020 Presidential #Election between Donald #Trump and Joe #Biden took place last week. Cases are on the rise around the world and the timeline for domestic #stimulus talks seems to have moved up from early 2021 to post-election. Europe has started another round of #lockdowns, but it was already priced into the market in previous weeks. This context is important when we look at how #ARKInvest navigates the markets as active fund managers and analyze their five ETFs together (#ARKK, ARKG, ARKW, ARKQ, ARKF). Square (SQ) and Roku (ROKU) dominated their earnings and Invitae (NVTA) missed by much less than last quarter. #Tesla remains #ARK Invest's biggest holding by a large margin, which is a major factor in returns, volatility, and RELATIVE risk reduction because it's not currently in the S&P500 …yet.

I am not a financial advisor or affiliated with ARK Invest in any way. Thanks for watching!

Video Transcript:

Hey there. Alex here, bringing you a special episode of Market Mondays, titled Market Sunday, November 8th, 2020, covering ARK Invest's latest news and trades for the week ending Friday, November 6th. Market Mondays and today's special Sunday episode have three parts. In part one, I'll discuss the overall markets and broader economic situation. In part two, I'll discuss ARK Invest specific news. And in part three, we'll use it all as context to discuss ARK Invest's latest buys, sells and trades.

Links to everything I discuss can be found in the description below. The first piece of news that's obviously front and center is that this week the United States had its presidential elections and from Tuesday, November 3rd through Friday markets close, no winner was declared. That means that although we may now know who the winner is by the time you're watching this, these results were not priced into last week's market. And the first day results may have been priced in is Monday, November 9th.

In addition, we didn't know which party was going to gain control of the Senate, which currently has a Republican majority, or the House of Representatives, which currently has a Democratic majority. When no party controls the presidency, the House and the Senate, fiscal and economic policies are subject to checks and balances from both sides of the aisle. That tends to be good for the market because no unforseen policies can quickly get approved without scrutiny from both sides. That sort of stability reduces uncertainty in the markets, which shows up as lowered volatility.

In last week's episode of Market Monday, we talked about stimulus expectations for a new round of checks happening in early 2021 as opposed to before the election. This episode is coming out a day early, in part because the broader economic situation has changed a lot in the last week. So I encourage you to check out last week's episode and contrast the two after you finish this one. These next few slides will show you what I mean. So, contrast last week to this week where stimulus news is much more tied to the election, which means sentiment around it is more bullish since word on the street, Wall Street that is, is that stimulus can happen at the end of 2020 instead of the beginning of 2021.

I believe headlines like this contribute to last week's broader market rally, which we'll discuss in just a minute. Last week I talked about the partial and full month lockdowns happening in Germany, England and France and how that news injected worries into the U.S. stock market. They're worth bringing up again in this episode, as this previous week was the first week these lockdowns took effect. When lockdowns occur, businesses, whether they're publicly traded or not, take a hit in terms of sales and profits and individuals are put out of work.

In my opinion, both of those are obviously bad for parts of ARK Invest's portfolio because some of the disruptive innovation companies they invest in are still quite young. Lockdowns and a lack of customers can really set them back in terms of long term growth and milestones. Whenever there are lots of bad economic news items that are related, it's good to keep an eye on the underlying cause. This is not a political channel or YouTube series, but one thing that's been politicized recently is how cases are counted.

What I'm showing here is simply the case count that the market could be pricing in, since these are some of the most widely available numbers that track cases over time. Remember, prices reflect expectations and the news on Wall Street is record-breaking, daily case counts. And here we can see that in the United States, as well as for Germany and France, which are two of the countries currently under lockdown. One thing we can do is look at a survey of other market participants and see what their sentiments were for the previous week.

Here we can see that last week, 38% of market participants were bullish, 30,6% were neutral and 31,5% percent were bearish. That is a 2,7% increase in bullish participants, a 1,1% increase in neutral participants, and those people were obviously taken out of the bearish camp of market participants. It's also important to notice that bullishness is now right in line with the historical average, and neutral participation is 1% below historical average and bearish participation is 1% above historical average.

So what this tells me is market participation sentiment for the previous week is right in line with the historical average, with a wild swing from bearishness to bullishness over the previous week. So let's look at what the S&P 500 did two weeks ago. It's important to remember this kind of context when we look at the swing from week to week. This is a map of the S&P 500 broken down by economic sector. In the top left, you can see technology, in the bottom left, financials, in the top right, consumer defensives, and so on.

The whole map is red because the broad economic situation from two weeks ago was largely negative in sentiment. And we just saw that sentiment is shifting from bearish to bullish. So the question we should ask ourselves is, did the market shift with the sentiment? So now let's look at the most recent week's map of the S&P 500. Holy smokes, this ain't no joke. What a massive rally for the S&P 500. As you can see, plenty of big name stocks rose almost, if not over 10%, Microsoft rose 10,5%, Apple rose over 9%, Facebook 11,5%, Google and Amazon, almost 9% each down and down the line.

This was a massive rally for the S&P 500 and a wild shift in market participant sentiment. And I strongly believe that this kind of context is needed for looking at ARK Invest's trades over this previous week. Here is another picture of the two major indices. The S&P 500 is on the left and the NASDAQ is shown on the right. As you can see, the S&P 500 rose over 200 points and the Nasdaq rose almost 1000 points in the previous week.

In my nuanced expert opinion, that is really nice. And now is probably a good time to mention that nothing on this channel or in this video should be taken as financial advice. Another thing I mentioned earlier is that no party controls the presidency, the House and the Senate. I believe this was one of the major factors in reducing uncertainty, and thus volatility. That's exactly what we're seeing here. What you're looking at on the left is the VIX, the VIX, which is the volatility measure of the S&P 500

and on the right we have the VXN or VXN, which is the volatility measure of the Nasdaq. Anything above twenty eight is considered highly volatile. For the Nasdaq, that number could be a little higher, but I'm just showing twenty eight on both charts. As you can see, tech is still more volatile than other sectors, but overall volatility drastically decreased over the previous week. In ARK Invest specific news, they released issue number 246 of their newsletter.

Their newsletter talks about five key issues, all of which are very interesting. The first is Space X's Starship and how it could lower rocket launch costs by about 90%. It also discusses ARK's stance on autonomous trucks. So while some people argue that autonomous trucks will commercialize before self-driving passenger cars, ARK doesn't agree with that stance. And that basically comes down to the fact that there's lots and lots of data for autonomous passenger vehicles, but not a lot of data for big semi trucks specifically.

So semi trucks take up a lot more space and have a lot more size and weight considerations. And ARK suggests that requires its own set of training data before we can have autonomous semi trucks. The newsletter also discusses transformers, not the robots in disguise. Instead, Transformers are a version of neural networks. Transformers form the basis of BERT, which is what powers Google search as well as GPT3, which is what powers open AI's model enabling human grade writing.

Transformers are also often used in computer vision, which is the focus of my graduate degree. Computer vision is fundamental to solving the autonomous transport problem. The newsletter also covers an emerging trend in social commerce. During recent earnings calls, Pinterest, Snapchat, Facebook, and TikTok all discussed the emerging trend of social commerce. This is because three new technologies are happening in the market. First, fintech solutions are enabling every site that wants it to accept payments. Any site that wants it now has access to low cost e-commerce infrastructure.

And the third is that the dominant social platforms are embracing social commerce. So the world is headed in a direction where social platforms also enable shopping. And fifth, JP Morgan launched a card reader to compete directly with Square and other payment companies. ARK Invest also released Episode 82 of their FYI podcast in which they discussed the digital economy with Gary Vaynerchuk, where they talk about the future of advertising and the digital economy. The podcast really focuses on Gary's view on the advent of social commerce and where he thinks digital commerce is going in the future of the Internet.

Gary V is another serial entrepreneur. He's the face of VaynerX, Vayner Media and Vayner Sports. Gary is also a big investor in the disruptive innovation space, specifically in media and social media. And he's an early investor in companies like Facebook, Twitter, Tumblr, Venmo and Uber. Last but not least, ARK Invest released an email on their stock commentary. They share a commentary whenever a stock raises or drops by more than 15% in a day over the course of the week.

And they had commentaries on five stocks, Nano Dimension, Lightspeed, The Trade Desk, CloudFlare and Palantir. If you watched last week's episode of Market Monday, we covered Nano Dimension extensively because they were also ARK Invest's biggest buy for the week. In earnings news, I'd like to talk about ARK Invest's five biggest holdings whenever some big news item comes up. Square, Roku and Invitae all reported earnings this previous week. So I'll quickly cover them, starting with Square.

Square announced that more than two point five million people have used the stock trading feature on Cash App, less than a year into its launch and their gross profit crushed expectations by about 59% year over year, they reported a gross profit of 794 million dollars, up from 500 million dollars this time last year. Analysts were expecting a 708 million dollars in gross profit so that 794 million dollars is about a 12 percent beat.

Square also reported just over three billion dollars in revenue for the quarter. A huge jump from the quarter two numbers. Their stock price jumped from one 160 dollars at the start of the trading week to just under 200 dollars by market close on Friday. Square is ARK Invest's third-largest holding overall, it is number three in the ARKK accounts and there are ARKW accounts. That's their General Innovation Fund and their Advanced Internet fund. And it is number one in ARKF, which is their financial technology fund.

Roku saw a huge increase in active accounts. 43% jump to 46 million while streaming hours rose 54% to 14,8 billion hours of streaming. They reported 451 million dollars of quarter three revenue, which is a 73% year over year increase. Analysts were also expecting earnings of negative $0,40 per share, so an earnings loss of 4 to 8 cents per share, Roku reported nine cents of earnings per share, ridiculously crushing analyst expectations.

And of course, you can see that reflected in Roku's stock price. At the start of last week's trading week, it was trading for about 205 dollars. And towards the end of the trading week, it was trading for over 250 dollars, marking a roughly 25% increase in price in a single week. Roku is ARK Invest's fourth largest holding overall. It is number four in their ARKK account and number two in their ARKW account.

Invitae, ticker symbol NVTA, reported a loss for the quarter and this represents an earnings surprise of just negative 3%. Last quarter, expectations were a loss of 62 cents per share, but they actually produced the loss of 77 cents per share, delivering a surprise of negative almost 25%. So this is much closer to expectations and definitely in the right direction. You can see that their stock price took a little hit after the reported earnings, but generally it's holding steady because there's a lot of long term faith in the company.

Invitae is ARK Invest's number two largest holding, only behind Tesla. It is number two in their 10 billion dollar ARKK Innovation Fund, and it is their top holding in the ARKG fund, which is their second biggest ETF. So now that we have some context, both in terms of the big broad market rally as well as ARK Invest's individual stock picks doing very, very well over the previous week, let's dive into the data. So in the previous market Monday, we discussed how their total assets under management fell almost 7% and how that seemed to be an underperformance compared to the broader market only falling 5%. This week,

we can see that same effect of investing in extra volatile stocks or disruptive innovations, but going in our favor. While the market rallied about 10 or 11 percent, ARK's total assets under management rose almost 15 percent. This is because they employ a very advanced investing strategy, which is buying low and selling high. And this is one of the big benefits of smart, active portfolio management. What you're seeing here is their total assets under management, broken down and colored by fund, notably for the first time ARKF the dark blue fund has reached over a billion dollars in assets under management and their total assets under management have reached just under 20 billion dollars across the total of their five funds.

We can combine all five of their funds and look at their total holdings. The bars are ordered by how much ARK has in that company overall, across all of their funds, Tesla is in the number one position, representing something like 7,3% of their overall funds, followed by Invitae, which represents about 5,5% of their total holdings, then Square, than Roku, and then Crispr. And the reason I like to cover their top five holdings specifically is because, as you can see, their top five holdings represent almost 27% of their overall institutional holdings.

They currently have forty eight positions worth over a hundred million dollars each, which is up eight from last week, and they currently hold one hundred and forty two companies as a whole. There's an asterisk next to the one hundred and forty two because that does not include things like Japanese yen and bonds. Another way to look at all of their holdings at once is in a pie chart. And as you can see, their top five holdings represent over a quarter of the pie.

That's that top left quarter of the pie. And they have lots and lots of positions that are worth very little of their overall institutional holdings. Feel free to comment below with any visualization requests. I love reading all of your comments and I love thinking about new and creative ways to visualize the data. I read every comment and I encourage you to give me constructive feedback. So one such cool and interesting way to visualize the data is with what I'm calling the trading board.

So what you're seeing here is every ticker for every stock that ARK Invest is holding at the end of this trading week. It's colored by the percent change in the number of shares that ARK is holding. So Dark Green represents big increases in the number of shares and dark red represents big decreases in the number of shares that ARK is holding week over week. ARK cannot control the prices of stocks. But how ARK controls its portfolio and manages it is through buying and selling shares.

So this board covers all of ARK Invest's buys and sells for the given week. So let's take a look at all of the darkest green and darkest red changes from the previous week. In terms of percent change, their biggest increase was in PayPal, followed by 10 cent fall by exact sciences and down and down the list. So in column one, you can see how many shares they're currently holding. In column two, you can see the percent change from the previous week.

So that's the column that this table is sorted by. And then the fifth column is what is the ARK Rank? If you look back at the bar chart, that rank would be which position that bar is in. For example, Teladoc has an ARK Rank of six. And if we look back at the bar chart, sure enough, ticker symbol TDOC is the sixth bar on the bar chart. So all the ARK Rank does is show you relative to all of their holdings, which position is this holding in.

So as you can see, PayPal's rank increased by twenty eight. So from rank 60 all the way up to rank 32 and its closing price as of Friday was $202.73, representing an 8,92% increase in price. One of the reasons I like looking at all of this data in one clean table is because we can start to see if they were selling shares because of a big increase in price or for some other reason.

So you can see that they bought PayPal even though the price increased by about nine percent and they bought Lending Tree, even though the price decreased by about nine percent. We can also look at their biggest sells the same way. So their biggest sell is actually on the bottom. So DOUYU International, ticker symbol DOYU. They sold forty four point six percent of their position. And it's important to realize that week over week the price had barely changed.

Their second biggest sell was Illumina. They sold about forty two percent of their position, even though that price didn't change. And sure enough, when we look at last week's version of this table, we'll see that they've been selling off Illumina week over week. Other companies, they ended up selling were Zscaler, Pinterest, Xilinx, Pinduoduo, Syros Pharmaceuticals and Square, even though it's one of their biggest holdings. You can see that in those last three cases, ticker symbols PDD, SYRS and SQ, all three cases of sells were because of big jumps in price.

So this is just active portfolio management and not a loss or change in conviction. Here's that table, but from the previous episode so you can compare and contrast, feel free to pause the screen and jump back and forth here. And as you can see, Nano Dimensions was indeed at the top of my list and Illumina was indeed at the bottom of my list. So based on the last two weeks of ARK Invest's biggest buys and sells, we can see which companies ARK Invest is continually buying the most of as well as which companies they are continually trimming their positions in.

So some of their more consistent buys for the last two weeks are Accolade Inc, ticker symbol ACCD, Teladoc Health, ticker symbol TDOC Fastly, ticker symbol, FSLY, Spotify, ticker symbol SPOT, and social capital SPEC with open door IPOB and some of the positions they're trimming most consistently are Illumina, ticker symbol ILMN and Pinterest Ticker Symbol PINS, Xilinx, ticker symbol XLNX and Syros Pharmaceuticals, ticker symbol SYRS. This is not financial advice in any way.

I'm merely presenting ARK Invest's trading data which they make publicly available, and I'm trying to present it in a novel, interesting and informative way. I'm not associated with ARK in any way. And I am not a financial advisor. I'm just a nerd who loves pouring through their data and showing it to you. My name is Alex, and this is Ticker Symbol: You, the channel that invests in you. Thanks for watching.

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Alex Divinsky

๐Ÿ’ฐ Investing in our future through disruptive innovation, โ˜• lover of coffee, ๐Ÿ“บ host of Ticker Symbol: YOU on YouTube

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