Mentioned in Video:
⚠️ #CathieWood consolidates her actively managed funds at #ARKInvest by selling her “cash-like” positions to buy her highest conviction stocks (like #TSLA, TDOC, PATH, and #PLTR stock) at steep discounts. Other times, she sells Tesla stock, seemingly out of nowhere. What gives? This episode explains the connection and uses one sneaky indicator (based on a CNBC interview with Cathie Wood) to highlight what @ARK Invest thinks are some of the best stocks to buy now.
Earlier this year I made an episode about how Cathie Wood prepares for a crash. It was called
“Cathie Wood Prepares for a Crash” and in that episode, I talked about some of the investing
lessons I've learned since I started really looking at ARK Invest's daily trading data,
as well as how I use that data to build better investing habits for myself.
Oof. Also in that episode, I shared something I call the Cathie Indicator. Since then,
that indicator helped me decide to invest aggressively in the middle of May,
after ARK Invest's funds dropped by double digits in a matter of days.
Doing that made me pretty happy when ARK Invest's funds rebounded by double digits
in just a few weeks after that. Well, guess what — this Cathie Indicator just flipped again.
So, I put the word URGENT in the title because I really do feel that this information
is time-sensitive. In this episode, I'll go over exactly what this indicator is, what's going on
in ARK Invest's funds that caused me to make this episode right now, and how you can track
this indicator for yourself, if you're interested in doing so. Let me set the stage with this quick
clip of Cathie Wood on CNBC's half time report earlier this year, where she talks about what
she does with the holdings inside ARK Invest's funds during a market crash or a deep correction.
Okay, so let me unpack that clip. Cathie Wood uses big, stable companies as cash-like
positions because she can't hold a lot of actual cash in ARK Invest's funds. Most of her funds have
much less than 1% cash at any given time. Cathie Wood will sell out of these cash-like companies,
even at a loss, when she feels that her highest conviction stocks are trading at a steep discount,
like during a market correction or a crash. In that clip, she was talking about big biotech
companies, but each ARK Invest fund has these cash-like positions in them. For example,
Cathie Wood held $75 million dollars of Apple inside ARKF, ARK Invest's Fintech Innovation Fund,
until the start of May. By May 18th, Cathie Wood had dropped Apple completely.
Why this sudden drop? Well, if we go look at the price action for some of ARK Invest's
biggest positions around the middle of May, guess what we find! Everything from Tesla and Teladoc,
to Palantir and UiPath, was trading at a steep discount. In fact, if we zoom out and look at
all of ARK Invest's funds around that time frame, we can see that pretty much everything Cathie Wood
invests in was way down in price. And, as you can see, things didn't stay down for very long,
hence the urgency. Now let's talk about the Cathie Indicator during that same time frame.
All the Cathie Indicator measures is the number of stocks inside each ARK Invest fund
over time. In that clip, Cathie Wood said that ARKK had as little as 33 stocks in it during the
lows in March of 2020. For comparison, in the beginning of May of this year, ARKK had almost
60 stocks in it. Then, in the middle of May, when everything started to crash, Cathie Wood did
exactly what she said in that clip — she sold her cash-like positions to buy up her highest
conviction holdings at bargain prices, which shows up on this Cathie Indicator plot as sharp
declines in the number of holdings in each fund. If you go look at my videos from back in June,
which is when the stock prices started moving back up and the Cathie Indicator leveled off, I spent
all of my time talking about the patterns I was seeing in ARK Invest's trading data as well as
putting out deep dives on many of the stocks I saw Cathie Wood was buying up, like Teladoc, UiPath,
Palantir, and Draftkings. Many of those stocks are still among ARK Invest's biggest positions today,
so I put a playlist of those deep dives together for you. If you're interested in that, I'll leave
a link to it in the top right-hand corner of your screen right now and in the description
below as well. And, if you look at what the Cathie Indicator is doing now, you can see that all six
of ARK Invest's funds have been concentrating down again since the start of this month.
So, if I look at what Cathie Wood has been buying in each fund over this same time frame, I can be
confident that I'm looking at ARK Invest's most recent highest conviction plays, since those
are the stocks she's spending her cash-like positions on right now. Pretty cool, right?
So, here's ARK Invest's most recent trading data. Each row in these tables is one stock,
the rows are ordered by the size of ARK Invest's position in that stock, and they're colored by
the change that position since the start of the month compared to how their overall assets
under management have changed. Since their AUM is down 5% since the start of September,
positions that shrank by more than 5% are in red and positions that shrank
by less or ended up growing are in green. We're looking for the darkest green grows.
Also, note that this first column shows the percent change in shares Cathie Wood is holding,
while the third column shows the change in price, since both influence the total position size.
Right now we're looking at data for all of the funds combined,
but I'll also quickly go fund by fund. So, as ARK Invest's funds are concentrating down, Cathie Wood
is buying a lot of Invitae, ticker symbol N V T A, even though its price isn't really falling.
Invitae is a genetic diagnostics company that offers gene panels and single-gene testing for a
broad range of clinical areas including hereditary cancer, cardiology, neurology, pediatric genetics,
metabolic disorders, and so on, so it's pretty core to ARKG, ARK Invest's genomics revolution
fund. Also, UiPath, ticker symbol P A T H, fell in price by about 15% since the start of the month
and Cathie Wood has bought about 15% more shares accordingly, so even though her billion dollar
position in it is almost unchanged, she's holding a lot more PATH stock. UiPath is a robotic process
automation company focused on discovering and automating repetitive business processes in a
wide variety of industries. It's one of only two companies to be in all six of ARK Invest's funds,
the other being Palantir, ticker symbol P L T R. Also, you may have noticed that Cathie
Wood reduced her Tesla shares by close to 10%. [make the home alone face/home alone clip].
Fun fact, every YouTuber making that face on their Thumbnails is also making that exact
sound as well. Cathie Wood sold roughly 10% percent of her position in Telsa because one
of the rules she follows is not having any one stock be over 10% percent of any fund by weight.
Tesla is still the number one position in ARKK, ARKW, and ARKQ and it's currently still over 10%
percent of each of those funds, so this is a non-issue, even though it looks like a big
sale. There, saved you some clicks. The only other stock I'll call out before moving on to
the individual funds is Pagerduty, ticker symbol P D. PagerDuty is a software as a service platform
that uses machine learning and automation to send and manage alerts and notifications for customer
service applications. They're actually built on top of Twilio, another of Cathie Wood's biggest
holdings. ARK Invest's position in Pagerduty increased by over 13% as the stock dipped in
the beginning of the month, and now the stock is up about 4%, making Pagerduty ARK Invest's
30th biggest position overall, out of about 160. See? I knew pagers would never go out of style.
Since your time is valuable, let me sort the rest of these tables by the biggest change in share
count instead of the actual position size, since that shows us which stocks Cathie Wood is actually
buying into. Here it is for all of their funds combined. I already covered UiPath, Pagerduty,
and Invitae and you'll notice that the rest of these are much smaller and much lower-ranked,
so fair warning that their position sizes within each fund can change fairly quickly. Cathie Wood
increased her combined share count by more than 20% in the following companies since the start of
the month: Pfizer, ticker symbol P F E, Discovery, ticker symbol D S Y, Workday, W D A Y, Markforged,
M K F G, and Komatsu, ticker symbol K M T U Y. Here's the table one more time without
highlights for those of you taking screenshots. I see you out there. Let's move on to each fund,
starting with ARKK. The biggest changes in share count were in Signify Health, ticker symbol S G F
Y, UiPath, P A T H, Pagerduty, P D, and Invitae, ticker symbol N V T A. That matches up with what
I just showed you in ARK Invest's combined funds because ARKK is actually over $21 billion dollars
in assets under management, making it bigger than all of Cathie Wood's other funds combined. Let's
move on to ARKG, ARK Invest's fund themed around the genomic revolution. The biggest increases in
share count were in Pfizer, ticker symbol P F E, 1 Life Healthcare, O N E M, UiPath Again,
and Invitae Again. This second row is actually cash, and you can see its rank in ARKG is 53, so
it's actually one of the very smallest positions in the fund, even after this 40% increase. Next
up, ARKW, ARK Invest's next-generation internet fund. Cathie Wood has been investing aggressively
in internet-based companies all year, so I'm not surprised to see way more dark green rows
in ARKW than in ARKG. Lots of stocks increasing by double-digits here: Robinhood, ticker symbol
H O O D, Roku R O K U, Genius Sports, G E N I, Pagerduty Again, PD, Khosla Ventures, K V S B,
which is the SPAC bringing Nextdoor public. Nextdoor is a social network focused on local
communities to help people who are physically close to each other connect online. Then, below
that, we have UiPath again, Zoom Video, ticker symbol Z M, and Splunk, ticker symbol S P L K.
ARKF, ARKQ, and ARKX are all much smaller than the three big funds I just covered,
so the combined ARK ranks of some these holdings are going to be much smaller than in the last
three funds. Still, they're worth covering if you're looking for cool stocks in the Fintech,
Automation, or Aerospace areas, respectively. This is ARKF. ARKF's cash position is up almost
5X from 2 weeks ago as Cathie Wood continues to consolidate the fund and so far, she's been
spending that money on Discovery, D S Y, Workday, W D A Y, Farfetch, F T C H, and Etsy, E T S Y.
She is also buying the dip on Stoneco, ticker symbol S T N E. I'm excited to see where some
of this 18 million dollar cash pile in ARKF ends up. Next, we have ARKQ and we can see a similar
trend. The cash pile almost doubled over the last 2 weeks and so far it's been spent on Komatsu,
K M T U Y, Markforged, M K F G, Proto Labs, P R L B, Jaws Spitfire, S P F R, which is the SPAC
bringing Velo3D public. Velo3D is a pretty cool, vertically integrated metal 3D printing company
that prints parts for space rockets, jet engines and fuel delivery systems.
Deere, ticker symbol D E, and Blade Air Mobility, ticker symbol B L D E, also saw double-digit share
count increases since the start of the month. Last and, uh, actually least, we have ARKX,
ARK Invest's newest and smallest actively managed fund focused on Space-based technologies
and their beneficiaries. Markforged, Deere, Blade Air Mobility, Jaws Spitfire, and Komatsu, and
UiPath all show up here again, as well as Heico, ticker symbol H E I, and Aerovironment, ticker
symbol A V A V. Just to be cheeky, let me point out that even after these double-digit increases,
almost all of the positions I just mentioned are STILL smaller than Netflix's position in this
Space Exploration fund. Womp womp. Kidding aside, ARKX is a tiny fund compared to ARK Invest's other
5. It has just $600 million dollars in assets under management, which is less than 1 and a
half percent of the almost $42 billion dollars in combined assets under management I just covered.
That was a pretty fast play-by-play, but now you have the full context for the biggest increases
in ARK Invest's holdings by share count, when you combine these funds together. Here's that table
one more time. If you're looking for interesting genomics and healthcare plays, it's Pfizer,
One Life Healthcare and Invitae. If you're looking for cool 3D printing companies,
check out Markforged or Jaws Spitfire, which is Velo3D. Some interesting Fintech plays
could be Discovery, Workday, or Stoneco. If you're looking for cool stocks in the areas of aerospace,
automation, and autonomous mobility, check out Heico, Deere, Blade Air Mobility, Komatsu or
Aerovironment. If you want to know the highest conviction names that Cathie Wood keeps buying,
it's going to be the positions with the highest combined rank:
UiPath, Invitae, and Pagerduty are much higher ranking than the rest.
Comment below or tweet me at ticker symbol you if any of the companies I just mentioned
were already on your radar and which ones interest you the most. I read all your comments and tweets
and usually will do a deep dive on a company if enough people request it. I love this stuff.
And of course, if you find this kind of information useful, there are a few ways
to track this for yourself. The easiest is to like this video and subscribe to the channel
with all notifications turned on. I'm not trying to squeeze you here; I spend all my time building
these dashboards and looking at this stuff already and if you do those things, you'll be
the first to know when I see these time-sensitive trends and patterns emerge in the data and make a
video about it. That's the point, right? If you want to track things for yourself
without a YouTuber involved, no problem, you can go to www.ark-funds.com, download
the holdings spreadsheets for each fund every day, count the number of holdings in each fund,
and track the changes. ARK Invest makes their data completely free and publicly available and I'll
always support investors who want to go straight to the source. I really respect that. If you want
this information daily but don't want to do the downloading, counting, and tracking yourself, my
Patrons on Patreon and Channel Members right here on YouTube have 24/7 access to these dashboards
and they get updated before every market open, by me, by hand. I do that because I really believe
I'm adding value and that using data to guide my research and investments instead of my gut
leads to better habits and better results. After all, better information today means better
investments tomorrow and this is the best way I know how to get that information directly to 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.
If you want to comment on this, please do so on the YouTube Video Here