Traders betting against Cathie Wood’s ARK Invest have had a lucrative run this year.
Shorting the firm’s family of eight exchange-traded funds (ETFs) has turned investors a mark-to-market profit of $2.4 billion so far in 2022 – more than twice the $941 million profit they made in all of last year, per figures from data analytics firm S3 partners.
Of that gain, $492 million has been generated since mid-August, as technology stocks resumed a downslide amid renewed rate hike fears and rising bond yields.
Before the recent slump, ARK rode a summer rally that helped the speculative, beaten-down stocks that comprise much of its holdings bounce. The fleeting climb led to a temporary streak of short coverings, the closure of a short position by buying back shares that were initially borrowed to short sell, from mid-June through last month.
Since then, however, “We saw short selling once again get more active in these tech-heavy ETFs,” S3 Managing Director Ihor Dusaniwsky said in a note.
“Short sellers were actively backing up their bets as stock prices of the underlying ARK ETF holdings declined,” he added. “Short sellers were willing to keep their exposure even as stock borrow rates for their shorts almost doubled.”
Catherine Wood, Chief Executive Officer and Chief Investment Officer of Ark Invest, speaks at the 2021 Milken Institute Global Conference in Beverly Hills, California, U.S., October 19, 2021. REUTERS/David Swanson
The $882 million ARK Fintech Innovation ETF (ARKF) was the most profitable of the lineup, with a return of roughly 28.7%. ARKF was down about 62% year-to-date as of Thursday’s close, according to Bloomberg data. Top holdings in the vehicle include Block (SQ), Shopify (SHOP), and Coinbase (COIN), which are down roughly 60%, 80%, and 70%, respectively, over the year.
ARK Innovation (ARKK), the firm’s flagship investment vehicle with about $8 billion in assets under management, came in third place, turning short sellers a mark-to-market profit of 27.4% on average short interest of roughly $1.4 billion. The ETF was the most shorted of the docket and was down 60% as of the end of Thursday.
Wood’s trenchant stock picks made her a star portfolio manager amid the pandemic recovery after ARKK returned a whopping 150% in 2020. Since then, the firm has experienced a change of fate as speculative tech names fell out of favor among investors concerned over rising interest rates.
The ARK founder and CEO has been a vocal opponent of recent Fed policy, insisting in a recent webcast that central banks are overdoing it.
“They’ll let something crack first,” before inflation “unravels to something well below” the target rate of 2%, she said.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
Click here for the latest trending stock tickers of the Yahoo Finance platform
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
The Wall Street Journal
Flood Insurance Fell in Florida Before Hurricane Ian Struck
SANFORD, Fla.—Florida homeowners had reduced their flood insurance coverage in the years before Hurricane Ian dumped up to 15 inches of rain on the state, inundating coastal and inland areas. Only a small number of residences in two of Florida’s hardest-hit inland counties are covered by flood insurance. The percentage of protected homes is higher in coastal areas that sustained the most damage, but still, is over 50% in just one of the affected counties, according to an analysis by Neptune Flood, a private-sector flood-insurance provider.
It’s Getting More Expensive to Bet Against Cathie Wood — And Investors Are Paying Up
(Bloomberg) — Short sellers are homing in on Cathie Wood’s pool of exchange-traded funds, undeterred by the rising cost to bet against the Ark Investment Management family.Most Read from BloombergGazprom Halts Gas Supplies to Italy in Latest Energy BattleFed Begins to Split on the Need for Speed to Peak RatesIndonesia Suspends Football Matches as Riot Kills at Least 129Ukraine Latest: US Sees Russia Pullout From Lyman as EncouragingMarjorie Taylor Greene’s Husband Files for Divorce After 27 Yea
$250,000 Pays This Much In Interest
Growing your retirement savings is an important goal for most investors. When you reach $250,000 in your account, it helps to understand how much income you can earn from your savings. While many people use the 4% Rule to determine … Continue reading → The post How Much Interest Does $250,000 Pay? appeared first on SmartAsset Blog.
5 Dividend Growth Stocks to Beat Market Volatility
Coca-Cola (KO), General Dynamics (GD), AstraZeneca (AZN), Boise Cascade (BCC), and Insperity (NSP) that offer dividend growth could be compelling picks amid market volatility.
Electric van maker Arrival misses quarterly production goal
British electric van and bus maker Arrival said on Friday it had missed its third-quarter target to start van production because of supply chain problems, but was on target to meet its goals for the end of 2022. “The supply chain is broken and we’re a new company,” chief executive Denis Sverdlov told Reuters. Arrival and other commercial electric vehicle (EV) startups are burning through cash as they race to bring vans or trucks to market before the funds run out or customers choose to buy from legacy automakers instead.
Bank of America Likes These Beaten Down Chip Stocks
Semiconductor stocks have tumbled in recent months amid flagging demand, with the S&P Semiconductors Select Industry Index dropping 36% year to date. Bank of America analysts recently discussed their favorite choices in the sector.
Seeking at Least 16% Dividend Yield? This Top Analyst Suggests 2 Dividend Stocks to Buy
Inflation, interest rates, and recession – these are the bogeymen of investing, and they’ve been watching over our shoulders for the past several months. We all know the story by now, the rate of inflation is running at generational highs, the Federal Reserve is hiking rates in an attempt to push back against high prices, and that’s likely to tip the economy into recession. At a time like this, investors are showing a growing interest in finding strong defensive portfolio moves. It’s a mindset t
Back to Bear Market: How Should You Adjust Your 401(K)?
Thursday’s plunge of nearly 460 points in the Dow Jones Industrial Average sent stocks back into a bear market and left investors once again wondering how to navigate the financial waters — including…
Where to Invest $1,500 Right Now
While a turbulent market can provide plenty of opportunities to buy more of the stocks you love at a bargain, it’s also tough to see the stocks you own go deeper into the red. Healthcare giant Johnson & Johnson (NYSE: JNJ) hardly needs an introduction. While the S&P 500 remains down about 17% over the trailing 12 months, shares of Johnson & Johnson have delivered a total return of approximately 4% in that time frame.