Declan Harty, here—filling in for Robert Hackett, who is taking some well-deserved time off this week (I mean, have you read our latest cover story? Or followed our NFT auction last week?).
So, to kick off my first Data Sheet, I’d like to talk about Cathie Wood, and specifically, the growing crowd of Wall Streeters who are betting against the tech-loving head of ARK Invest.
It’s been a rough 2021 for most of Wood’s funds. What started as a meme-like rise for many of ARK’s ETFs quickly turned bad in February, as investors shifted to so-called “value” stocks and away from the “growth” companies that Wood favors. And some in the financial world seem to think the worse is yet to come.
Michael Burry, who famously bet against the housing market ahead of the 2008 financial crisis, revealed earlier this week that his Scion Asset Management held $30.8 million in put options against Wood’s ARK Innovation ETF, known as ARKK, at the end of June. Put options let their holders make what is typically a bearish trade by locking in a price at which it can sell the underlying shares in the future. Thanks to securities law, we don’t know what price Burry bought the put options at, when they will expire, or even if Scion has already executed the trade (the filings that institutional investors use to publicly report their holdings are based on the end of the quarter and are typically released 45 days after the fact).
What we do know is that Burry was not alone in that bet —and that he is far from the biggest bear on Wood.
Laurion Capital Management held put options worth more than $171 million against ARKK, according to The Wall Street Journal. Wood’s actively managed ETFs were also the targets of put option bets from GoldenTree Asset Management ($102.5 million), Moore Capital Management ($5.8 million), and Cormorant Asset Management ($134.8 million against two ARK funds).
Adding to the pressure is the growing number of short sellers betting against Wood; short interest in ARKK now stands at $2.88 billion—more than 13% of the ETF’s float, according to S3 Partners. Over the past month, the count of shares shorted against ARKK has climbed 26.8% while the ETF has fallen 0.6%, S3 managing director Ihor Dusaniwsky told Coins2Day.
Cathie Wood is used to being bet against, though.
In profile after profile published over the past year, she is painted as a believer in the power of, and lack of appreciation for, innovation—a factor that reportedly played into her decision to leave the conservatively run AllianceBernstein almost a decade ago and start ARK. “To his credit, Michael Burry made a great call based on fundamentals and recognized the calamity brewing in the housing/mortgage market,” Wood tweeted Tuesday. “I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space.”
Of course, many of Wood’s big gambles have been successful. She was an early bull on Tesla, for one (her firm’s latest in March predicted the stock will rise to $3,000 in 2025; they’re at $694 in mid-day trading today). Meanwhile, she forecasts that Bitcoin will reach $500,000, more than 10-times its current level. And for as much has been made about the ARK Innovation ETF’s recent woes, it’s still up more than 32% from a year ago.
Maybe Wood happened to get lucky by establishing ARK at the perfect moment when tech stocks started to soar. Perhaps the rise in ARKK is simply a result of a swell in the number of day traders and Wood’s fanbase. But there is a reason CNBC and Bloomberg TV haven’t spent much time over the last decade talking about the shares of banks or energy companies: Tech and growth stocks have been on a sustained rise that, however inexplicable, is one that Wood is surely betting will continue.
Declan Harty
@declanharty
[email protected]
NEWSWORTHY
Social media reckons with the Taliban. With the Taliban taking over Afghanistan, U.S. Tech giants now face questions about how much access—if any—the Taliban should get to their platforms. Facebook has been one of the most outspoken, with Mark Zuckerberg's social network saying in recent days that the Taliban is banned from its service and that it will monitor for accounts indicating "praise, support, and representation" of the group. Alphabet-owned YouTube said Tuesday that it had a long-standing prohibition on the accounts believed to be operated by the Taliban. Twitter, on the other hand, has taken a slightly more measured approach, saying the Afghan people are relying on its platform for "help and assistance." A Taliban spokesperson currently has more than 320,000 followers on Twitter.
Misinformation crackdown. On Tuesday, Twitter added a new feature that lets users report misinformation on elections, COVID-19, and otherwise. The tool, available in the U.S., Australia, and South Korea, comes amid a worldwide conversation about the tech industry's role in regulating the spread of conspiracy theories, racism, and other harmful content. President Joe Biden has been particularly outspoken about COVID-19 vaccine misinformation, telling reporters in July that the likes of Facebook are "killing people." (Biden later walked back the comment by blaming bad actors on the platform.)
Amazon effect hits Walmart? The e-commerce giant built by Jeff Bezos has finally surpassed Walmart as the largest retailer outside of China (where Alibaba is based). While not a surprise, Amazon's overtaking of Walmart comes on the heels of an 18-month pandemic during which consumers shifted to shopping online rather than in person. Walmart is far from a loser here, though, as it has managed to grow sales by $24 billion in the last year. But its gains pale in comparison to those of Amazon, which saw an almost $200 billion increase in the total value of everything bought on its platform in roughly the same period, The New York Times reported.
More than 40 million. That's how many records of past, prospective, and current customers were compromised in a hacking of T-Mobile. On Wednesday, the company disclosed that some of the data included customers' names, Social Security numbers, and drivers' license information; however T-Mobile did say that there had been "no indication" that any information about customers' credit cards, debit cards, or other payment information was stolen.
The gold standard. Palantir loaded up on gold bars in August: $50.7 million worth of 100-ounce ones, to be exact. The software company, founded by Peter Thiel and CEO Alex Karp, has been pushing into more unusual investments as of late, including a handful of SPACs. In its latest quarterly report, Palantir said the gold will be kept in a "secure third-party facility" in the Northeast. COO Shyam Sankar later explained to Bloomberg that the decision comes as Palantir prepares for "a future with more black swan events."
FOOD FOR THOUGHT
"We can't do anything with this moon." Silicon Valley's push to automate driving is floundering: Starsky Robotics shut down in 2020, Uber exited the business last year, and Lyft sold its self-driving car business to Toyota. And then, in perhaps the clearest example of the tech industry's challenges with self-driving vehicles, there is Waymo. The Alphabet-owned company has been operating self-driving rides in Phoenix for four years in what had been expected to be the first stop of a broader rollout for its technology. But Waymo continues to face problems, as Bloomberg Businessweek reported Tuesday. Said one analyst: "We got to the moon, and it's like, now what?"
From the article:
In 2017, the year Waymo launched self-driving rides with a backup human driver in Phoenix, one person hired at the company was told its robot fleets would expand to nine cities within 18 months. Staff often discussed having solved "99% of the problem" of driverless cars. "We all assumed it was ready," says another ex-Waymonaut. "We'd just flip a switch and turn it on."
But it turns out that last 1% has been a killer. Small disturbances like construction crews, bicyclists, left turns, and pedestrians remain headaches for computer drivers. Each city poses new, unique challenges, and right now, no driverless car from any company can gracefully handle rain, sleet, or snow. Until these last few details are worked out, widespread commercialization of fully autonomous vehicles is all but impossible.
IN CASE YOU MISSED IT
How venture capital-backed startups that got PPP funding fared after the pandemic by Lucinda Shen
Apple accepts 15 Black- and brown-led businesses for impact accelerator by Marco Quiroz-Gutierrez
Most workers favor vaccine mandates, but a significant number still oppose them by Megan Leonhardt
New lawsuit questions regulatory status of Bill Ackman's SPAC by Declan Harty
Popular outrage, not economics, will determine the fate of Big Tech by Philipp Carlsson-Szlezak and Paul Swartz
Why the C-suite could be getting a C grade on the inclusivity and empathy report card by Ellen McGirt
Procter & Gamble has a brand problem by Lance Lambert
Mark Cuban just revealed how much Dogecoin he actually owns by Marco Quiroz-Gutierrez
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BEFORE YOU GO
The bigger picture. Halfway around the world in Afghanistan, men, women, and children are facing a serious threat. Take the Afghan Girls Robotics Team, for instance. The group of 12 to 18-year-olds who have competed internationally is now scrambling to try and leave the country, CNET reported Tuesday.
Often, we talk in this newsletter about some of the world's most exciting and innovative technologies and developments. But it's important to take a step back and look at what else is happening, too.
I'll be with you again on Friday, but in the meantime, Kevin Dugan will be back for your regularly scheduled programming tomorrow.
