✍️ ARK Invest Short & Squeeze - Edition #1
ARKK +21.6% in 2023 - Performance, Short Interest, Key Metrics, AI framework, ARKK deep dive, latest trades, direct stock commentary & bonus
Dear all,
welcome to the inaugural 1st edition of the ARK Invest Short & Squeeze report that covers state of the art analytics & visuals on Ark’s 6 main ETFs. A unique report after I studied what is out there, and not even Ark Invest themselves post many of these key analytics in their usual public reports to investors.
Target audience: long, short & short squeezers of the Ark innovation investing theme. Useful also for investors in general, journalists and markets observers given how Ark is quite a liquidity proxy, risk-on/risk-off, and sentiment gauge in the financial markets.
Report is not behind a paywall, there are no pesky ads here but pure data-driven research as always. It would be highly appreciated if you just spread the word around to people that might also be interested.
Report structure is the following:
📊 Ark Invest ETFs: Performance Overview 📊
📊 Ark Invest ETFs: Short Interest - ETF level & single stocks 📊
📊 Ark Invest ETFs: Key Metrics 📊
📊 Ark Invest ETFs: Artificial Intelligence framework 📊
📊 ARKK flagship ETF: deep dive 📊
📊 Ark latest trades in action 📊
💬 Ark Invest Direct Stock Commentary 💬
🏦 Bonus Takes & Charts 🏦
📊 Ark Invest ETFs: Performance Overview 📊
2023 started with a massive rally for the 6 main Ark ETFs via a general risk-on environment: ARKK +21.6% & ARKG +21.08% in 2 weeks.
Ark ETFs weekly % change for the past 12 months:
Zooming out further for the returns & CAGR since the inception of each ETF: massive parabolic run up and then back to earth with a notable driver being cheap money driven by ultra low interest rates and central banks balance sheet expansion. It is down 77% from all-time highs and shaved off 70% last year: is it back now or just a bear market rally after the recent good news from the inflation side?
Is what happened lately a very unique Ark / Cathie Wood story? No, via Oktay Kavrak we have this great chart with the 5-year performance of ARKK vs a Goldman Sachs Basket of Unprofitable Tech Stocks. Spot the difference! Close to none!
An interesting data point now via Eric Balchunas from Bloomberg: despite ARKK being down materially in the last 12 months, we find that it attracted inflows of $1.8 bn leading all 256 thematic ETFs. Hard to say there is no interest in Ark, isn’t it?
A great poll now in 2023 via Arny Trezzi asking: ‘Is ARKK UNINVESTABLE?🤔’. Results were very balanced, actually more than I was expecting. Food for thought … .
Now let’s get back to analysis & research and decompose the 2023 performance of the 6 main Ark ETFs via price scatterplots: Total Return % year-to-date and Above 52-week Low %. Use case: check for market leaders & laggards, pos/neg momentum, short/squeeze candidates, relative strength and/or likely unwarranted cheap stocks.
ARKK 2023 Total Return % and Above 52-week Low %: most names are up materially, check the outliers
ARKQ 2023 Total Return % and Above 52-week Low %: most names are up materially, check the outliers
ARKF 2023 Total Return % and Above 52-week Low %: most names are up materially, check the outliers
ARKG 2023 Total Return % and Above 52-week Low %: most names are up materially, check the outliers
ARKW 2023 Total Return % and Above 52-week Low %: most names are up materially, check the outliers
ARKX 2023 Total Return % and Above 52-week Low %: most names are up materially, check the outliers
📊 Ark Invest ETFs: Short Interest - ETF level & single stocks 📊
Short interest at the ETF level: ARKK flagship ETF has the highest metric at 14.02%. Note how ARKF used to be very high, though it did temper lately.
Via Bloomberg we find the interesting data that short interest is not high just for ARKK, but also for the Goldman Sachs basket which tracks stocks that are heavily shorted which surged 15.7% last week (most for a week since April 2020 Covid crash). Given the rally in 2023, did quite some funds get caught offside lately?
Short interest of the components of each ETF with total return in 2023:
ARKK components: short interest is very high especially on the names to the right. COIN, NVTA, CRSP & TDOC could be causing hard time to short sellers given their performance this year.
ARKQ components: VUZI with a high 23% SI despite a 47% return in 2023. On the other side, LMT, NIU, XPEV & ISRG despite being down in 2023, have low SI.
ARKF components: Silvergate Capital (SI) with an ultra high 53.6% SI and a -23.4% return in 2023 has been working very well for short sellers. Most other ARKF components with a relatively low SI.
ARKG components: FATE being shorted strongly given the 23% SI and a -43.3% return in 2023
ARKW components: COIN TDOC & VUZI with a high SI despite good performance in 2023 while note the peculiar case of GBTC: a very low 2.5% SI despite being down 65% in 2023
ARKX components: DDD U JOBY VLD & PATH with high SI despite great performance in 2023 while HON LHX LMT with low SI despite being down
Last but not least on the Short Interest section, execution wise one way to short ARKK is via ‘the shark going for the Ark’, namely SARK which is an ETF launched in 2021 which goes inverse via swaps on Ark's flagship fund. A great 87% return since inception (was up 135% just recently in December), though note lately the flows into the ETF are fading together with volume.
📊 Ark Invest ETFs: Key Metrics 📊
Now let's plot 5 Key Metrics covering the last 3 years for all 6 ETFs: Investment growth of $10,000, Drawdown from peak, Flows (weekly), NAV trading at Premium/Discount & Volatility.
Ark ETFs Assets Under Management (AUM) since inception: log scale
And now on a linear scale so that you do not get tricked as it looks quite different:
📊 Ark Invest ETFs: Artificial Intelligence framework 📊
ARKK ARKQ ARKF ARKG ARKW valuation via an Artificial Intelligence (AI) framework provided by Hedgy Analytics via the Cheapness, Profitability, Sentiment & Momentum dimensions. Main takeaway: rock bottom Cheapness, Profitability & Momentum scores while note the recent jump in Sentiment
Profitability and Cheapness dimensions via a great scatterplot visual:
Momentum and Sentiment dimensions via a great scatterplot visual:
If you go on Hedgy's website, you can filter the Opportunity Triangle by Cheap, Value, Profitable, Growth, Loved, Trending and right in the middle, Ideal:
12 months forecast for ARKK ARKQ ARKF ARKG & ARKW components:
N.B. background on the Artificial Intelligence (AI) framework: model breaks down company historical and forecasted financial fundamentals to gain perspective on its Cheapness, Profitability, Sentiment, and Momentum. Then it further applies machine learning techniques to data to determine which measurements are most predictive in each distinct industry. It is improved and fine tuned week by week and more to come.
📊 ARKK flagship ETF: deep dive 📊
Digging inside the flagship ETF ARKK and the constituents via the angle of Performance & Weight in 2023 & 2022.
EXAS COIN ROKU SQ CRSP RBLX & DKNG doing the heavy work in 2023
2022 ARKK biggest detractors: TSLA was a big one indeed as reported widely, but other names pulled down ARKK even more: ROKU, COIN, TWLO
Since inception, Bloomberg estimates that ARKK investors lost almost $11bn, though let’s note that was also with the positive sign back in Q4 2020. I personally always say: when anything works too well & too fast, time to ask questions, hedge, trim or mark a profit: nobody got hurt ever booking a profit, stepping a bit on the side for a new plan less influenced by recency bias. On hedging, a general message: it’s very likely to be cheap when the asset is going fast upwards (i.e. when nobody wants to hedge).
A common statement I see online is that ARKK has been all about retail investors buying the innovation investing theme. Data clears the ski on that one also: Fidelity data shows us that current Institutional ownership is 43%, they bought more recently & in the Top 10 holdings by shares held, we find big household names as owners.
Via Fintel.io we see visually how institutional ownership increases more and currently at it’s highest level, and that despite the price falling back to 2019 levels.
From a technical analysis view, ARKK formed a major Head & Shoulders pattern in the last 3 years. Going into 2022 year-end, it broke briefly below the right neckline, only to come back up in 2023 strongly. That is a key resistance level to be watched further. In case a confirmed break below the 33-ish level happens, that would be very bearish with the next support around the 23-ish level.
All in all, ARKK is very sensitive to inflation, hence the interest rates trajectory & liquidity profile that the FED embarks on. Chart below shows FED total assets yearly % change and ARKK price. As FED liquidity shoots up, ARKK goes parabolic and the other way around. ARKK in general is a bet on innovation and a liquidity proxy as well.
When rates & inflation will fall fast enough, likely a sharp rebound for Ark ETFs, growth, hyper-growth & tech space in general. A wordplay & rhyme in the same time: at the end of the day it’s a big 'rates play' … for this space.
📊 Ark latest trades in action 📊
🐂 Bullish action🐂
Ark buying strongly the dip in Tesla (TSLA), Coinbase (COIN) & Roku Inc (ROKU).
🐻 Bearish action 🐻
Ark continuing the bearish action on Shopify (SHOP) with some new sales & exiting from Fate Therapeutics (FATE) & Silvergate Capital (SI).
💬 Ark Invest Direct Stock Commentary 💬
Ark shares weekly commentaries with investors on stocks part of their strategies that have appreciated or dropped more than 15% in a day during the course of the week.
🏦 Bonus Takes & Charts 🏦
ARK with a deep dive on Exact Sciences (EXAS): Expected Value In 2027: $140/share. Full take can be found here.
Cathie Wood launched in Q4 2022 a new venture fund targeting illiquid assets.
My 2021 thread which got 40,000+ views on Twitter:
I hope you enjoyed this publication & it would be great to hear your feedback both in terms of what is currently inside & coverage you would like to see further.
Have a great 2023!
Maverick Equity Research
Very interesting how SI is shorted like crazy while GBTC not despite being down also and a crypto winter play also ... . Thank you for this great comprehensive take!
Hmm nice Short data there … thx