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    ARKK holdings executives offload $13.5bn in stock

    The founders and senior management of companies owned by Ark Invest’s flagship fund have embarked on an unprecedented mass sale of shares.

    According to calculations by securities firm Stone X, company insiders sold $ 13.5 billion in shares and bought only $ 11 million in the six months to December.

    The rush to the exit is the latest shock to the fate of Ark Innovation ETFs (ARKK), Which lost Almost half of that value since its peak in February 2021. With more than 150% profit in 2020, it became a poster child for the Wall Street technology-backed boom, and was nicknamed founder, CEO and portfolio manager Cathie Wood. “Queen of the Bull Market”..

    Vincent Deluard, Global Macro Strategist at StoneX, said: “The median holdings of ARKK have fallen 55% from their 52-week highs. If insiders aren’t buying now, why do we need investors?”

    Deluard said it’s not unexpected that insider sales will outpace purchases as cash-deficient founders diversify their portfolios and early employees receive stock options.

    A similar trend is taking place in the wider US stock market, where insiders have sold record $ 32 billion shares in S & P 500 companies in the last six months, with purchases down to $ 95 million in six years. I was depressed.

    However, Delard said that during the last two months of 2021, during the period when the S & P 500 continued to rise, many of these stocks plunged, and the trading gap by insiders of ARKK’s investee companies He said the size of the was amazing. ..

    “Company insiders tend to be quite opposed to their actions. They buy after a big drop. There was a big drop, there were a lot of sells, and there weren’t many buys,” Deluard said. He added.

    “Why should someone else do it if the wise people aren’t buying it? The bubble is the transfer of wealth from the masses to the insiders anytime, anywhere.”

    Insider trading data “seems to show that Cathy and the team are more confident than the people who run these companies,” said Ben Johnson, director of Morningstar’s Global ETF Research. rice field.

    The data show that the sale of ARKK has destroyed shareholder value since the start of 2014, even though a 328% return was reported during this period.

    ARKK had a cumulative net inflow of $ 15.5 billion since its launch, but by the end of Thursday, its net worth was only $ 14.4 billion. That is, it is not worth it to the average investor. Most of that return.

    A line graph of ARKK's shareholder value creation assets minus net flow ($ 1 billion)

    “Most investors were accumulating at soaring prices in 2020 and 2021, so no shareholder value was created,” Deluard said.

    “Cathie Wood has no control over investors.” [poor] A true measure of timing and her talent comes from time-weighted returns that remain amazing despite last year’s losses. Nevertheless, the reality of investor flow cannot be ignored. “

    This trend is not unique to ARKK. According to Morningstar, investors are very likely to load into the fund after making the most profits, so investors’ dollar-weighted returns will be the total return of the fund across the U.S. market over the decade to 2020. Delayed by 1.7 percentage points. ..

    However, Wood’s declaration of Ark Invest’s higher objectives is questionable.

    Wood, a devout Christian, has Ark’s mission It ’s not just about making money For investors, “it’s about Allocate capital to God’s creation In the most innovative and creative way possible. “

    ARKK collected $ 17 billion in net inflows between January 2019 and June 2021, and Deluard found funds invested in companies that generated a total of $ 23 billion in revenue during this period. ..

    These companies spent $ 47 billion on R & D and issued $ 14 billion in new shares over a 30-month period.

    Deluard argued that this investment and funding was “definitely facilitated by a large purchase of ARKK.” This “allows many young companies with unproven technology to raise more stock with a much higher valuation than they would otherwise.”

    “The claim that ARKK will fund research and accelerate the pace of innovation is credible. The new shares sold to ARKK will be between the small or negative profits of high-growth companies and their large R & D expenses. It helped fill the gap, “he added.

    However, Delard said ARKK’s investee companies issued $ 23 billion in equity-based payments over the same period.

    “Non-optimistic stories are just as reliable. The flow of Ark ETFs may have spurred research and innovation, but it also allowed insiders and founders to monetize with absurd valuations. “He said.

    “It will be clear over time whether Ark Investment Management funded the next industrial revolution or organized the transfer of historic wealth from the general public to insiders and early investors.” He concludes the hypothesis that he believed was reinforced by current insider sales.

    Johnson believed that ARKK could have improved society during his lifetime, but “if so, in a unnoticed amount and in a very roundabout way.”

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    ARKK holdings executives offload $13.5bn in stock Source link ARKK holdings executives offload $13.5bn in stock

    The post ARKK holdings executives offload $13.5bn in stock appeared first on California News Times.

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