Trading statistics from Cathie Wood’s firm ARK Investment Management LLC show that the company’s shares sold roughly 4 million Twitter shares in one day on Monday, the largest in a single day since May at least.
Selling 3.66 Million shares
ARK Innovation ETF, Wood’s flagship product, sold 3.66 million shares of Twitter on Monday, while ARK Next Generation Internet ETF sold over 280,000 shares, according to MSN. Assuming Monday’s closing level, the market had risen an estimated $142 million.
It also reported that a mixed set of results from its social-media competitors has prompted the company to sell its assets. Last week, Facebook’s parent company, Meta Platforms Inc., experienced the largest one-day drop in stock market history as its user base stopped growing, while Snap Inc. experienced the largest one-day gain in stock market history after providing quarterly sales forecast that exceeded Wall Street’s expectations.
The firm’s daily trade reports highlight only active management actions, not investor-driven creation or redemption. Wood’s mantra is that ARK invests for at least five years and that volatility in equities picks is expected. After roughly 150 percent gains in 2020, investors started selling expensive tech companies and shifted to cyclical firms projected to benefit more from a recovery.
Ventures into private equity
ARK Invest is establishing a closed-end fund to maximize returns in risky investments, as Wood’s existing exchange-traded funds continue to decline. On Thursday, ARK submitted fund documents with the SEC.
According to Barrons, Ark Venture Fund will make investments in disruptive, inventive businesses with the potential to develop tremendously, much like the vast majority of the companies held by the ARK ETFs. It differs from other investment vehicles in that it needs investors to be significantly more committed to their capital.
The fund will buy back 5% of its outstanding shares each quarter to allow investors to sell their holdings. The duration between redemption windows is what gives these funds their name. Because the fund can only buy so many shares, more stock may be offered for sale than the fund can buy. There may not be enough time to sell at any window.
Since their prices reached their apex a year ago, ARK’s existing ETFs have struggled to maintain their value. The Covid-19 pandemic has hastened the adoption of numerous innovative technologies in 2020, resulting in a boom in the value of ARK ETFs, which are dominated by innovation stocks. They were among the best-performing funds in the industry that year.