Is Ark-Invest really any good?

[hershey101]

I'll preface this conversation by saying: I've been following Ark since Cathy came on CNBC talking about $TSLA at $5k+ back in 2017 (or 2018)... I've been a super $TSLA bull since 2013 but that seemed insane even by my standards in then.

Since then, I've invested a substantial sum of $ into ARK's funds as a "diversification" of sorts out of $TSLA . That being said, I've been following almost all the analysts on fin-tweet as a way to learn about the industries I know little to nothing about (eg. biotech/genomics etc.). However, based on their AI/Deep Learning/Self-Driving analysts' comments, it seems like they don't really have that deep an understanding of the space. They just look really smart in relative comparison to GS/MS/JPM etc. analysts who have their heads up their own ass, need to be spoon-fed information and are incentivized to not go against the status-quo.

I know a lot of folks here also have $ in Ark Invest, and I'm curious what you think? Cathy seems super smart, but the rest of the analysts are a mixed bag IMO. This combined with the recent Resolute developments makes me wonder if I shouldn't just move my $ out of Ark and back into the 3-5 of their top-holdings I understand really well.

 

[Featsbeyond50]

They are on-point at this point in time. The question is, are they lucky or brilliant? They are a very smart crew but that doesn't mean, as Cathy has said, "this time it IS different". For some companies, especially Tesla, I firmly believe great things lie ahead but other companies could be in bubble territory due to being pulled in the euphoric wake.

ARK are mutual funds and to me this creates two problems. One, they have to buy lots of stocks which means some of those stocks will be junk and some probably in bubble territory. The other thing I don't like is they are sellers of Tesla. As TSLA continues to rise as a percentage of their funds, they have to sell. Do I want to own a fund that is selling Tesla? Not really.

 

[ggr]

They are on-point at this point in time. The question is, are they lucky or brilliant? They are a very smart crew but that doesn't mean, as Cathy has said, "this time it IS different". For some companies, especially Tesla, I firmly believe great things lie ahead but other companies could be in bubble territory due to being pulled in the euphoric wake.

ARK are mutual funds and to me this creates two problems. One, they have to buy lots of stocks which means some of those stocks will be junk and some probably in bubble territory. The other thing I don't like is they are sellers of Tesla. As TSLA continues to rise as a percentage of their funds, they have to sell. Do I want to own a fund that is selling Tesla? Not really.

They are not mutual funds, they are ETFs (exchange traded funds).
They don't "have to buy" anything. They actually have quite small numbers of investments compared to many other funds.
They only sell TSLA to stay within their diversification guidelines. It's their biggest holding. They also buy back in whenever the opportunity presents itself. It's been working very well for them (and for me).

You are right that it's likely some of their other holdings are not going to pan out long term. But they put a lot of research into their holdings, more than you or I can do. Their hit rate is likely to be good.

 

[Featsbeyond50]

They are not mutual funds, they are ETFs (exchange traded funds).
They don't "have to buy" anything. They actually have quite small numbers of investments compared to many other funds.
They only sell TSLA to stay within their diversification guidelines. It's their biggest holding. They also buy back in whenever the opportunity presents itself. It's been working very well for them (and for me).

You are right that it's likely some of their other holdings are not going to pan out long term. But they put a lot of research into their holdings, more than you or I can do. Their hit rate is likely to be good.

You're not really disagreeing with me on anything. You're just drawing a different conclusion, which is fine.

 

[Featsbeyond50]

Oh, I do want to say, I've looked at their holdings, and their funds contain a lot of stocks. Off the top of my head, I'd say at least 50 each. I don't know what the typical mutual fund holds but to me, 50+ is a lot.

 

[MP3Mike]

Oh, I do want to say, I've looked at their holdings, and their funds contain a lot of stocks. Off the top of my head, I'd say at least 50 each. I don't know what the typical mutual fund holds but to me, 50+ is a lot.

While ARKK contains 49 stocks more than 50% of their money is in the top 10. On the other hand a S&P500 fund holds 500 stocks, that is a lot. The Vanguard mid-cap value ETF holds 205. So I wouldn't really call under 50 a lot, especially with the concentration in the top 10.

 

[st_lopes]

Oh, I do want to say, I've looked at their holdings, and their funds contain a lot of stocks. Off the top of my head, I'd say at least 50 each. I don't know what the typical mutual fund holds but to me, 50+ is a lot.

The typical mutual funds holds 100s. It’s a requirement by securities law to maintain « diversified » status. Ark also has regulatory required limits on how much they can hold any one position. Believe it’s 20% if I’m not mistaken and it doesn’t apply to all of their funds.

Also FYI, they are a top returning ETF for several years running, and it’s not just because of Tesla (since it’s always « just » 10% on average of their holdings).

To the OP‘s point, not all their analysts are rock stars, but they are all above average. Ultimately, Cathie is the CIO and decides on all positions. So your buy of the ETF is disproportionately a buy in her and her ability to pick stocks, but also to know the strengths and weaknesses of her people.

 

[Featsbeyond50]

they are a top returning ETF for several years running

No doubt, they are on-point right now.

 

[ggr]

You're not really disagreeing with me on anything. You're just drawing a different conclusion, which is fine.

Actually, yes, I am disagreeing with you.

The other thing I don't like is they are sellers of Tesla.

They aren't sellers of Tesla, they are traders of Tesla. They both sell when Tesla has become (through stock price appreciation) too high a proportion of their holdings, and buy again whenever either Tesla falls or other stocks appreciate. They balance so that TSLA is always around 10-12% of their ARKK fund, for example. They have self-imposed trading guidelines that they have effectively promised to their investors to follow.

The rest of what you said shows that you really don't know what you think you know. Draw whatever conclusion you want.

 

[CLK350]

ARKK / Cathie W are great, BUT you have to keep in mind that their objective is FIRST to grow the size of the funds they manage, second to get best returns. That's because they get paid as a percentage of the funds they manage for their investors.
That being said, I do like to scan through their picks to see what's noteworthy.
If anyone followed, I'm curious to know if they anticipated AMD's sort of surprising dominance over Intel.
So if not ARK, what I'd really like to find is a decent stock/ investment that would be the best counterpart to TSLA.
Best candidates off the top of my head seem to be in biotech, crypto, or Chinese FinTech.

 

[Dutchie]

I bought Ark a couple at a times when it was in its $40’s. I bought them because TSLA was about $300, which was a bit high for me. Looking back I should have saved all these $40’s which I put in over time, and buy TSLA at $300—$400 instead (it was pre split). Now my Arks are trading around $100 so I still did quite alright. Thinking of selling though and buy TSLA from proceeds.
Mind you I am still heavy invested in TSLA on my other account.

 

[AudubonB]

ARKK / Cathie W are great, BUT you have to keep in mind that their objective is FIRST to grow the size of the funds they manage, second to get best returns. That's because they get paid as a percentage of the funds they manage for their investors....

This MAY, or MAY NOT, be the case. Insufficient information to determine which.

In order properly to determine the answer, one needs to know the extent to which Cathie and her team have invested in ARK's products. In all the firms I worked for, every senior and mid-level personnel owned between "a lot" and "effectively all investment assets" in their products. Which is as it should be.