Cathie Wood says Michael Burry doesn’t understand innovation space after he bets against ARK fund
Cathie Wood called Michael Burry on social media after ‘The Big Short’ investor placed a bet against their flagship ARK Innovation Exchange Traded Fund.
“He deserves credit for having made a great call based on fundamentals Michael Burry realizing the calamity that is brewing in the housing / mortgage market. I don’t think he understands the fundamentals that are creating explosive growth and investment opportunities in innovation, ”tweeted Tuesday morning.
Regulatory filings discovered by CNBC Pro on Monday showed Burry was betting options against Woods’ ARK Innovation ETF. Burrys Scion Asset Management bought 2,355 put contracts against the red-hot tech ETF in the second quarter and held them until the end of the reporting period. Investors benefit from puts when the prices of the underlying securities fall. It is not clear whether Burry’s position is profitable or whether he is still holding the short bet.
Burry was one of the first investors to benefit from the subprime mortgage crisis. He was featured in Michael Lewis’ book “The Big Short” and the subsequent Oscar-winning film of the same name.
Shares in Wood’s flagship fund, ARK Innovation, bottomed in May after a rotation in value names in the first half of 2021; However, the ETF ended the second quarter up 9%. ARK Innovation’s shares are still down 6% year-to-date.
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Burry’s filing through the end of the last quarter also shows that he increased his Tesla put position during the reporting period. Wood is a longtime Tesla bull. The electric car maker is number 1 at ARK Innovation, accounting for more than 10% of the total ETF.
Check out the rest of Wood’s Twitter thread here.
“In our view, the seeds for the innovation explosion @ARKInvest is dedicated to were sown in the 20 years that ended with the tech and telecom bankruptcy. After more than 20 years, these technologies should change the world over the next 10 years” Wood’s Twitter thread continued.
“If we’re right, GDP and sales growth will decline until opportunities in emerging technologies start moving macro needles. In this environment, innovation-based strategies should excel, ”said Wood.
“Deflation in commodity prices is cyclical, but it adds to the secular forces caused by technologically-enabled disruptive innovation (” good deflation “) and creative destruction (” bad deflation “),” Wood said in a tweet.
“Since mid-May, a number of raw material prices have collapsed: wood -65-70%, copper -10-15%, oil -10%. An unexpected rise in the dollar also has a negative effect on raw material prices. Now the Mannheimer” Autoindex took advantage of it – a leading index for new car sales – is slipping, “said Wood.
“Most bears seem to believe that inflation will continue to accelerate, which will shorten the investment horizon and destroy valuations. Despite what we believe to be a supply chain / short term inflation spurt, both stocks and bonds have appreciated in value since March. ”Concluded.
Wood is one of the few investors who go against the grain when it comes to inflation. While many market participants are concerned about rising prices, the founder of ARK Invest anticipates deflation amid a collapse in commodity prices, a halt in taxation in Washington and burgeoning innovation trends.
Scion Asset Management did not immediately respond to CNBC’s request for comment.
– with reports from Yun Li of CNBC.