Cathie Wood says stocks are not in a bubble, thinks investors betting against her fund are off base

ARK Invest’s Cathie Wood defended her innovation-led strategies on Thursday after investors bet against her funds.

“I don’t think we’re in a bubble, which I think many bears believe,” Wood said on CNBC’s Tech Check on Thursday. “In a bubble, and I remember the late 1990s, our strategies would have been cheered. You remember the bouncing behavior of analysts who made estimates higher than the others and price targets higher than the others. We got none of that right. “In fact, you see a lot of IPOs or [special purpose acquisition companies] come out and fall to earth. We couldn’t be further from a bubble. “

Regulatory filings discovered by CNBC Pro on Monday showed that Michael 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. Burry was one of the first investors to benefit from the subprime mortgage crisis.

Other hedge funds have also placed bets and other short bets against the Fund’s ETFs.

“When I see such negative vibes out there, especially when it comes to valuation and longer time horizons, I actually feel a little more comfortable. I like bad news,” added Wood. “The discounting is worse now than the news will actually be. I actually feel better about our strategies in this environment.”

Wood said much of the downward movement in their funds has been focused on inflation and rising interest rates. However, the portfolio manager’s macro thesis focuses on deflation through innovation.

“The innovation that we’ve centered our research around, these five platforms: DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology, barely got off the ground,” said Wood.

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Wood’s flagship fund, ARK Innovation, bottomed in May as investors switched to value stocks and tech stocks in the first half of 2021. The ETF ended the second quarter up 9% but is still down 7% year-to-date.

ARKK was trading the flatline on Thursday.

“The seeds for all of these platforms were sown in the 20 years that ended in tears in the tech and telecommunications crisis, and there is a lot of muscle memory, but that’s not what is happening right now. The market is ready for it. We have never been at a more provocative time for innovation in history, “said Wood.

Wood made a name for itself with a 2020 banner that saw ARK Innovation return almost 150%. The fund held large stakes in stocks like Zoom and Teladoc, which thrived during the pandemic. The ETF soared with investors hoping to get some of the “disruptive innovation” names that Wood is promoting on its popular YouTube channel. The fund has assets under management of more than $ 22.5 billion, according to FactSet.

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