Short Interest In Cathie Wood’s ARK Innovation Fund Has Plunged
In “signs that Cathie Wood’s ARKK fund is likely still nowhere near a bottom”, it was reported yesterday that the interest in shorting the fund is starting to fall – almost as fast as the fund itself continues to plunge.
“Traders are taking bets against [Wood] off the table,” a new report from Bloomberg said this week, noting that short interest as a percentage of shares outstanding in Wood’s flagship fund has dropped in recent weeks.
Just 9.2% of the fund is out on loan, compared to a scorching high of 17% back in April. The decline in short interest has come as the fund has fallen 28% over the last month, the report notes.
James Pillow, managing director at Moors & Cabot Inc., told Bloomberg: “The fund remains in a clear downtrend, so normally traders would have continued to press such a short. It is likely that the broadly covered inflows spooked some of the less-committed shorts.”
Since December, ARKK is down about 60%, the report notes. Matt Maley, chief market strategist for Miller Tabak + Co. added: “Maybe they just wanted to take some profits now that it has fallen so much.”
Chris Gaffney, president of world markets at TIAA Bank added: “High rates hurt growth stocks. In turbulent times — it’s volatile, and the volatility is going to continue, especially in the short term — you don’t want to be investing in speculative companies, you don’t want to be investing in companies that just don’t have a proven earnings record.”
And while ARKK continues to plunge, the Tuttle Short Innovation ETF (SARK) has been seeing outflows. Investors yanked about $39 million from the inverse Cathie Wood fund in the latest session where data was available.
Thu, 05/26/2022 – 09:22