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Short Interest In Cathie Wood's ARK Innovation Fund Has Plunged

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. 

Tyler Durden
Thu, 05/26/2022 – 09:22

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