Cathie Wood’s exchange-traded funds slipped in the pre-market on Monday, signaling no immediate end to the selloff that has wiped 25% from her flagship investing strategy over three turbulent weeks.
That’s the longest stretch of weekly losses for the Ark Innovation ETF (ticker ARKK) since the Covid-spurred meltdown last year, according to data compiled by Bloomberg. The fund dipped 2.4% as of 7:34 a.m. in New York, with other products from Wood’s Ark Investment Management falling in lockstep.
Futures for the Nasdaq 100 declined 1.4% as benchmark Treasury yields climbed to almost 1.6%.
A glance at some of the biggest Ark holdings helps explain the firm’s trouble: Tesla Inc., its top bet, was down about 2% in early trading. Square Inc. slid by 2.3%, and Teladoc Health Inc. declined 1.7%. All of them have been tumbling in recent weeks.
Those stocks have been some of the hottest on Wall Street, surging as the pandemic accelerated a shift to online working and the election of U.S. President Joe Biden raised expectations of a policy boost for electric vehicles. Now, the prospect of rising inflation amid an economic recovery is driving up bond yields, making the highest priced equities less attractive.
The prolonged run of losses across Wood’s funds represents the biggest test yet for the firm she founded in 2014. Investors poured billions of dollars into her ETFs in recent months inspired by Ark’s stellar returns in 2020.
The latest data showed that Wood’s main fund recorded a small inflow on Thursday, even as it dropped 5.3%. Other funds like the Ark Next Generation Internet ETF (ARKW) and the Ark Genomic Revolution ETF (ARKG) saw hundreds of millions of dollars in outflows.
Short interest in ARKK, as measured by the percentage of available shares that are on loan, has climbed to a record of more than 5%, according to data from IHS Markit Ltd. Bearish bets had eased slightly on Thursday.
This article was provided by Bloomberg News.