Anchors away
Cathie Wood's sinking Ark
Good morning, diligent analysts. This is your Stock Market Rundown for April 26th, 2024. Thanks for joining me, once again. Let’s dig in:
TODAY’S TOP STORY: ARK IN THE STOCK-MARKET STORM
$14 billion is, to use a sophisticated financial term, a metric shit-ton of money. Enough to build a aircraft carrier, or a major sports stadium.
$14 billion is also the amount of money lost in the past 10 years by Ark Investment Management, the most wealth-destroying investment firm on Wall Street. Once a media darling, Ark has been pummelled by withdrawals, with its assets under management sinking from a peak of $59 billion in 2021 to $11 billion today.
Ark was founded by Cathie Wood, who built her career on investing in “disruptive technology”. Translation: super-volatile stocks with exposure to AI, crypto, 3D printing, robotics, and electric vehicles.
In countless media appearances, she forecasted a bright future for tech stocks with missionary zeal. In 2022, she gave her long-term price target for Bitcoin: $1 million by 2030. (Still a ways to go on that one.)
When tech stocks became super-trendy in 2020, Ark’s funds were flying. Its flagship ETF was up 153% that year. Bloomberg named Wood stockpicker of the year, and retail investors piled in like lemmings.
Well, what goes up must come down, and the portfolios got smoked over the next two years as tech stocks corrected. Investors pulled billions.
But Wood isn’t changing her strategy—in fact, she’s leaning into it. The #1 holding in Ark’s flagship ETF? Tesla: the controversial electric vehicle company is 10% of the entire fund.
Chances are, Ark’s track record will continue to be a roller-coaster, and investors will just have to hold tight through every twist and turn—whether it’s a thrill ride or an epic crash.
SO WHAT ELSE IS GOING ON?
Once a scrub, always a scrub. A credit-rating agency study found that 40% of US companies that defaulted on their debt last year had previously defaulted.
The US labor market is as strong as The Rock during a bench press, with unemployment benefits claims steady at a low level.
Layoffs watch: Take-Two Interactive, the makers of Grand Theft Auto, are hitting the reset button on their workforce—letting go of 600 employees and scrapping projects to cut costs.
A shareholder advisory firm is speaking out against Warren Buffett’s company, Berkshire Hathaway, for inadequate climate disclosures and poor oversight on executive pay. I’m waiting for Uncle Warren to retaliate by dropping a fire diss track.
And that's a wrap for the week, friends. Make sure to tune in first thing Monday morning for more of the usual nonsense. Yours in capitalism, The Axe
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