Cathie Wood Lashes Out at ETF Dedicated to Shorting Her

Celebrated disruption-tech devotee Cathie Wood has several distinctions, but one stands out: An exchange-traded fund has been hatched to short her own flagship ETF, Ark Innovation. So she is trashing this upstart.

“The idea of shorting innovation, in America, is ridiculous, I think,” the founder of investment firm Ark Invest told CNBC. The doppelganger fund, Tuttle Capital Short Innovation, is short-sighted and short-term obsessed, she charged.

Wood said, “When I see people so sure that we are wrong that they are willing… to set up funds to short innovation, you know that investor psychology, the pendulum, has swung so far in one direction, that if we’re right… the rewards are going to be enormous,”

Her celebrated flagship fund had superb returns through 2020, when it gained 156%, but it lost 23% in 2021 and is down 28% so far this year. Founded in November, the Tuttle ETF, though, is up 30% year to date.

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The Tuttle fund trades under the ticker SARK, an obvious mocking reference to Wood’s Ark firm. CEO Matthew Tuttle, who started his investment firm in 2012, told the business TV network last fall that he viewed his shadow-Wood fund as “a great hedge” against when markets slide. Because it focuses on the “high-multiple names,” like the ones in Wood’s ETF, his portfolio stands to do better, in his view. The Wood-style stocks, he said, “will be hurt more” in a downturn than other stocks.

His ETF, composed entirely of shorts, lists $319 million in assets, while Wood’s ETF has $12.6 billion. To Wood, regardless of present market conditions, her strategy of owning shares in the game-changing tech will pay off big-time later.

In her appearance, Wood defended her holdings, singling out video conferencing company Zoom Video Communications (down 30% this year) and online gaming platform Roblox (off 48% for the same period). Both have big futures and their current slump is merely temporary, she argued.

“We are now in the first rip-and-replace cycle since the early ’90s, when the internet was evolving, in the enterprise communications space,” she said. Companies like Zoom “are in the process of helping companies and individuals transform their lives and rearrange their communications stack, this time in the cloud,” she added.

Roblox really got hammered this week after reporting disappointing financial results, coming in with less revenue and a deeper loss than analysts had projected. Wood said she spent more than $20 million buying more of the stock as it fell.

Overall, she added, Roblox is “one of the best ways to play the global metaverse out there. We saw the stock hit very hard by some short-term numbers. We were impressed by the daily average user growth at 33%.”

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Tags: ARK Innovation, Ark Invest, Cathie Wood, hedge, Matthew Tuttle, metaverse, Roblox, shorts, Tuttle Capital Short Innovation, Zoom Video Communications

Pension fund giant the New York State Common Retirement Fund has filed a shareholder proposal requesting Tesla disclose how much money it has spent settling sexual harassment and racial bias complaints. The move came after a California jury delivered a verdict in a racial discrimination lawsuit stating that the electric car company could owe upward of $130 million.

“It has been reported that most Tesla workers are currently bound by mandatory arbitration agreements, so consequently there is little transparency into the extent of workforce mismanagement,” according to the shareholder proposal.

While Tesla’s electric vehicles have the potential to have a positive impact on the environment, many environmental, social, and governance investors have questioned the fund’s corporate governance. New York Common said it worries that a culture of discrimination could lead to negative impacts on the stock’s returns.

“Civil rights violations within the workplace can result in substantial costs to companies, including fines and penalties, legal costs, costs related to absenteeism, and reduced productivity,” stated the shareholder proposal.

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Since the proposal was issued, California’s Department of Fair Employment and Housing has sued Tesla for alleged racial discrimination of Black employees in its Fremont, California, plant.

Tesla’s team called the lawsuit “unfair and counterproductive” in a blog post.

“Tesla strongly opposes all forms of discrimination and harassment and has a dedicated Employee Relations team that responds to and investigates all complaints,” the post states. “No company has done more for sustainability or the creation of clean energy jobs than Tesla. Yet, at a time when manufacturing jobs are leaving California, the DFEH has decided to sue Tesla instead of constructively working with us.”