% of ETF
|ARKG||14 Dec 2020||Buy||RHHBY||ROCHE HOLDING AG||158,614||0.1200|
|ARKG||14 Dec 2020||Sell||VCYT||VERACYTE INC||12,900||0.0100|
|ARKK||14 Dec 2020||Sell||WORK||SLACK TECHNOLOGIES INC||738,400||0.1900|
|ARKK||14 Dec 2020||Sell||XONE||EXONE CO/THE||80,543||0.0100|
|ARKQ||14 Dec 2020||Buy||AAPL||APPLE INC||26,764||0.2500|
|ARKQ||14 Dec 2020||Sell||TSLA||TESLA INC||5,076||0.2500|
|ARKW||14 Dec 2020||Sell||CRWD||CROWDSTRIKE HOLDINGS INC||69,505||0.2500|
|ARKW||14 Dec 2020||Buy||TTD||TRADE DESK INC/THE||13,521||0.2600|
CNBC reported on Wednesday that closely watched money manager Cathie Wood stated that Apple could have owned the driverless vehicle market if it had purchased Tesla when the opportunity presented itself during the electric vehicle maker's troubled Model 3 ramp-up.
"We've been keeping a close eye on Apple for quite some time now. Because, after all, what exactly is an autonomous vehicle? Her extensive "Squawk Box" interview included discussions of her Ark Invest strategies, the returns she expects long-term, and her decision to purchase Zoom at a low point in the company's stock price recently.
Following a Bloomberg report last week that the tech giant is accelerating efforts to launch a self-driving vehicle, Apple shares hit all-time highs last Friday and then again Monday, putting the company's market capitalization solidly above $2.5 trillion for the first time. In response to a request for comment from CNBC regarding Apple's autonomous ambitions, the company did not immediately respond. Tesla was also unavailable for comment on Wood's remarks at the time of publication.
"This is extremely difficult work — and given the high level of management turnover, we'd be surprised if they were able to complete it in such a short period of time," Wood said, referring to a June Bloomberg report about the departures from Apple's autonomous unit of three top executives. In 2018, Apple enticed Doug Field, who was then Tesla's senior vice president of engineering, to return to the company where he had worked previously. Apple also hired a slew of other former Tesla employees, according to reports.
Mr. Wood, a longtime Tesla uber-bull and shareholder who believes in the company's CEO Elon Musk, told CNBC that the company "should have been in the Apple market." In fact, Apple should have purchased Tesla years ago, when the opportunity presented itself. "We're relieved that they didn't."
A tweet from Elon Musk, sent out in December 2020, revealed that Musk had reached out to Apple CEO Tim Cook "during the darkest days for the Model 3 program" to discuss the possibility of selling Tesla "(for one-tenth of our current value)."
Cook, according to Musk, "refused to attend the meeting."
Following difficulties in increasing production to meet demand, Tesla began shipping the first Model 3 sedans in 2017. The Model 3 is a less expensive electric sedan targeted at mass-market car buyers. The car business was "hell" in 2018, according to Musk, who tweeted that he was sleeping at the factory in an attempt to solve the issues.
Forward to today, when Tesla has joined the exclusive club of companies with market capitalizations exceeding $1 trillion, and Musk, the company's largest shareholder, has been aggressively liquidating billions of dollars in his equity stake.
Cathy Wood, a CNBC contributor, stated that she sees "nothing wrong" with Musk selling stock and taking profits, as well as paying billions of dollars in taxes related to stock option grants.
Musk purchased 2.15 million shares of Tesla stock and sold 934,091 shares of the company, according to regulatory filings made late Tuesday. The transactions were worth just over $1 billion, according to Musk. Musk has sold 9.2 million shares worth $9.9 billion in stock since taking a poll on Twitter on Nov. 6, asking whether he should sell stock.
Even billionaires are suffering from the pandemic blues.
"It seems like every day is the same as the last," complains Oaktree Capital founder and legendary debt investor Howard Marks in his most recent memo.
"Weekdays aren't that much different from weekends in terms of feeling" (this was especially true pre-vaccine when we rarely ate out or visited others). In the last two years, we've only taken one vacation of a one-week duration. The best way to summarize it is to draw a parallel with Groundhog Day: "Every day feels remarkably similar to the day before."
Not surprisingly, the COVID-19 grind does not appear to have improved Marks' disposition. His latest memo is, to put it mildly, depressing. He expresses disillusionment with the state of American politics ("Serious potential threats to our democracy exist, and no one can predict what the future holds in this regard"), generational inequality ("The Baby Boomers have been and continue to consume more than their fair share of the pie," he writes), and the future of the United States. In addition to the apparent expectation that the Federal Reserve will run monetary policy, support markets, and now fight climate change ("How many roles can one institution have and still maintain a coherent effort?"), there is also the apparent expectation that the Federal Reserve will run monetary policy, support markets, and fight climate change.
It's a fascinating collection of ideas, particularly when you consider the collision of US politics with the potential need to raise taxes or cut welfare spending as the population grows older. Who knows what kind of a shambles this could turn into.
However, for investors, the top half of the memo, in which Marks discusses investing and inflation and how technology connects these two ideas, is the most important part to pay attention to.
Great investors are often scarred by events that occurred during their formative years when it comes to investing. For Marks, the rise and subsequent fall of the original US growth stocks in the 1960s – a group known as the Nifty Fifty – is an event that he revisits on a regular basis.
Marks sees many parallels between the growth stock boom of the 1980s and the growth stock boom of the 2000s and beyond. The author writes that this was "one of post-war America's first significant brushes with newness."
"Even more absurdly, investors embraced these companies because of their revolutionary newness, but they somehow assumed that a newer and better new thing would never come along to displace them," says the author.
It's no surprise that nearly half of the Nifty Fifty have gone out of business or been acquired by other companies.
Although the world appeared to be changing much more slowly in the 1960s than it does now, Marks argues that this presents an increased opportunity for rapid disruption to today's leaders than it did then.
"Anyone who believes that all of the companies on today's list of leading growth companies will still be around in five or ten years will stand a good chance of being proven wrong," says Marks.
"This signals the beginning of a new world order for investors. Stable, defensive, and moat are all terms that will become less relevant in the future. Much of investing will necessitate a higher level of technical expertise than was previously required. Furthermore, investments based on the assumption that tomorrow will be the same as today must be subjected to significantly increased scrutiny."
The word "moat" is used several times in this passage, and it stands out remarkably. Warren Buffett is not mentioned in this article. Still, he is widely recognized as having popularized the concept of a company's value being linked to an economic moat that provides a competitive advantage over its competitors.
Marks' message is that, because of technological advancements and the rapid pace of change in the modern world, moats will be breached much more quickly and efficiently than in the past. The situation appears to be a call for a different type of investor, one who is perhaps less hung up on the tried and true methods of the past and more willing to consider the implications of technological advancements, according to the surface appearance.
Even going one step further, we might wonder whether investing for the long term – those decades-long bets that Buffett is famous for – will become more difficult in this rapidly changing environment.
Of course, Buffett isn't the only one in this market thinking very long term in this market.
By purchasing high-growth technology stock that trades at a stratospheric valuation, investors are making an implicit bet that the company will experience sustained growth over the long term and will be able to increase its earnings to the point where it grows into its valuation over time.
This is not an impossible feat, as Marks demonstrates in the Nifty Fifty. Still, investors can fall into the trap of erroneously assuming that the same spirit of disruption and innovation that drives today's winners will not drive tomorrow's rising stars.
This brings us neatly to Cathie Wood of ARK Invest, one of the world's most prominent and polarizing investors in very long-term technology trends, who makes an unexpected appearance in Marks' latest memo.
As rising inflation fears wreak havoc on high-growth technology stocks, Wood and ARK are having a rough time right now. The ARK Innovation ETF, which has become a proxy for the hypergrowth, futuristic end of the market, reached its recent high on November 1 and has since fallen by 15 percent.
Beginning by stating that Wood may have misquoted him by implying that he believes technology has the potential to cause a deflationary bust; Marks claims that he asserted that technology could be a deflationary factor in the economy;
The suggestion made by Wood that not only can technologies such as automation and artificial intelligence act as a deflationary force, but they can also provide a boost to productivity that Wood claims will be greater than anything we've seen "certainly in modern times" has piqued Marks' interest. According to the ARK model, this productivity boom could boost the US GDP to $US40 trillion ($55.2 trillion) by 2035, far exceeding linear estimates of GDP of $US28 billion at the time.
Marks is intrigued by the notion that technological advancements could reduce the number of hours worked while also increasing the amount of output produced per hour worked. "In other words, technological advancements have the potential to increase GDP while simultaneously increasing unemployment."
His point is that, while inflation is currently in vogue – as Wood is well aware from the pressure on her holdings – investors should not discount the possibility that technology will act as a deflationary force in the long run.
Cathie Wood's ARK funds sold shares of Tesla (TSLA) in order to increase their stake in Zoom Video Communications (ZM) following the video communications company's disappointing earnings results. The Ark Innovation ETF (ARKK), the fund's flagship investment vehicle, sold $136 million in Tesla stock while purchasing $112 million in Zoom stock. ARK Next Generation Internet ETF (ARKW) purchased Zoom for $22 million after selling $23 million worth of Tesla stock to fund the purchase.