Morning Wood: Space Stocks Take Off After ARK Files For Space-Themed ETF

Morning Wood: Space Stocks Take Off After ARK Files For Space-Themed ETF

Love her or hate her, Cathie Wood’s ARK Invest is moving markets. The firm’s ARKK Innovation ETF has been the topic of numerous reports here on Zero Hedge, where we have laid out the firm’s quick rise to fame – mostly as a result of Softbank gaming the NASDAQ with options and whatever the hell has been going on with Tesla stock over the last 18 months or so.

Now, Cathie Wood’s next target appears to be outer space – and the market is taking notice.

On Wednesday, the firm filed to launch a space exploration ETF, immediately sparking a rally in space-themed names in Wednesday’s after market session and Thursday’s pre-market and morning session.

The ETF “will primarily track U.S. and global companies engaged in space exploration and innovation,” according to the filing. 

Space related names rose on the news in early pre-market trading on Thursday, with stocks like Maxar and Virgin Galactic catching a bid in hopes of frontrunning the eventual bid that will come from the ETF.  The rally continued during the morning session, with names like Gogo and Viasat also catching bids.

Just hours ago, we noted how short interest in ARK’s flagship fund had exploded, as investors were turning to bet against Wood via her fund’s flagship ETF. We noted that short interest as a percentage of shares outstanding for the $21 billion ARK Innovation ETF spiked to an all time high of 1.9% from just 0.3% one month ago, according to data from IHS Markit Ltd. and Bloomberg. 

Shorts are also piling into the firm’s other ETFs, we noted, including its $9.4 billion Genomic Revolution ETF and its $5.9 billion Ark Next Generation ETF. ARKK rose almost 150% in 2020 and brought in $9.6 billion in new money. 

Dave Nadig of ETF Trends told Bloomberg: “You can’t expect any shortable asset to have the kind of meteoric rise ARKK has had and not attract almost mechanical short-selling. There are, quite literally, traders who have screens for ‘ETFs that went up X far over Y time’ to use as contrarian short indicators.”

ETF expert Eric Blachunas commented: “The Ark phenomenon is the first time ever that a rock-star portfolio manager has been shortable. Typically, they’re in a mutual fund or a hedge fund, which you can’t short. This is breaking new ground in a way.”

We noted just a day prior that ARK funds had seen a record inflows over $1 billion a week ago. The massive volume in ARK’s funds has continued from 2020 into 2021, as Balchunas had predicted late last year when he pointed out several reason the fund could actually become a victim of its own bloated size.

On Friday of last week, ARK funds set new inflow and turnover records, as Jim Bianco of Bianco Research pointed out on Twitter Sunday evening. ARK’s funds saw inflows of over $1 billion last Friday – something “not even Vanguard did,” Balchunas noted Monday morning. 



Tyler Durden
Thu, 01/14/2021 – 10:50

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Author: Tyler Durden