Cathie Wood and team share outlook on Tesla, Bitcoin, economy in 2021

  • All five active ETFs from Cathie Wood’s ARK Invest achieved a return of more than 100% in 2020.
  • That strong performance helped the company raise over $ 20 billion last year and bring total assets under management to $ 50 billion, according to Morningstar and Bloomberg.
  • In a market update webinar on Tuesday, Wood shared her outlook for 2021 and explained why the current bull market is so different from the dot-com bubble.
  • ARK cryptanalyst Yassine Elmandjra also outlined a new three-tier framework for evaluating Bitcoin’s fundamentals, while analyst Tasha Keeney shared her Tesla outlook for 2021.
  • You can find more stories on the Business Insider homepage.

Either way, Cathie Woods ARK Invest had a blockbuster year.

The innovation-driven asset manager Ark Innovation ETF (ARKK) for USD 21.5 billion, ARK Next Generation Internet ETF (ARKW) for USD 6 billion and ARK Genomic Revolution ETF (ARKG) for 9, $ 4 billion totaled 153%, 157% and 181%, respectively, according to Morningstar data, beating 99% of their peers.

The smaller ETFs – Ark Autonomous Technology & Robotics ETF (ARKQ) at $ 2.2 billion and Ark Fintech Innovation ETF (ARKF) at $ 2.3 billion – also gained 107%, respectively, for the quarter 108 %% to, as the Morningstar data shows.

Additionally, Wood ran one of the top 10 mutual funds in 2020: the $ 1.3 billion American Beacon ARK Transformational Innovation Fund, which made 99% of its peers return 147% in 2020.

These incredible wins have helped ARK raise over $ 20 billion in less than four months. The company’s total assets under management were $ 50 billion in mid-December from $ 28.4 billion in early September.

For all of the history written last year, ARK is starting strong as early as 2021, bringing in $ 3 billion in new assets over the past five weeks as of Jan 11 and, according to Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence $ 11 billion in the past five weeks.

“If it maintains this pace, it will need about $ 105 billion this year – which is exactly what BlackRock took last year,” Balchunas said in a tweet on Tuesday.

However, ARK’s shot attracted so much attention last year that some investors are skeptical of whether the company can continue its formidable streak. In particular, the company’s three largest ETFs are attracting short sellers, with short interest in the Ark Innovation ETF rising from about 0.3% a month ago to 1.9%, according to Bloomberg.

Wood’s outlook for the economy and markets in 2021

The bearish bets on ARK appear to be in lockstep with recent talk of a market bubble and an impending correction. Wood, however, did not appear to be bothered in a webinar to update the markets on Tuesday.

“The V-shaped rebound we’ve been talking about for some time may have seen a slight wobble in some of the statistics released these days,” she said, referring to the surprise drop in December wages. “But it was all leisure, hospitality, and more small business focused.”

While the V-shaped rebound may be somewhat subdued, Wood envisions “explosive gains”, fueled in part by possible bipartisan action in infrastructure, healthcare and clean energy.

“We’re likely to see more bipartisan action given how dysfunctional the government has looked and how policymakers are unlikely to want to be perceived as part of the problem,” she said. “Hopefully you want to be part of the solution.”

What further confirms their view of the V-shaped rebound is the continued rise in cyclical stocks in the market.

“What has been nice in the stock markets lately is this

Bull market
has expanded, “said Wood.” We have hit a new high in the equity markets, which means the rebound is over and the bull market has resumed. “

She continued, “This is not like the tech and telecom bubble when the market effectively narrowed towards internet stocks and biotech. Instead, it is expanding – we find this very healthy.”

Bitcoin – the special thing about this bull market

In the same webinar, YKine Elmandjra, blockchain and cryptoasset analyst at ARK, shared what he thinks are the drivers for Bitcoin’s meteoric rise.

The digital asset was extremely volatile in a few weeks, doubling in value to exceed $ 40,000 per bitcoin in the first week of January from $ 20,000 in mid-December, before falling to just over $ 35,000 as of Wednesday.

“I think what is unique about this outbreak compared to previous outbreaks is a combination of institutional dynamism and acceptance, as well as strong underlying network foundations and holding behaviors,” he said. “And then, in terms of the underlying fundamentals of Bitcoin, it really seems that this holding behavior has never been this long-term.”

Elmandjra noted that Bitcoin skeptics tended to delve into the alleged lack of fundamentals of the digital currency, but he believes the claim is “based on Bitcoin’s inability to properly fit into the framework associated with traditional assets is “.

To evaluate the investment benefits of Bitcoin, Elmandjra developed a three-tier framework for evaluating the fundamentals of Bitcoin, which is also described in his latest Research Note.

In general, the framework relies on open source data that is transparent and published in real time on the Bitcoin blockchain. This refers to the public ledger or database where Bitcoin transactions are recorded.

The first level of the framework, which is relevant for all Bitcoin holders, deals with “the general state of the network, which ranges from network security to monetary integrity to transparency”.

The second level deepens the data and segments it according to Bitcoin wallet addresses.

“At this level, an analyst can basically see the position of each holder and the cost base of those positions at any given point in time,” he said. “And this is especially relevant for long-term investors and owners who are really just trying to track the holdings and long-term trends of Bitcoin holders.”

The last layer is especially useful for active managers, according to Elmandjra, where the data can provide buy and sell signals in the crypto market.

“It takes advantage of the two lower layers. This is where you can manipulate data and derive relative valuation metrics that identify short- to medium-term inefficiencies in Bitcoin price,” he said. “As institutional investors begin to really get into Bitcoin and become convinced of the underlying long-term thesis, we believe these three layers of data will be central to their understanding and confidence in the fundamentals.”

A year of expansion and scaling for Tesla

In February 2018, Wood raised her eyebrows when she shared her controversial price target for Tesla on CNBC.

Less than three years later, it was adequately confirmed when Tesla rose more than 7% on Jan. 7 to hit $ 4,000 per share on a split-adjusted basis.

Tesla, which remains a key position for ARK, is expected to expand for another year in 2021, ARK analyst Tasha Keeney said in the webinar.

In the area of ‚Äč‚Äčautonomous driving, she is keeping an eye on the subscription service for the driver assistance system “fully self-driving”, which is expected to be introduced at the beginning of this year.

“I think we are looking at future developments in the self-drive sector to find out when they can unlock the autonomous taxi network,” she said. “It’s hard to pinpoint as there is still an unresolved issue, but Elon has commented that it could be within the year.”

Keeney is also observing Tesla’s geographic expansion in its core electric vehicle business.

“Your factory in Shanghai is still growing. You are building in Germany, Austin, and you have just opened an office in India,” said Keeney. “Their core EV business, which is focused on what progress they make there and in terms of size over the next year, is sure to be something else to look out for.”

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