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A Rebuttal and Some Math On Why ARK Is Not In Danger Of Blowing Up

March 28th 2023

Last night I had a long private Twitter conversation with Edwin Dorsey, the writer of the Will ARK Invest Blow Up post that's been circulating from The Bear Cave blog. Before we get to the data let me say he seems to be a good person, not a troll, and it didn't seem like he was trying to blow things up.

He claims that he was basing his thesis off a particular number reported by WSJ. Jason Zweig at WSJ reported that ARK has 43.5% of their assets under management in companies where they own 10% or more of the company.


And I'm pretty sure the WSJ number is wrong.

When looking at the numbers against ARK holdings, I can't get anywhere close to ARK having $22bil (43% of $53bil) committed to these 27 companies. They'd have to own ~$850mil of each of those companies. Which is impossible because the highest market cap on that sheet of companies is CRSP at $8bil. Only 9 of the 27 even have a market cap over $3bil.

Just to be safe I manually checked the ARK ownership percent using the raw shares held from the ARK fund sheets against Yahoo's shares outstanding to make sure Cathie's Ark ownership percentages were correct. I then also checked against a Bloomberg screenshot because there are some private accounts that ARK runs that they consider shares under management.


That screenshot was missing ARCT and AQB. So I added them, did the math, and here's the outcome...


It's about 18.3% of AUM. Even if we jack up the total to account for the fact that we've fallen 25% we still only get to $12-13bil against what would have been about $56bil AUM. Nowhere near 43.5%.

If these numbers hold it's not Dorsey's fault. It would be some combination of Jason Zweig and FactSet.

I welcome you to check my work. If I'm wrong, I'm wrong. If FactSet would chime in on how they got their numbers that'd be ideal.

In addition to the basis number of Edwin's and the WSJ pieces being more than halved, it's worth pointing out a few other things:

  1. ARK is not leveraged
  2. 27 names is a a lot of names to have $9bil spread into
  3. Especially when almost half of those names have a market cap over $1bil
  4. The names listed above have a large percentage of shares outstanding available as float
  5. The average market cap for ARKK is $35bil

While this will not absolve some people of their fears of a liquidity problem, it should at least cut them in half.

I also would recommend reading the COO of ARK, Tom Staudt, talk about the mechanics behind the ARK ETFs. It's incredibly informative and goes into detail about what happens when big money needs to be moved around quickly.