Happy holidays everyone! 🎄🎉💫

On Monday, December 27th ARK's trade sheet was comprised of all sales to provide a dividend to shareholders. There were some 65 trades that occurred. Nothing special to read into as they clearly explained the purpose in the disclosure...

NOTICE: All transaction activity today was for purposes of raising cash for the 2021 annual ETF distribution. This cash raise activity has been completed.

Other than that the trade sheets have maintained the same general trends of buying TDOC (Teladoc), EXAS (Draftkings), PATH (UiPath), and HOOD(Robinhood).

There's just one thing, one big thing, that really stands out as write-worthy. The selling of TSLA. We're going to call it profit taking because it is but I think there's a bigger statement here.

ARK has consistently said they now expect--after this big growth sell off--their compounded annual return to be 40%+ for the next three years. Given that, plus the true beat down a lot of these names have taken and it looks like they don't view Tesla to be in that higher 40% return bracket.

Consider that after holding steady for years in the portfolio at a weighting of between 7-9% the position has now dropped below 6.5% and is seeing sales, not buys...

I know, there's a lot of doubt out there. Myself included on HOOD (particularly after thinking about the available marginal retail dollar). But ARK is doubling down on what they think the future looks like. Let's take a look...

At the start of the pandemic it became clear that the companies in ARK's portfolio were going to be the primary beneficiaries of a more tech saturated lifestyle. Those companies were in the best spot to capture the economics from increased screen time and increased internet usage. Naturally, investors started bidding up the valuation of those companies.

We can see that here as the blue line from this Bucketfox chart. The blue line represents the median price-to-sales (P/S) ratio of all the holdings in the ARKK ETF on any given trading day. The purple arrow shows how the median P/S starts to balloon in mid 2020...

ARK was way in front of the trend and so were able to reap the benefits of increased valuations for their portfolio companies.

Not only were they in front but they were also right on how those companies would perform. If we look at the orange line we can see that the median revenue per share for all companies in the ARKK ETF went up significantly as the pandemic wore on...

What did ARK do as they appreciated and realized the increased revenue? They traded out of them into companies that hadn't "hit" yet. This is clearly viewable by the quick decrease (marked by the green arrows) in median revenue per share shortly after those revenue spikes we just looked at...

As ARK has always said, they rotate out of names that appreciate into higher conviction, beaten down names. And they sure are putting their money where their mouth is because median revenue per share is at an all-time-low in the ARKK fund...

This indicates to me that ARK has doubled down on their vision and strategy.

Which brings us back to TSLA. While Tesla is a high-growth company and ARK remains committed to it both in position size and commentary it stands to reason that, even for big Tesla bulls, Tesla won't crack a $3-4tril market cap within 3 years.

If that's the case and you think TDOC will hit $100bil from it's current $14bil valuation, you would sell more Tesla to buy more TDOC. That's exactly what they're doing. Same with HOOD, PATH, EXAS, COIN, and all the other charts that look like 🤮...

The numbers and Bucketfox charts don't lie. So the big story to me is that ARK thinks Tesla will appreciate less than the names they're digging deeper into.

For that reason I think that's the big story of the past few weeks. Tesla has cracked below it's historical weighting in the fund for the first time.

No reason to freak out as a Tesla holder, it's still a great company. This isn't bearish from ARK, this is strategic and, quite honestly, it's bold. I feel like ARK is betting the firm on a handful of really out of favor names and the genomics trend taking off.

If they're right, they'll be right huge. If they're wrong, it's going to be ugly.

I do think they'll be right but it might not be this quarter or next, this might be a longer time frame than what most younger investors and traders are used to. Either way, we'll be keeping a close eye on it here at Cathie's Ark.

🏧 Profit Taking:

• TSLA (Tesla) is the big ARK story right now. After holdings steady in the portfolio at a weighting of between 7-9% for years the position has now dropped below

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