Webinar Takeaways: Cathie Wood on Ark Becoming Too Big

The following has been transcribed from the February 9, 2021 Ark Webinar. Edits and comments are my own and were done in a way to best preserve the voice of Cathie Wood.

This dialog was taken from the Q & A portion of the webinar.

Moderator: "Several questions around ARK's recent growth and the size of our strategies. So this first question is for you, Cathie, I'll try to incorporate all of these questions into one. Could you share your thoughts on capacity for innovation focused strategies?"

Phil here: by capacity he means how much money can Ark handle.

Cathie: "I think this is an important question, and we do want to address it. Our answer from the beginning, from when we started Ark in 2014, is we believe that if we're right and the platforms and technologies scale the way we expect, and you just saw Tasha's scaling and of course, Yassine as well, that our capacity should scale exponentially as well."

Phil here: In the section right before this Tasha highlighted that earnings from robotaxi networks could reach $1tril by 2030. Earnings. Not revenue. Let that sink in.

Right before Tasha, Yassine expanded on the continued trend of companies putting Bitcoin on their balance sheet. Ultimately narrowing in on a potential $5-10tril market cap, 5-10x it's current price.

Back to Cathie...

"Now our growth since the bottom of the Coronavirus has been fairly dramatic. And I think when people say, "Oh, they're forced into larger cap stocks." Well, I can give you a few examples where market caps went from 250 million, this would be one example, NVTA (Invitae), roughly $250mil, if I'm not mistaken, to $8bil.

And we have a lot of stocks in that category, they were depressed enormously during the Coronavirus crisis, but they came out flying because they're solutions to the problems that the Coronavirus created.

So, that is one source of capacity. This idea that, "Innovation solves problems, let's allocate more capital towards innovation." And we are seeing that."

Phil here: When she says "let's allocate more capital towards innovation" she's referring to companies and individuals actually buying the products of innovation, not us or Ark buying innovation stocks. Not that Ark isn't, of course, but she's saying that groups of people are actually doing what Ark thought they would two or three years from now and buying the fruits of innovative research and investing.

Cathie then elaborates on how the the investable landscape is expanding...

"Last year, there were $82 billion worth of SPACs issued. This year, year to date, we might be over $20 billion already. As for IPOs...

• 2019
• IPOs: 235
• Total Raised: $69bil
• 2020
• IPOs: 406
• Total Raised: $148bil

So they nearly doubled last year.

Secondaries in 2020, $97 billion on 164 deals. In 2014, there were 40 deals that raised 35 million. More than a hundred-fold increase. We're adding a lot of capacity to the market with these SPACs, IPOs, and secondaries."

Moderator: "I would also add from a global perspective, we're seeing some of these opportunities and these technologies scaling even faster in other parts of the world, like Asia. Can you comment on that as well?"

Cathie: "We see the amount of innovation around the world exploding, with Asia wanting to take a lead, especially China. By our estimates there's roughly $14 trillion in what we would call disruptive innovation. According to our estimates in 2030, that number will grow more than five fold to 75 trillion. That's the bucket we're playing in. So there will be more than enough capacity for our innovation strategies to scale globally."

Phil here: In short, Cathie isn't concerned about becoming too big. From the sound of it she thinks people are still underestimating what's about to happen.