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Cathie Wood’s ARK Innovation ETF (NYSEMKT:ARKK) has endured a tumultuous journey. Despite a 22% year-over-year uptick, the fund’s five-year return of 12% pales against the S&P 500’s massive 80% surge.
Recently, Morningstar flagged ARKK
for its spot on the “Top 15 Wealth-Destroying Funds Over the Past 10 Years” list, ranking at No. 3 and obliterating approximately $7.1 billion in wealth. In the broader “Top 10 Wealth-Destroying Fund Families Over the Past 10 Years,” the ARK ETF Trust secured the top spot with estimated wealth destruction amounting to $14.3 billion. The ETF fell victim to extensive losses in the 2022 bear market, which wiped out between 34.1% and 67.5% of its funds for the year. Despite a partial recovery in 2023, the losses proved insurmountable.
Despite its travails, one distinguished fund manager has not forsaken ARKK. The disclosure in his Q4 13F filing is proof.
David Tepper Reveals Stake in ARKK ETF Call Options
As of Dec. 31, David Tepper’s Appaloosa had possession of ARKK calls against 2.55 million shares, ranking these calls as his 14th-largest 13F position among 40. Appaloosa functions as a concentrated hedge fund with a long-term perspective. Its top 10 holdings make up 69.21% of its 13F portfolio, and its average holding duration stands at 7.13 quarters, equivalent to 1.78 years. As of Dec. 31, 2023, its 13F portfolio amounted to $5.79 billion.
Appaloosa doesn’t hold shares of the ARKK ETF, opting for a more leveraged approach with the calls. Each call offers exposure to 100 shares of the underlying stock at a fraction of the cost. However, alongside the potential for gains comes the risk of losses. Nevertheless, Appaloosa’s position in ARKK calls clears signifies its bullish stance on the ETF.
Tepper has a track record of making prescient calls, exemplified by his estimated net worth of $20.6 billion.