'I don't think the market is ready for this': Cathie Wood outlines what short-sellers betting against her innovation strategy don't get

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'I don't think the market is ready for this': Cathie Wood outlines what short-sellers betting against her innovation strategy don't get
Ark Invest; Insider
  • Cathie Wood responded to the recent increase in short bets against her fund in an interview with CNBC on Thursday.
  • The Ark Invest founder and portfolio manager said the market is not in a bubble and advances in technology will continue to drive stocks higher.
  • "I don't think the market is ready for this," Wood said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Cathie Wood is hitting back amid a record rise in short-sellers betting against her fund, including Michael Burry of "The Big Short" fame.

Burry initiated a $31 million put position in the Ark Invest Disruptive Innovation ETF, according to a recent 13f filing. That's on top of his $731 million put position in Tesla, which happens to be Wood's highest conviction stock and largest holding at Ark.

Burry isn't the only investor betting against Wood, with short interest in the ARKK ETF currently standing at a record 11.87%, worth more than $2.5 billion, according to data from Koyfin. On top of that, a Short ARK ETF prospectus has been filed with the SEC by Tuttle Capital Management.

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But in an interview with CNBC on Thursday, Wood defended Ark's investment strategy, which focuses on disruptive innovations and often includes buying fast growing but profitless companies like Teladoc, Spotify, and Twilio, and said that the market is no where near bubble territory.

"We couldn't be further away from a bubble, and the reason for that is the innovation around which we have centered our research... are barely off the ground," Wood said.

The investment manager pointed to falling SPAC prices and negative sentiment among investors as reasons why the stock market is not in a bubble.

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"I remember the late 1990's," Wood said, after arguing that bearish investors believe the stock market is most definitely in a bubble.

"In a bubble, our strategy would have been cheered on, but we have nothing like that right now," Wood said, pointing out that negative investors point to valuations as a reason for concern. But Wood believes the scenario in which a rise in interest rates will hurt valuations won't materialize due to a surprise return to deflation, driven in part by technological innovation.

The five innovation platforms Wood focuses on are include DNA sequencing, robotics, energy storage, blockchain technology, and artificial intelligence.

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"The seeds for all of these platforms were planted in the 20-years that ended in the tech and telecom bust, and ended in tears, and there's a lot of muscle memory around that. But that's not what's going on right now. The seeds planted back then are beginning to flourish now, and it's just beginning," Wood explained.

All of these technology platforms "are about to experience S-curve [growth profiles] and feed one another's S-curves. I don't think the market is ready for this," Wood said.

"We've never been at a more provocative time for innovation in history," Wood said.

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