Cathie Wood, the star fund manager at the helm of Ark Investments, hit back at billionaire investor Michael Burry Tuesday, saying the famed short seller “doesn’t understand” the fundamentals underpinning her tech bets.
Burry, known for his role in shorting housing bonds just prior to the global financial crisis in 2008, is now betting against Wood’s Ark Innovation ETF (ARKK) – Get Report through his Scion Asset Management Fund, according to documents filed Monday with the Securities and Exchange Commission.
Wood, however, took to Twitter on Tuesday to defend the nature of her fund’s investment strategy, saying the tech innovations she’s targeting “should transform the world in the next ten years.”
“Unlike the tech and telecom bubble, this equity bull market has broadened beyond the innovation strategies that boomed last year to value and other stocks that had trailed,” Wood said on her verified Twitter account. “The bull market has strengthened, setting the stage we believe for another leg up in innovation strategies.”
ARK Innovation ETF shares were marked 1% lower in pre-market trading Tuesday to indicate an opening bell price of $115.84 each. The fund, one of last year’s outstanding performers, is down 7% so far this year despite a record run for tech stocks and numerous all-time high closing levels for the Nasdaq Composite Index.
Earlier this spring, Burry unveiled a significant bet against Tesla (TSLA) – Get Report earlier this week — based on put options — worth around $535 million. Tesla is one of ARK’s biggest and most important holdings.
Put options give the buyer the right, but not the obligation, to sell a certain asset (such as Tesla stock) at a certain price at a defined point in the future.
Burry, who made billions betting against the U.S. housing market in the mid-2000s, has recently expressed concern about the fact that Tesla generates a large portion of its profits from the sale of regulatory credits as opposed to the production of its Model 3 and Model S sedans.
Tesla, however, posted its best quarterly earnings on record last month, with net income topping $1 billion for the first time, as global deliveries surpassed 201,000 and continued progress was made on production facilities in Texas and Germany.