What You Need to Know
- Burry’s Scion Asset Management has been betting against Wood's ARKK ETF with bearish put contracts.
- Wood tweeted that Burry doesn't understand the fundamentals in the innovation space creating explosive growth.
- The head of Ark has been reducing allocations to Chinese stocks in several ETFs, including ARKK, which now has none.
Cathie Wood laid out her case for why her firm has for months been paring holdings tied to Chinese technology giants. The superstar fund manager also rebutted investor Michael Burry after he bet against her flagship ETF.
“I think that China-U.S. saber rattling, which has intensified under this administration — a surprise to me — is bringing more activity back home,” Wood said in a Bloomberg Television interview taped Friday. “The supply-chain reorganization is going to be a positive for the U.S., and it’ll be somewhat of a negative for China.”
In a tweet on Tuesday, she also hit back at Burry of “The Big Short” fame — who through his firm Scion Asset Management owned bearish put contracts against 235,500 shares of her Ark Innovation ETF.
Wood said in her tweet that she doesn’t think Burry understands the fundamentals that are creating “explosive growth and investment opportunities” in the innovation space.
To his credit, Michael Burry made a great call based on fundamentals and recognized the calamity brewing in the housing/mortgage market. I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space.
— Cathie Wood (@CathieDWood) August 17, 2021
Wood’s ARKK ETF is now sitting with no exposure to shares of companies in the world’s second-biggest economy. Her firm had dumped Chinese stocks in July as Beijing’s clampdown on sectors ranging from education to technology wiped about $1 trillion off shares listed on the mainland, Hong Kong and the U.S.
“The valuation of the market is going to stay down for a long time, until they become more inviting to foreign capital again, and maybe want to integrate a little bit more into the world,” she said during the Aug. 13 interview. The crackdowns by the Chinese government are “contradictory to their desire to become one of the most innovative countries in the world.”
On Tuesday, China’s market regulator issued draft rules banning unfair competition among online platform operators, driving a fifth consecutive day of selling in the nation’s bellwether technology stocks.