The Tesla-Bitcoin-Ark syndrome revisited

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Comments of the Day

10 February 2021

 

Video commentary for February 9th 2021

 

Eoin Treacy’s view

A link to today’s video commentary is posted in the Subscriber’s Area. 

Some of the topics discussed include: Dollar weak, commodities firm, Bonds steady, China and Japan firm, emerging markets outperforming, liquidity continues to fuel demand for IPOs. 

 

Email of the day – on investable ideas

Firstly, thanks for the terrific service, it’s been so helpful in these turbulent times.  I was interested to read the subscriber feedback in today’s comment. 

I agree with the comment that sometimes it’s quite hard to find investable ideas in some of the themes that you so accurately pick up on. 

For example, soft commodities/agricultural products, some direction as to likely beneficiaries would be really helpful.  I’m a UK based investor, so in general like to stick to our market or Europe and it has not been easy.  Perhaps Bayer?  ABF but the Primark exposure is confusing.  In the Eoin’s Favourite’s section of the chart library some of the categories do help, but there’s doesn’t seem to be one directly related to rising soft commodity prices other than farm machinery or fertilisers?

Lithium is another one where I am struggling to find the right investment, even though I looked at your collection of related companies.  As the price seems to have broken out of a long-term downtrend some suggestions as to likely beneficiaries would be really helpful, although understand that one must also do one’s own research.

With Bitcoin, which I’m not that keen to buy, but you highlighted the Greyscale Bitcoin Trust which although I’ve not invested in it was really helpful to have an idea related to the concept you were right about. 

Hope this feedback helps and thanks again.

And

I found the criticism yesterday, a bit harsh.  There are few sites that provide the breadth and depth that we get from FTM.  Here, in West Aust, I wake each morning to your market summary of the principal events.  I find it cost effective for that point alone.

The suggestion above regarding missed opportunities is one worth pursuing, not so much regarding the chartbook but for highlighting early chart indications of emerging opportunities.  I feel that perhaps FTM may report facts that are available elsewhere but the site is not fully exploiting your chart analysis skills that are not available elsewhere.  You should exploit your strengths and don’t reproduce stuff that is, or soon will be, in the media. We all want to know where Eoin Treacy sees emerging or imminent changes. 

 

Eoin Treacy’s view

Thank you both for this feedback and your kind words. I am a firm believer in giving the people what they want. Afterall, why else would one subscribe. Let me address the challenges in the order they are outlined in the above emails.

 

The Tesla-Bitcoin-Ark syndrome revisited

Thanks to a subscriber for this note from Saxo Bank. Here is a section:

Before the news broke on Tesla and Bitcoin, we were planning a research note on Ark Invest holdings across their five actively managed ETFs. Our motivation was driven by the fact that Ark Invest recently pushed above $50bn in asset under management (AUM) and that some holdings in the Ark Disruptive Innovation ETF were getting quite concentrated. As a result, we have dived into the numbers and can now extend our note It is time to get cautious on the Tesla-Bitcoin-Ark connection back in January.

There are two main idiosyncratic risk sources around the Ark funds if we exclude the general market risk. The first one, is the percent ownership of outstanding shares in a specific company across holdings in its five actively managed ETFs. The list below shows the company where Ark Invest owns more than 10% of the outstanding. The sharp observer will quickly note a big overlap with the new generation of biotechnology companies, that we also recently wrote about, and given Ark Invest has grown AUM from around $3bn a year ago to over $50bn gives you an indication of how big a force the investment firm has been in the bull market in biotechnology stocks. But AUM flow can reverse and thus these concentrated positions can become a liquidity issue and big risk for these stocks and Ark Invest itself.

 

Eoin Treacy’s view

ARK’s ETFs are actively managed. That’s something new in the space. Most people think of an ETF as a tracker and paid a premium for active management either through mutual funds or hedge funds. ARK provides the active management part at a discount but the 0.75% expense ratio on the Innovation ETF (ARKK) is chunky when compared to other similar funds.

 

Marijuana Legalization Is Now in Sight. Here’s How to Play It With Options

This article from Barron’s may be of interest to subscribers. Here is a section:

A trio of U.S. senators has given investors the green light to invest in marijuana stocks, an endorsement that suggests the volatile sector might finally blossom into something as acceptable and regulated as alcohol.

More details will emerge when Sens. Cory Booker (D., N.J.), Ron Wyden, (D., Ore.), and Chuck Schumer (D., N.Y.) introduce legislation to legalize and tax marijuana.

“In the early part of this year, we will release a unified discussion draft on comprehensive reform to ensure restorative justice, protect public health and implement responsible taxes and regulations,” they announced Feb. 1 in a joint statement.

 

Eoin Treacy’s view

The cannabis sector went through a painful rationalisation as early efforts to increase supply suppressed the margins. That led of a significant decline in 2018/19 for many of the more leveraged companies. With the Presidential election in the USA ushering in a new administration speculation began to ramp up that cannabis legalisation was back on the menu.

 

Hong Kong Interesting Charts

Eoin Treacy’s view

There are two parts to most markets at present. There are the strong trends which have been in evidence for years and continue to perform. The new IPOs and SPACs also fall into this category because many of these companies have seen their values trend higher for years before they sought listings.

The other category are the catch-up plays which are only now just breaking out of their respective bases.

 

Eoin’s personal portfolio – stop triggered on hedge position

Eoin Treacy’s view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change.

 

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