Michael Burry vs. Cathie Wood.
It’s a battle of investing minds for the ages and one in which the investment thesis around disruptive technological trends, in fields ranging from innovation to space exploration, is in the crosshairs.
On Tuesday, investment powerhouse Wood defended his bullish arguments for his big tech bets, such as Tesla Inc. TSLA,
and Virgin Galactic Holdings SPCE,
and other investments that she says will reshape the world, through her exchange-traded fund ARK Innovation ARKK.
Burry, who rose to fame for predicting the subprime mortgage crisis in 2008 and was featured in Michael Lewis’s book and film “The Big Short,” takes the other side of Wood’s bets.
In a series of tweets, Wood said that Burry this time doesn’t get it.
“To his credit, Michael Burry made a great fundamentals based call and acknowledged the looming calamity in the housing / mortgage market,” she tweeted Tuesday. “I don’t think he understands the fundamentals that create explosive growth and investment opportunities in the innovation space,” she concluded.
“The equity market is likely to reward disruptive innovation strategies,” Wood wrote.
In a public document released on Monday, Burry revealed that his company, Scion Asset Management, held bearish put options at the end of the second quarter against 235,500 actively managed Wood’s shares valued at more than $ 30 million.
Put options give the holder the right, but not the obligation, to sell the underlying security at a fixed price.
Wood’s ARKK and other funds are sitting on huge gains since the pandemic-inspired bear market lows of last March. The performance made Wood one of Wall Street’s star stock pickers, but it also made her a target for those betting that a change in the skin of the market, brought on by higher inflation and a possible rise in interest rates will hit its strategies.
Wood is clearly betting otherwise and believes his investments will thrive as the global economy is on the verge of a technological inflection point that could see sweeping changes in everything from IT to the wider adoption of technology in the world. growth such as electric vehicles and autonomous driving.
Shares of Ark Innovation fell 1.4% on Tuesday, but have gained ground in the past three months, to nearly 12%, after falling in February. However, the ARKK, referring to the flagship fund’s ticker symbol, is down 7.6% so far in 2021, underperforming the broader market.
The Dow Jones Industrial Average DJIA,
for example, is up 3.1% in the last three months and almost 16% since the start of the year. The S&P 500 SPX index,
is up 7% in the past three months and has gained nearly 19% so far in 2021, while the Nasdaq COMP Composite Index,
is up nearly 10% over a three-month period and has climbed about 14% through August.