ARK Investment Management has quietly appointed two of its analysts as associate portfolio managers.
The changes have not been officially announced by ARK, and managers, Sam Korus and Nicholas Grous, have not yet been added to any of the company’s ETFs, a review of regulatory filings shows.
The promotions were first noted by Morningstar analyst Robby Greengold, who indicated that at ARK, where currently founder and CEO Cathie Wood (pictured) is the sole named portfolio manager for all funds, “they are setting the stage for a succession plan for the portfolio management” seem to be ETFs.
He noted that “to date, the firm has relied on Research Director Brett Winton for representation [Wood] if needed.’
A review of archived versions of the ARK website reveals that Korus and Grous, both formerly on ARK’s analyst team, have been in their new roles since at least May 19. A spokesman for ARK did not immediately respond to a request for comment Thursday.
Korus and Grous have both been with the firm for more than three years and came to ARK from unusual fund manager backgrounds. Grous’ three months at Deutsche Bank in 2014 appears to be the only time either of them has been on Wall Street.
Grous has also held stints at a real estate firm, a marketing firm and an insurance broker, while Korus lists a stint as a student brand manager for Red Bull, a year as a sailboat captain and an internship in business development among his LinkedIn experience.
As analysts, Korus covers automation, robotics, energy storage and alternatives, and space exploration. Grous covers digital media and online gaming.
“At this point in time, it is difficult to assess the significance of the title change for Korus and Grous,” Greengold wrote, adding that the associate PM title “rarely held and the only known person in ARK’s investment team since the firm’s inception was Morningstar.” it only briefly and did not rise as a portfolio manager.’
The firm’s flagship fund, ARK Innovation ETF (ARKK) surged nearly 157% in 2020 when many of its internet-related holdings were Covid-19 lockdown darlings.
But the mid-cap growth strategy fell 23% in 2021 and is down another 55% this year through June 1.
Those disparate performances have even made it a feast-or-starvation fund in relative terms, with 2020’s surge putting it in the top percentile of its category and both 2021’s decline and this year’s swooning putting it in the bottom 100th percentile placed.
The fund’s recent losses have been so severe that even the money invested in the fund in early 2020, which captures this year’s profit, is now down more than 22% cumulatively through Wednesday.
Tesla, until recently the fund’s largest holding, is down nearly 30% this year through June 1, contributing to the fund’s woes. But smaller stocks like video-streaming company Roku and medical videoconferencing company Teladoc have fallen even more this year, down 60% and 64%, respectively, further hurting the fund.
Tesla has long been ARKK’s top holding, typically around 10% of the fund, and was a key driver of the fund’s stellar 2020, as the electric-car maker’s stock soared more than 740%.
In the past two weeks, however, two other holdings have taken the top spot.
First, Roku toppled Tesla, with the streaming hardware company taking 8.38% of ARK Innovation’s assets on May 19, while Tesla took 8.21%, according to Barron’s.
At the time, Zoom Communications, a provider of video conferencing software, was the fund’s third-largest holding at 7.84%.
However, as of May 24, ARKK’s most convinced position is Zoom. The stock represented 9.54% of the fund’s assets yesterday, with Tesla in second place (9.03%) and Roku in third place (8.27%).
According to Morningstar data, Zoom is up 5.2% over the past week and 8.1% over the past month, outperforming both Tesla and Roku. The stock is still down more than 40% this year.
Tesla is up 12.4% over the past week but down 15% over the past month as pressure on the stock stems from concerns over founding CEO Elon Musk’s bid to take over social media platform Twitter buy, increased. Roku is also up 7% on the week but down 2.3% on the month.
The three stocks seem to be Wood’s favorites of late, with each accounting for more than 8% of the fund’s assets. However, their movements within the fund appear to be less a part of Wood’s strategy and more the result of recent market movements.
For the past few days, Wood has been selling them all together and buying them all together with no other discernible pattern, presumably in response to daily flows.
The fund’s fourth-largest holding, payments processing company Block (of which Twitter founder Jack Dorsey is also co-founder, chairman, and president), absorbs 5.6% of the fund’s assets.
Despite ARKK’s poor performance in 2022, the $8.5 billion fund’s net inflows haven’t been bad. The ETF raised $305 million last month April and just over $1 billion this year through April.
While it has lost nearly $1.5 billion over the 12 months ended April, it has raked in $14.4 billion over the past two years.