Cathie Wood's Newest Stock Pick Includes This Hot Meme

5 months ago 88

Two of today's astir fascinating trends successful markets, Cathie Woods' ARK Invest and "meme stocks," just collided. And they're coming unneurotic successful the ETF satellite — but lone hold connected 1 stock.

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Just this week, an ETF tied to the stock-picking accomplishment of ARK Invest faces disconnected against 1 holding stocks fashionable with the online-investing forum crowd. Their approaches are precise different, but the goal is the same: outperformance. It won't instrumentality agelong to spot which attack wins out, though. They lone hold connected 1 stock: Cloudflare (NET).

The ARK Transparency ETF (CTRU) started trading Wednesday, making it the ninth ARK Invest ETF for investors. It aims to ain the 100 companies that are astir unfastened and upfront astir their operations. And past there's the Roundhill Meme Stock ETF (MEME), which owns 25 stocks with the astir societal media enactment and high abbreviated interest. It besides debuted connected Wednesday.

Talk astir a fascinating duo. You person an ETF tied to a apical nonrecreational wealth manager squaring disconnected against 1 pursuing the moves of wide investors who are anti-establishment.

"The (MEME) ETF provides a diversified mode of owning companies that are successful request by retail investors, but are retired of favour with organization investors," said Todd Rosenbluth, caput of ETF and communal money probe astatine CFRA.

The One New ARK Pick That Meme Investors Like, Too

Given however antithetic their approaches are, it's astonishing to find immoderate overlap astatine all. But there's Cloudflare.

Cloudflare, a supplier of cloud-based computing systems to companies, is the fifth-largest holding successful ARK Transparency astatine a 1.4% position. It's been a coagulated gainer this year, much than doubling successful worth truthful far. But it's besides getting dragged down successful a meme banal clang lately. Shares mislaid astir a 4th of their worth successful conscionable the past month.

But Cloudflare is an adjacent bigger presumption successful the Roundhill Meme ETF astatine 3.8% of the portfolio. Roundhill Meme is an equal-weighted portfolio, meaning each holdings are astir the aforesaid size of the portfolio. What's the allure of Cloudflare to meme investors? In the mediate of May, abbreviated sellers controlled much than 5% of the company's outstanding stock, which is somewhat elevated vs. the S&P  500.

Both ARK and meme investors, though, anticipation the aboriginal for the institution is bright. Cloudflare is seen losing different 5 cents a share successful 2021, oregon an adjusted $1.5 million, but turning a nett of 2 cents a stock successful 2022.

Sizing Up ARK's New ETF Vs. The Meme Stocks

Both ARK Transparency and Roundhill Meme ETFs whitethorn person launched connected the aforesaid day. And they some ain Cloudflare. But that's wherever the similarities end.

ARK Transparency is tilted chiefly to larger, well-known leaders successful the environmental, societal and governance realm. Its apical holding, astatine 1.5% of the portfolio, is graphics paper champion Nvidia (NVDA). Nvidia consistently scores highly connected the IBD Best ESG Companies list, for its openness successful sharing goals connected everything from reducing discarded to divers hiring.

The caller ARK ETF besides banks connected larger firms, arsenic the weighted mean marketplace worth of companies it holds is $108 billion. In summation to Nvidia, different heavyweights successful the portfolio see Tesla (TSLA) and Apple (AAPL).

But nary of those amusement up successful the Roundhill Meme portfolio. The mean marketplace worth of companies successful the meme portfolio is lone $36 billion. But present you'll find a presumption successful 2021's elephantine winner, beleaguered movie concatenation AMC Entertainment (AMC). The banal is up an astounding 1,468% this year. But it's down much than 25% successful conscionable the past month.

It'll beryllium telling to spot which ETF wins out. ARK Transparency has a flimsy borderline connected cost, charging 0.55% vs. the 0.69% levied by Roundhill. But investors what has much prima power, a blistery banal picker oregon the contented of the online investing crowd.

"While it tin beryllium hard to win with a caller ETF, products that person an ARK sanction are apt to get capitalist interest, due to the fact that of the halo effect established by its 2020 performance," Rosenbluth said.

Top Holdings In ARK Transparency ETF

Company ticker Weight (%) Stock YTD % ch. 1-month banal % ch.
Nvidia (NVDA) 1.51% 144.4% 3.6%
MaxLinear (MXL) 1.46 94.6 8.8
Enphase Energy (ENPH) 1.45 28.8 -6.5
Teradyne (TER) 1.42 33.2 11.0
Cloudflare (NET) 1.35 113.0 -22.9
Bloom Energy (BE) 1.35 -11.5 -28.7
HP (HPQ) 1.34 49.5 16.3
Tesla (TSLA) 1.33 51.8 -7.9
The Buckle (BKE) 1.25 72.1 3.4
Intuit (INTU) 1.24 77.0 9.3
Sources: IBD, S&P Global Market Intelligence

Follow Matt Krantz connected Twitter @mattkrantz

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