View profile

$ARKX. Space Tractors. This Is What You Came For?

$ARKX. Space Tractors. This Is What You Came For?
DISCLAIMER: This note is intended for US recipients only and in particular is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
Cool Your Jets
$ARKX isn’t the first space-sector US ETF - that honor goes to the wonderfully tickered $UFO. But it is the most high profile, coming as it does from the Fund Manager That All Other Fund Managers Love To Hate, Ark Invest.
The fund begins trading today, March 30.
SpaceFinTwit, such as it is (there’s like 30 of us, but we’re hoping we turn into the cool kids like CloudFinTwit was all through 2020), is all up in arms because the initial list of stocks to be included in the fund includes such space oddities as John Deere, Netflix and, our personal favorite, coming in at number 2, another Ark Invest ETF, $PRNT. Where be the $MAXR? Whither $NSH?
Fear not. Since we are not Other Fund Managers, we have plenty of faith yet in Ark. We were all bulled up on $ARKX on announcement - we posted a note on Seeking Alpha at the time, which you can read here - and we still feel that way. We’ll be buying a small initial stake in staff personal accounts once trading begins.
The dollar values posted in the initial allocations list are tiny. The #1 holding, Trimble, comes in at around the price of a sushi lunch for the Ark team. And we really should not be surprised at the latitude the fund manager has given itself with the names here. Recall that in ArkWorld, $TSLA is not just an auto manufacturer but also a leader in robotics and, probably, genetic engineering. Ark likes to give itself the ability to have multiple funds all invest in the same stock. This has worked great on the way up for Ark; most likely it will be horrible on the way down but, much grouching from Wall St folk notwithstanding, Ark is not yet on the way down. So that John Deere is in ARKX? Well, read the fund docs. The fund is permitted to buy stocks that benefit from space and aerospace services. Earth observation benefits agriculture, agriculture needs tractors, ergo Earth observation drives tractor sales, so, $DE be a core space fund holding. Quod Erat Deeremonstrandum.
Lob asteroid fragments at this thing if you want. We rather suspect the fund will do fine. There’s going to be a whole lot of Earthling dollars headed Ark’s way for this one in our view, and ETF ‘creation units’ never had a more appropriate name. From nothingness shall spontaneously spew forth a Big Bang of Yuge Amounts Of Money, expanding at a rapid rate.
OK - enough tortured space puns. The opening day list is kind of odd but for now, In Cathie We Trust. We plan to buy ARKX when it starts trading and we think the fund has a bright future. Yet more annoyance heading Wall St’s way we think!
Cestrian Capital Research, Inc - 30 March 2021.
DISCLOSURE: Cestrian Capital Research, Inc staff personal accounts hold long position(s) in MAXR, NSH and TSLA.

Ways To Connect With Cestrian Capital Research
Sign up to receive this, our Revue Newsletter, direct to your inbox
Follow us on Twitter - @CestrianInc
Read our free articles on Seeking Alpha
Did you enjoy this issue?
Become a member for $9 per month
Don’t miss out on the other issues by Cestrian Capital Research, Inc
Cestrian Capital Research, Inc

Proprietary buyside stocks research. Space and Cloud Focus. For US investors only.

You can manage your subscription here
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue
5000 Birch St, West Tower, Ste 3000, Newport Beach, CA 92660