6 ms·

It came out recently that Bill Hwang also funded the first 4 ETFs from ARKK.

by grey-area 5y ago

jedberg 5y ago
I'm not super familiar with ARKK. What does this imply and why was it revelatory that he was involved?
- endisneigh 5y ago
  It basically just means that he pumped ARKK with debt and/or gains from leveraged investments. You could say that the implication is that ARKK's main investments, e.g. TSLA were also pumped. Given that most of ARKKs investments started to tank around the same time this fiasco happened, it could also imply some level of interconnectedness that investors were not explicitly made aware of (and they probably should've).
- speeder 5y ago
  ARKK has been declining heavily lately, and according to some analysts it has been the culprit of a bunch of Nasdaq crashes the past 3 months. Seemly ARKK is focused on tech stocks, and as they keep losing share price they keep selling FAANG stocks to buy their own shares or smaller companies shares in an attempt to stall their losses. There was lots of speculation they were going to crash hard like Archegos did, and that was BEFORE the Archegos involvement was known.
  - hogFeast 5y ago
    When ARKK blows up it will precipitate a change in how some ETFs operate. ARKK is basically Archegos-lite (with retail investors bag-holding, not investment banks), they have invested heavily in a few stocks, have cornered the price, and when the fire alarm goes off they are the fat guy that gets jammed in the fire door. The fundamental principle of an ETF is liquidity, ARKK has wilfully debauched the concept for their own gain. You are seeing this with a few other ETFs, particularly INRG...amazingly given that they blew up in 2008 for the same reason, but a lot of these are attempting to manage the concentration risk (INRG recently rebalanced). ARKK is just pure greed: marketing fiction, aggressively corner the market, fuck the customers, fuck the consequences.
  - cj 5y ago
    For anyone curious, ARKK holdings are public (as are all ETFs). Here's a PDF. https://ark-funds.com/wp-content/fundsiteliterature/holdings/ARK_INNOVATION_ETF_ARKK_HOLDINGS.pdf https://ark-funds.com/wp-content/fundsiteliterature/holdings...
  - grey-area 5y ago
    I love that some of their ETFs also contain their other ETFs, it’s turtles all the way down!
- cowmoo728 5y ago
  https://en.wikipedia.org/wiki/Ark_Invest https://en.wikipedia.org/wiki/Ark_Invest A layperson's summary: ARK funds are actively managed funds that invest in sector-specific "innovative" companies. For example, ARKQ is their autonomous + robotics ETF. ARK funds have been doing extraordinarily well in the past few years, despite the fact that highly targeted sector-specific funds tend to underperform because of the difficulty of evaluating early stage companies launching risky technology products. Cathie Wood, the founder, has been heralded as something of an investment genius for her ability to grow her funds so rapidly. Personal opinion: I'm scared of investing in the ARK funds because there appears to be a cult of personality around Cathie. She hit it big with Tesla, but most of her popularity seems to be built around her youtube channel fandom. There's an entire ecosystem of youtubers pumping ARK funds the same way there's an entire ecosystem of internet users pumping dogecoin. If her first four funds were heavily bankrolled by Bill Hwang, it would make me even more hesitant to ever invest in an ARK fund.
- grey-area 5y ago
  It means ARK was mostly funded by someone previously convicted of fraud (and responsible for the recent collapse of over-extended Archegos), which is a bit concerning.
valuearb 5y ago
a conspiracy theory going around is that Bill was pumping up stocks that he and Cathie (ARKK) were buying through the use of “gamma squeeze”, ie buying far out of the money call options. An example of how this works is let’s say Tesla is trading at $500. You purchase call options to buy TSLA at $1,000 that expire in two days. These options are super cheap because the idea that TSLA will double in two days is ludicrous. But the market makers who sold you the call option have to buy TSLA shares to hedge their risk, driving TSLA’s price up, and costing you much less to do it than just buying TSLA shares directly. This theory is mostly advanced by short sellers who were betting against some of Cathie and Bills key positions. It started with GSX, where widely circulated short research demonstrated compelling evidence it was a fraud. Yet it kept going up for months after, and didn’t collapse until Bills fund did (Cathie did not own it AFAIK). So they have pointed to a weird set of far OOM calls being bought right before expiration on other Cathie positions like Tesla during their big runs. And that since Bill Hwangs collapse they are all down sharply. It sounds intriguing but could easily be coincidence. ARKK is down over 30% in last few months, but that was likely inevitable. If there was a magic gamma squeeze technique for keeping high fliers airborne she clearly isn’t using it. She’s stuck with concentrated bets in some illiquid positions of dubious value, and as her investors sell she will be forced to sell her positions in enough volume to crush their prices worse, driving ARKK down furth forcing more redemptions in an un-virtuous circle that ends very badly.
- kevstev 5y ago
  FWIW I never heard the term "Gamma Squeeze" until it was thrown around in context of GME. I used to work in Options Market Making. I am not saying the concept didn't exist, but this seems largely an idea that has never proven itself in reality. I am not saying I am the end authority on this, but personally I would look VERY closely at anyone throwing these terms around. Google trends shows virtually zero mentions of the term until recently: https://trends.google.com/trends/explore?date=all&geo=US&q=Gamma%20Squeeze https://trends.google.com/trends/explore?date=all&geo=US&q=G... Frankly, the amount of misinformation being thrown around in forums like WSB these days is shocking to me. Its like the same people that realized they could easily distort views on the political system realized that was small game compared to getting rich off pump and dumps.

It came out recently that Bill Hwang also funded the first 4 ETFs from ARKK.

jedberg 5y ago

I'm not super familiar with ARKK. What does this imply and why was it revelatory that he was involved?

endisneigh 5y ago
It basically just means that he pumped ARKK with debt and/or gains from leveraged investments. You could say that the implication is that ARKK's main investments, e.g. TSLA were also pumped. Given that most of ARKKs investments started to tank around the same time this fiasco happened, it could also imply some level of interconnectedness that investors were not explicitly made aware of (and they probably should've).
speeder 5y ago
ARKK has been declining heavily lately, and according to some analysts it has been the culprit of a bunch of Nasdaq crashes the past 3 months. Seemly ARKK is focused on tech stocks, and as they keep losing share price they keep selling FAANG stocks to buy their own shares or smaller companies shares in an attempt to stall their losses. There was lots of speculation they were going to crash hard like Archegos did, and that was BEFORE the Archegos involvement was known.
- hogFeast 5y ago
  When ARKK blows up it will precipitate a change in how some ETFs operate. ARKK is basically Archegos-lite (with retail investors bag-holding, not investment banks), they have invested heavily in a few stocks, have cornered the price, and when the fire alarm goes off they are the fat guy that gets jammed in the fire door. The fundamental principle of an ETF is liquidity, ARKK has wilfully debauched the concept for their own gain. You are seeing this with a few other ETFs, particularly INRG...amazingly given that they blew up in 2008 for the same reason, but a lot of these are attempting to manage the concentration risk (INRG recently rebalanced). ARKK is just pure greed: marketing fiction, aggressively corner the market, fuck the customers, fuck the consequences.
- cj 5y ago
  For anyone curious, ARKK holdings are public (as are all ETFs). Here's a PDF. https://ark-funds.com/wp-content/fundsiteliterature/holdings/ARK_INNOVATION_ETF_ARKK_HOLDINGS.pdf https://ark-funds.com/wp-content/fundsiteliterature/holdings...
- grey-area 5y ago
  I love that some of their ETFs also contain their other ETFs, it’s turtles all the way down!
cowmoo728 5y ago
https://en.wikipedia.org/wiki/Ark_Invest https://en.wikipedia.org/wiki/Ark_Invest A layperson's summary: ARK funds are actively managed funds that invest in sector-specific "innovative" companies. For example, ARKQ is their autonomous + robotics ETF. ARK funds have been doing extraordinarily well in the past few years, despite the fact that highly targeted sector-specific funds tend to underperform because of the difficulty of evaluating early stage companies launching risky technology products. Cathie Wood, the founder, has been heralded as something of an investment genius for her ability to grow her funds so rapidly. Personal opinion: I'm scared of investing in the ARK funds because there appears to be a cult of personality around Cathie. She hit it big with Tesla, but most of her popularity seems to be built around her youtube channel fandom. There's an entire ecosystem of youtubers pumping ARK funds the same way there's an entire ecosystem of internet users pumping dogecoin. If her first four funds were heavily bankrolled by Bill Hwang, it would make me even more hesitant to ever invest in an ARK fund.
grey-area 5y ago
It means ARK was mostly funded by someone previously convicted of fraud (and responsible for the recent collapse of over-extended Archegos), which is a bit concerning.

valuearb 5y ago

a conspiracy theory going around is that Bill was pumping up stocks that he and Cathie (ARKK) were buying through the use of “gamma squeeze”, ie buying far out of the money call options. An example of how this works is let’s say Tesla is trading at $500. You purchase call options to buy TSLA at $1,000 that expire in two days. These options are super cheap because the idea that TSLA will double in two days is ludicrous. But the market makers who sold you the call option have to buy TSLA shares to hedge their risk, driving TSLA’s price up, and costing you much less to do it than just buying TSLA shares directly. This theory is mostly advanced by short sellers who were betting against some of Cathie and Bills key positions. It started with GSX, where widely circulated short research demonstrated compelling evidence it was a fraud. Yet it kept going up for months after, and didn’t collapse until Bills fund did (Cathie did not own it AFAIK). So they have pointed to a weird set of far OOM calls being bought right before expiration on other Cathie positions like Tesla during their big runs. And that since Bill Hwangs collapse they are all down sharply. It sounds intriguing but could easily be coincidence. ARKK is down over 30% in last few months, but that was likely inevitable. If there was a magic gamma squeeze technique for keeping high fliers airborne she clearly isn’t using it. She’s stuck with concentrated bets in some illiquid positions of dubious value, and as her investors sell she will be forced to sell her positions in enough volume to crush their prices worse, driving ARKK down furth forcing more redemptions in an un-virtuous circle that ends very badly.

kevstev 5y ago
FWIW I never heard the term "Gamma Squeeze" until it was thrown around in context of GME. I used to work in Options Market Making. I am not saying the concept didn't exist, but this seems largely an idea that has never proven itself in reality. I am not saying I am the end authority on this, but personally I would look VERY closely at anyone throwing these terms around. Google trends shows virtually zero mentions of the term until recently: https://trends.google.com/trends/explore?date=all&geo=US&q=Gamma%20Squeeze https://trends.google.com/trends/explore?date=all&geo=US&q=G... Frankly, the amount of misinformation being thrown around in forums like WSB these days is shocking to me. Its like the same people that realized they could easily distort views on the political system realized that was small game compared to getting rich off pump and dumps.