ARKX: ARK Space Exploration & Innovation Is Another Bet on Cathie Wood – Investorplace.com

The latest ARK Invest Fund, the ARK Space Exploration & Innovation ETF (NYSEARCA:ARKX), is a pure play on Cathie Wood.

Source: Shutterstock

I call Wood the tech whisperer, thanks to the success of funds like ARK Innovation (NYSEARCA:ARKK), up 140% over the last year. Woods investment thesis is that she picks disruptive tech companies that can outperform the market, or even the tech sector.

This thesis makes sense to me. Knowing where technology is going, and getting out ahead of it, has given me a million-dollar retirement. But no thesis works forever, especially if everyone piles into it. If everyone has bought, theres no place to go but down.

So, whats the deal with this latest ARK fund?

ARK Space Exploration and Innovation is an exchange-traded fund, meaning you can buy it or sell it like a stock. Unlike market index funds like Vanguard Total Income (NYSEARCA:VTI), ARK funds are actively managed. In this way ARKX stock is a throwback to the old days of stock picking by professionals.

ARKX has been trading for less than a month, so its hard to generalize its performance. So far, its up 1% while the general market is up 5%. It was due to open for trade April 22 at $20.56, 6 cents above the offering price. Net assets are just $63.3 million, and the expense ratio is 0.75%.

The problem for the fund, as our Wayne Duggan wrote recently, is that there arent any true space exploration stocks. SpaceX is still private. Other space launch companies are highly diversified.

This is where the & Innovation part of the name comes into play. As of April 22, ARKX lists investments in 40 companies, few of which have anything to do with space. About 4.89% of the fund was in JD.Com (NASDAQ:JD), a Chinese e-commerce company that I own and like. But shipping with drones to remote Chinese villages, or fancy Shanghai restaurants, does not a space company make.

Of 40 holdings in the ARKX portfolio, I own shares in four. In addition to JD.Com, these are Amazon(NASDAQ:AMZN), Nvidia (NASDAQ:NVDA) and Alibaba Group Holding (NYSE:BABA).

Duggans criticism of the current holdings is based on Trimble (NASDAQ:TRMB), a 43-year old company that is ARKX largest holding, with a share of 8.92%. Trimble is also a big holding with the The 3D Printing ETF (NYSEARCA:PRNT), which is ARKX second-largest holding with 5.99%.

Trimble is mainly a satellite navigation company. It was called Trimble Navigation until 2016. The new CEO, Robert Painter, had been chief financial officer until last year and has been with Trimble about 15 years. He recently sold almost $560,000 in Trimble shares.I see no problem with any of that. Satellite-based navigation makes sense as an ARKX holding. Trimble stock is up 150% over the last year. The market cap is $20.3 billion. Even CEOs must eat.

My problem is that this is mostly a defense fund. Kratos Defense and Security Solutions (NASDAQ:KTOS), L3Harris Technologies (NYSE:LHS), Lockheed Martin (NYSE:LMT), and Boeing (NYSE:BA) are all big defense contractors among the 10 largest holdings. Then there are some true outliers. Whats Deere (NYSE:DE) doing here. Uh, Netflix (NASDAQ:NFLX)?

In the end whats in the ARKX stock portfolio right now is irrelevant.

Buying this fund means buying Wood and her team. Youre buying their strategies. Youre buying their trading savvy. I doubt half the current holdings will be in the fund a year from now.

ARKX is an active trading fund that depends for its success on the people running it. If you believe Wood and her team can find you stocks that benefit from space, buy it. Youre getting in on the ground floor.

At the time of publication, Dana Blankenhorn directly owned shares in VTI, JD, BABA, AMZN and NVDA.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technologys Big Bang: Yesterday, Today and Tomorrow with Moores Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack newsletter.

Go here to see the original:

ARKX: ARK Space Exploration & Innovation Is Another Bet on Cathie Wood - Investorplace.com