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The Queen's Investment Chess Game: A heavy position in Tesla, a bet on Bitcoin, known as the female version of Buffett

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This year's wealth outlets seem to be in the investment chess game of ARK Invest (Ark Investment) founder Catherine Wood.

Original title: "The Queen's Investment Chess Game: Heavily Holding Tesla, Betting on Bitcoin, Known as the Female Version of Buffett"

Original Source: Shenchao TechFlow

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Heavily betting on Tesla and investing in Bitcoin (GBTC)... This year's fortune seems to be in the founder of ARK Invest (Ark Investment) Catherine ‧Wood's investment chess game is praised by Wall Street as "the female version of Buffett" and "the goddess of technology stocks".

According to Seekingalpha statistics, among the 10 best-performing ETF funds this year, three of ARK's active ETF funds were selected, ARKG rose 147% year-to-date, and ARKK rose 125% year-to-date... significantly ahead of the SPY (S&P 500) index over the same period.

In 2015, when many people were still wondering what Bitcoin was, ARKW, a subsidiary of ARK Invest, entered the game in person , invested in GBTC issued by Grayscale Investment. At the time, the price of Bitcoin was only $250.

Today, ARK is still the largest holder of Grayscale Bitcoin Trust, holding a total of 240 million USD in GBTC.

In 2016, when Tesla’s stock price plummeted, almost all analysts were pessimistic about Tesla. Tesla's biggest "milk king". Now, ARK holds Tesla shares with a market value of 3.847 billion US dollars.

How does Catherine Wood practice the investment philosophy of "disruptive innovation" and successfully deploy Tesla and Bitcoin? From this, what can we learn? Deep Tide TechFlow analyzes the queen's investment chess game for everyone.

The Woman Behind Tesla

August 8, 2018, Tesla CEO Musk issued an internal letter stating that he is "considering taking Tesla private at a price of US$420 per share and a total price of US$71.3 billion" and has found sufficient sources of funding.

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As soon as the internal letter came out, the public was in an uproar. The pressure of public opinion hit Musk like a tide, and Tesla’s board of directors, investors, and SEC bombarded him in turn, but Musk seemed to have made up his mind: For a company with a long-term mission like Tesla, the status of a listed company is too much of a hindrance.

Once the resolution is passed, Tesla will once again become a " It is a private company, which means that Tesla does not have stock price concerns, does not have to fight against short selling, and does not need to regularly publish financial reports to disclose data, and the company will operate more freely.

However, Musk had to pay special attention to the sudden open letter.

This open letter is from Catherine Wood, the founder of ARK Invest (ARK Investment, hereinafter referred to as ARK).

In the open letter, Catherine Wood strongly opposed Tesla’s privatization and reiterated that Tesla is a valuable investment "$4,000 is the target price Tesla should have."

She believes that for Tesla, which has a bright future, the privatization price of $420 per share proposed by Musk is a serious underestimation of Tesla , thereby depriving many investors of the opportunity to participate in the company's success.

Musk said he and the board had influenced their decision after reading Catherine Wood's letter. Under pressure, Musk published an open letter on Tesla's official website officially announcing Tesla's abandonment of privatization.

Catherine Wood’s words certainly deserve Musk’s attention.

Since 2014, when ARK was established, it has been a die-hard supporter of Tesla, and Tesla ranks fifth among the holding companies.

In the process of investing in Tesla, ARK basically does not refer to the ratings of other analysts, and only believes in its own judgment.

In 2016, Tesla’s stock price fell 11%, and when almost all analysts downgraded Tesla’s rating, ARK increased its Tesla position doubled.

In 2017, when Tesla rose 46%, 68% of analysts were still bearish, and ARK expanded its holdings by at least 13 times.

As Tesla's biggest "milk king", what Catherine Wood has to do every year is to draw a sky-high price for Tesla's stock price cake.

Katherine Wood has sung Dotesla many times in public.

In February 2018, when Tesla’s stock price was still hovering around $270, Catherine Wood said: Tesla’s target price for the next five years is $4,000 per share.

In January 2020, Catherine Wood stated on CNBC that she believed that Tesla's share price was expected to exceed $6,000 in the next five years. Catherine Wood said that the reason why she is so optimistic about Tesla is that she believes that Tesla will not lose its dominance in the electric vehicle market.

And a week later, ARK released an update on Tesla's valuation, this time more aggressive: Tesla is expected to The stock will be worth $7,000, and in a bull market scenario, Tesla's stock price will be at or above $15,000. And by the end of 2020, Tesla's stock price will exceed $1,500.

At that time, many people ridiculed Catherine Wood for being blindly optimistic, but reality slapped them in the face.

On December 1, 2020, Tesla’s share price was US$584, which was equivalent to US$2920 before the 1:5 stock split. %. From this point of view, compared with the soaring Tesla stock price, Catherine Wood's imagination is still somewhat insufficient.

Why is Catherine Wood so bullish on Tesla?

Contrary to what most people understand, in Catherine Wood's view, Tesla is not just an electric car manufacturer, it is also a self-driving car platform provider. These are two completely different valuation models.

“Tesla is much more software-centric than most people realize, and there is a shortage of software engineers wanting to work for Tesla,” she said .

In an interview with CNBC, she elaborated on three reasons for continuing to be optimistic about Tesla in the long run:

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Battery Cost

Wood believes that Tesla is moving along the cost curve of mobile phones and laptops. With more efficient batteries, costs are also falling, which should further reduce the cost of electric vehicles.

Artificial intelligence chip

In 2019, Tesla launched a built-in autopilot and internal artificial intelligence chips with redundant functions.

Catherine Wood said that she had worked with an analyst who had worked at Nvidia. Anything that can be put on a car has a four-year lead.

Autonomous driving data

While true self-driving cars do not yet exist, Catherine ‧Wood believes that Tesla will become the dominant player in the emerging field of autonomous driving because Tesla's existing nearly 700,000 cars are already collecting data and have 10 to 12 billion miles of real-world driving data.

“In order to be a winner in the field of autonomous driving platform and artificial intelligence, you must have the most and highest quality data, and Tesla is such a company” , Wood said.

As of December 2, ARK Investment Fund and its three funds ARKK, ARKW, and ARKQ held assets worth US$1.952 billion, US$1.352 billion, US$4.1 billion and US$133 million in Tesla shares, with a cumulative market value of US$3.847 billion.

Reviewing Catherine Wood's investment strategy for Tesla, it is not difficult to see her support and advocacy for disruptive innovation. In the queen's investment chess game, in addition to Tesla, there is also a shining piece-Bitcoin.

The Queen’s Bitcoin

In 2020, Grayscale Investment will become the standard-bearer of the Bitcoin bull market . Open the list of shareholders of Grayscale Investment Bitcoin Trust (GBTC), and it is not difficult to find ARK.

ARK's investment funds and the "Next Generation Internet ETF" managed by ARK hold a total of 10.11 million GBTC shares, with a total value of 240 million US dollars.

For Grayscale Investments, Catherine Wood and her ARK are old friends.

In March 2015, the Bitcoin trust fund invested by Grayscale was listed on the over-the-counter market OTCQX (code: GBTC). Announced investment in GBTC, becoming the first public fund management company to invest in Bitcoin, when Bitcoin was only $250.

Contributed 25.84% of the gains.

Subsequently, Bitcoin hit the top and fell, Catherine Wood chose to sell all her GBTC and successfully escaped the top.

Catherine Wood knew about Bitcoin research earlier than most people.

“We’ve been paying attention to Bitcoin for a long time. In fact, we’ve been paying attention to Bitcoin not long after Satoshi Nakamoto designed it. Now Bitcoin is stabilizing, so we choose to invest in it.”

In 2017, Catherine Wood also publicly stated: “Bitcoin is a bigger company than Apple. Big ideas.”

In the capital market, the best way to be optimistic about an industry or a company is to invest in it. Grayscale’s GBTC gave Catherine Wood and ARK a compliant investment channel.

Michael Sony Sean, Grayscale's head of sales at the time, said ARK could not hold bitcoin directly because the IRS considers bitcoin a assets, but ARK can hold shares in the Bitcoin Trust (GBTC).

Why is Catherine Wood bullish on Bitcoin? How is this Queen researching Bitcoin? All of this may be glimpsed in ARK's investment strategy report.

In ARK's 2020 investment strategy report "ARK's Big Ideas 2020", Bitcoin was described as "the evolution of a monetary system" and made its finale.

The report mentions that a non-government-backed monetary system seemed neither feasible nor conceivable until the birth of Bitcoin:

- Currency issuance and the state are inextricably linked.

- Absence of a free market for money.

- State exploitation in kind.

- Limitations of non-sovereign currencies such as gold.

Until the emergence of Bitcoin, the Cambrian explosion of currency:

- The private sector begins to bring in funds.

- The rise of a digitally native non-sovereign currency system.

- A viable form of self-custodial and sovereign wealth ownership enabled by public key cryptography.

Because of Bitcoin, the world is witnessing a global war between sovereign and non-sovereign monetary systems.

ARK believes that cryptocurrencies controlled by an open source network are providing a new paradigm for the mechanism by which monetary systems store and transfer value.

As an open, neutral, permissionless global monetary system not dependent on any country, Bitcoin is well-positioned in this battle.

For the future valuation of Bitcoin, ARK uses three narrative logics for benchmarking:

The first is the denationalization of currency.

Bitcoin as a potential medium of exchange and catalyst for the demonetization of money is likely to take off in emerging markets.

Excluding the four countries with the strongest economic strength in the world, the total amount of money M2 (broad money supply) in the remaining countries is 40 trillion US dollars, if Bitcoin could gain a 5% market share, and its market cap would reach $1.1 trillion.

The second type is digital gold.

Bitcoin improves upon the limitations of gold as a store of value by being highly portable, strictly scarce, and publicly auditable.

The total market value of gold is 9 trillion US dollars (February 2020), if Bitcoin replaces its 15% share, then the market value of Bitcoin will It's $800 billion.

The third category is asset protection.

Rational allocation of Bitcoin as asset seizure protection ratio should be similar to the probability of assets being seized in an individual's lifetime.

At present, the total wealth owned by high-net-worth individuals in the world is 46 trillion US dollars. If Bitcoin is allocated according to the 5% probability of asset freezing for 50 years, then Bitcoin The market cap of the coin will be $1.3 trillion.

Just as Catherine Wood likes to describe Tesla's stock price as a new "big pie", in November, in an interview with the media, Wood also gave Bitcoin's The price paints a bigger "pie":

"Participation of institutional investors could push the price of Bitcoin to $500,000. "

Queen's Way

Katherine Wood seems to have been In preparation for starting a company like ARK.

In 1981, Catherine Wood received a bachelor's degree in finance from the University of Southern California Equity Research Analyst.

“The analysts there were tenured, and they weren’t giving up anything in their minds,” she recalls, “so I had to Running around, finding my way, and eventually finding companies that were overlooked.”

She switched to emerging Internet stocks and began to pay attention to the field of wireless communications, which allowed her to witness that with the rise of wireless communications, emerging markets are quietly happening Innovation by leaps and bounds.

"I've learned that when analysts and portfolio managers dismiss something as too small or not fully fit into any portfolio, Usually a real opportunity for unexpected gains."

Inside the company, she was once regarded as a "weird" for her maverick research and investment, 1981 In 2010, she successfully predicted that inflation and interest rates had reached their peak in advance, and she was looked down upon by her boss at the time.

This experience left a deep impression on Wood, who realized that the potential for going against the so-called "consensus" was huge, and doing the opposite often Can be a great success.

Today, she focuses on identifying overlooked and misunderstood stocks in five innovation areas: DNA sequencing, new energy, artificial intelligence, robotics and blockchain chain technology.

"Disruptive innovation" is a buzzword these days, but Catherine Wood learned early on what it meant.

In 2001, she joined AllianceBernstein as investment director, responsible for managing the fund’s investment portfolio of 5 billion US dollars, which allowed her to flex her muscles and truly Practice the investment style of "disruptive innovation".

In 2002, Amazon had 40 million users worldwide and its stock price was around $15-20. The capital market, which had just experienced the burst of the Internet bubble, was not optimistic For such an Internet company, the discerning Catherine Wood went against the trend and decided to invest in this "rule-breaking" company. Today, Amazon’s stock price has reached $3,200, more than a hundred times the stock price when Catherine invested.

Different from most traditional investment traders who stare at the company's past financial data, Wood believes that investment requires "destructive innovation", "no innovation, never Investment", resolutely abandon the old economy, and resolutely embrace the new economy.

ARK's investment portfolio since then has also implemented this investment philosophy.

Tesla changed the traditional car; Square changed the way you pay, borrow and invest; 2U changed how students access online courses; Zillow changed how people search , renting, and buying and selling houses; Zoom has changed the way people participate in meetings...

In 2014, after 12 years at AllianceBernstein, she decided to Leave, build your own company, and focus on investing in innovative companies that disrupt the status quo, but this move is opposed by friends around you.

“A lot of my friends thought I was going to fail,” Wood recalls, “but I never thought I would because there was a huge This is the best way to start a business.”

Active Research Knowledge, Catherine Wood named her company ARK Invest (Ark Investment) focuses on investing in companies that break industry rules and have disruptive innovations.

Different from other mysterious and arrogant investment institutions, ARK always takes the route of civilians:

(1) The company releases its research report for free;

(2) The company discusses investment targets with professionals on social platforms such as Twitter and Facebook;

(3) Open the company's research meeting every Friday afternoon to outsiders;

(4) publish the company's transaction log in real time;

Wood I believe that ARK's success is largely due to social media. "When we do research, we engage innovators in that field and say, 'Have you thought about this?' or 'You're wrong.'"

< p>ARK announces the details and changes of its holdings every day, and gives free "copying homework" to investors, and investors also give back to ARK.

With the help of Bitcoin and other tech stocks, wealth and fame have flocked to Catherine Wood, especially in the male-dominated investment world. Appear outstanding and alternative.

Wood is all too aware of the challenges women face in making a name for themselves in a male-dominated industry, and she hopes she can inspire the next generation to break through the ceiling. She opened a training center at her alma mater in Los Angeles to educate and encourage young women to participate in the technology innovation industry.

“You have to deal with difficulties very gracefully,” Wood said. , because I focus on the future and realize my dreams.”

"I like being a woman in this industry." Catherine Wood, who was praised by Wall Street as a "female version of Buffett" because of her high investment returns, but we know, There is only one Buffett, and Catherine Wood is also unique.