Compare the Pair: Warren Buffett + Cathie Wood are both buying again

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing. Whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to end. My name is Bryce and as always, I'm joined by my equity buddy Ren. How are you. 

Alec: [00:00:31] I'm very good, Bryce. I always say I'm excited for this episode, so I will say I'm excited. But obviously this may not feel like an exciting time. We probably sound like a broken record because the stock market is falling. But I am excited. I am excited to talk to you and I am excited to pick up some bargains. 

Bryce: [00:00:51] Yes, bargains galore out there at the moment with what's going on in markets. And we're going to have a look today at what some of the world's best investors are buying. We're comparing the pair between Warren Buffett and Cathie Wood, the. 

Alec: [00:01:06] Opposite ends of the investor spectrum yesterday. 

Bryce: [00:01:10] And taking a look at what they have been buying over the last quarter or so given the current market conditions. 

Alec: [00:01:17] They might be opposites, but I think there's things we can learn from both of them.

Bryce: [00:01:20] I'm sure that we're not. 

Alec: [00:01:21] Just going to list the companies.

Bryce: [00:01:22] I'm sure there are theorists.

Alec: [00:01:23] They're experts. 

Bryce: [00:01:24] So before we crack in, though, we are very excited if we're keeping the excited vibe. Very excited. That Fin Fest is fast approaching. Tickets for Fin Fest are going live on the 9th of June, so in a couple of weeks time to get early bird access. All you need to do is head to Equity Mates dot com slash fin fest and register your details. You only get exclusive access to the early bird tickets if you are registered, so head to Equity Mates dot com slash fine fest. Head to our Instagram and also on that website, we'll give you more information on what Fin Fest actually is. It's a day where we're going to have over 25 or 30 sessions hosted by some of the best investors from around Australia, covering topics across all levels of investing experience. So whether you are an absolute beginner or you are approaching Warren Buffett status, this is going to be the festival for you. Combine it with deejays, food, trucks, entertainment. It's going to be a day that is a lot of fun down at Barangaroo. So tickets aren't going to be expensive. They're going to only be 37 bucks for early bird. So make sure you get on that. Tickets available from the 9th of June where pumps.

Alec: [00:02:36] All the education of an Equity Mates podcast or with the vibe of Big Day Out. That's it. That's super. Well, I was going to say I started Coachella, I was going to say stereo sonic. But then I it's not you don't have to wear a single light and go to the gym for six months to be able to go in. 

Bryce: [00:02:51] I have, man.

Alec: [00:02:52] I know Bryce will not be running around topless until the afterparty. Afterparty?

Bryce: [00:02:59] So it's on the 15th of October. It's going to be awesome. And Sydney at this stage next year, who knows? But we won't make it to year two unless this one's a success. So we would love to all see you down at Fin Fest in October. 

Alec: [00:03:13] All right. Anyway, Bryce, before October, there is six months of market well, five months of market turmoil to get through. Before we get to Buffett and Cathie Wood, let's just talk about how we're going, how we're navigating this moment, because this podcast is about us learning in public and let's learn in public. Let's make mistakes in public. What has your portfolio like? What have you done? Anything. 

Bryce: [00:03:41] Why? I think this time last week I sat here and said, hand on heart, I have never I haven't sold anything. Okay. Times have. 

Alec: [00:03:49] Changed. I really like all. 

Bryce: [00:03:51] All I've sold one stock. Part of one stock haven't done the full I'm not really sure why, but I've sold part of my satire holding. Okay, because it was just an absolute dog's breakfast. I think I was down 86%. Yeah, and something that I've been thinking about recently is the reallocation of capital into better opportunities and we're moving into tax time as well. Yeah. So we're going to take a few capital losses into tax time.

Alec: [00:04:21] So I've been thinking about this tax loss harvesting as well. So for people that may not be across how that works 30 seconds or less, why does it matter for your tax? 

Bryce: [00:04:32] Or you can claim a tax loss on any sort of capital gains that you might be claiming for that year as well. Or you can carry that tax loss through to subsequent years. Sorry about capital loss through the subsequent years. 

Alec: [00:04:45] So you lose $100 on a stock. Yeah, you sell it. Yeah. And then you make $100 on a stock later. That hundred dollar loss as long as you report it at the time. Yeah. Well in that tax year you can offset that loss against the future gain. Yeah. So you don't pay tax on the future gain. Yeah. Yeah. And a lot of people have lost. And so this is a moment to think, are there any positions that aren't worth holding on to the, the bit of a dog's breakfast. Because looking at my portfolio, there's certainly. Some dogs in there. Yeah. And I'm going to do the same. Yeah, I am going to sell some. Crystallise those losses, report those losses this tax year and then hopefully make some gains in the future when I go to bed. 

Bryce: [00:05:28] But I think it's also an opportunity cost for me as well. Like I don't have infinite amount of dry powder, but I do want to be taking advantage of some of the opportunities that are popping up. So I am taking a look at my portfolio and figuring out, yeah, what are some of those positions that, you know, either have done, done well enough on or yeah. That have taken a bit of a hit. And I and I've got it's kind of lost my conviction in the faces is broken over. 

Alec: [00:05:53] Yeah. 

Bryce: [00:05:54] So I think that's crucially important though is that I'm not just selling things that are down for the sake of them, for the sake of tax. I am selling things that I feel I've lost conviction in and or and my thesis is broken. I think that's crucially important to understand. 

Alec: [00:06:09] Nice. Have you bought anything? 

Bryce: [00:06:12] I've just continued to put into gear. And, and just so the leveraged ETFs, obviously the J-just which is the one over in the States has taken more of a hit than the one here in Australia. And I have a bit of a watch list. I'm still remaining patient though. Yeah, I think we're in a great opportunity at the moment. I'm just going to wait a little before I start doing individual stocks. 

Alec: [00:06:34] So I don't know, but I. 

Bryce: [00:06:35] Haven't changed my DCA ETF strategy. 

Alec: [00:06:38] Yeah. So the eights and the stocks there that I spoke about obviously are related to his personal investing strategy and his investing goals. And you know, you've got to make your own decisions about what securities, what ETFs, what stocks are right for your portfolio and, you know, right level and right time and all of that stuff. So just wanted to make clear that Bryce is not a model that you should emulate. He is. And I wouldn't I wouldn't even look as he tells me every day he's his own person with his own hopes and dreams. 

Bryce: [00:07:09] That's it. That's it.

Alec: [00:07:10] Um, but yeah, I'm. Well, I'm being a little bit less patient than you, I think, because for me, it's like, you know, if something is 50% down and it will end up 70% down, I'm not too worried about getting it at 50. I would be kicking myself if I missed it. And I woke up in a couple of weeks and my patients had had the opportunity passed me by. So having put everything to work, I am going to sell some stuff similar to you to free up some money. But I've, I've put a bit to work this week, which is both exciting and nerve wracking now. 

Bryce: [00:07:46] Well, to your point, like it you're in.

Alec: [00:07:49] Yeah, you're in. So I've had I've had this in the back of my mind for a while and I haven't had a good spot to put in any of our content and we produce a lot of content. Yeah. So I'm just going to drop it in here, which is when you think about the stocks that are going to do really well out of this moment. And we always you everyone is using the analogy of 2000 because in 2000, 2001, tech stocks collapsed and a bunch of tech stocks went out of business, Pets.com being the famous example. But out of that wreckage emerged. Amazon, Google, Google IPO'd in 2004. But Amazon, Apple, Microsoft, they all emerged. And then, you know, other dominant companies that we see today. Yeah, I think it's important to stress that they weren't unknown companies. So Apple and Microsoft obviously had been around for a while, but Amazon had only IPO'd a couple of years earlier, but it was incredibly well known. Jeff Bezos was Time's Man of the Year in 1999. So when you're thinking about this moment and you know analogising in your head back to 2000, I don't think that the stocks that emerge out of this are the unknown ones. The stocks that did the best out of 2000 were incredibly well known. Now, there were ones that didn't do as well, like IBM, HP, Dell, like they all were around that time. And, you know, they didn't have the same story as the Amazon, the Microsoft and the Apple. So you still have to do the work and find the right ones. But don't think that it's necessarily going to be a company that no one has heard of before. Yeah, Jeff Bezos was literally time man of the Year the year before, and Amazon was probably the best example of coming out of that moment. So anyway, it was just a little titbit that I had, but I thought it was relevant. When people are thinking about the possibilities of this moment, the opportunities of this moment, I don't think it's like some stock that no one's ever heard of before. That's not what you need to find. You just need to find the best company. Yeah, Peloton. 

Bryce: [00:09:49] That is not the best company. By the.

Alec: [00:09:51] Way. 

Bryce: [00:09:52] I want to make that very clear. 

Alec: [00:09:54] What we haven't seen is the bankruptcies. And we spoke about this last Monday with the Joe early in the day. So yeah, I know, but it's just an interesting one. I think, you know, like funding markets are drying up, interest rates are rising, stocks are falling. It feels like that is a domino that will tip over at some point. Some of these like. 

Bryce: [00:10:15] But let's let's also be clear and not forget that this could be two years of slow pain. So, like. 

Alec: [00:10:24] I don't know, a fun start that I heard on another podcast. Sure. There have only been four times in either the last hundred years or stock market history. I think the last hundred years in the US that the market has seen two down years in a row. Oh, wow. Yeah. So 1929 to like 1931, that was three. How am I going to remember this all the time? Sorry. Yeah. 1929. Then the couple of years after that Great Depression, 1939 and 1940, World War two, then two years in the seventies, like 73, 74, and then 2000 and 2001. But if you think about the other ones, like 87, big crash, but then.

Bryce: [00:11:04] 28 almost made it.

Alec: [00:11:06] Well, 28 was the down year, but then nine, the recovery started. Nine was bad. The sort of nine was bad. But then it came through. Yeah. It didn't have to recover from where it was the year before. Yeah, yeah, yeah, yeah, yeah. So if that start is wrong, I am going to defer all blame and say I heard it on another podcast this morning, but I think that's an interesting stuff. 

Bryce: [00:11:28] Yeah, yeah, absolutely. I don't know. 

Alec: [00:11:30] What it means. Don't know what to do about it, but.

Bryce: [00:11:33] All right. Well, let's let's get moving with comparing the pair. Warren Buffett, who obviously is well known with his Berkshire Hathaway and Cathie Wood, who had became cult status during during the COVID years where her ark invest funds went absolutely gangbusters with her high conviction on on some of the best performing growth stocks. And she continues to double down, which we'll get to in a second. But let's see.

Alec: [00:12:03] She continues to double down with one really notable and interesting exception. 

Bryce: [00:12:08] Yeah, let's get to that. 

Alec: [00:12:09] In a second. 

Bryce: [00:12:11] So let's start with Warren Buffett, who who we've spoken about, you know, a number of times on the show. Tick tock. He's been holding cash. Well, I speak in this in this context, he's been holding a lot of cash of of light. 144 billion, I think was the peak over the last year or so. And he kept sort of saying that he felt there weren't many great opportunities out there for him to to invest in, but now he's putting the cash to use. 

Alec: [00:12:39] Yeah, everyone was like, what? The US Treasuries don't pay anything. And that's all you're buying. Yeah, but he is buying now and year to date, the S&P 500 is down 17%. I think it's actually more since I pulled that number. Berkshire is up 2%. So not a massive gain. But relative to the overall stock market, this is these are he's outperforming. These are Buffett's moments. Yeah. He had a decade of being ridiculed in the nineties and then he showed everyone in the early 2000 leading up to the GFC, everyone was like Buffett, he's too old. And then he showed everyone in the GFC he's doing it again. Yeah, yeah. So biggest headline, he's doubling down on Apple Big. 

Bryce: [00:13:23] So he bought another $600 million of Apple that I remember. The first time he bought it. Everyone was like, Oh my God, he's bought Apple. He'd say, He said for so long he doesn't understand tech. He's staying away from it, went large, made an absolute killing from it. It's now one of his largest holdings and and he's doubled down another $600 million in what is one of the I think it's the second most valuable company in the world now behind or was couple of weeks ago behind Saudi Aramco. Yeah right. Oh your prices. Yeah. 

Alec: [00:13:53] Berkshire owns about 5% of Apple and that's not a small amount of money.

Bryce: [00:13:59] No, but he has. 

Alec: [00:14:00] I would love to have. 

Bryce: [00:14:00] 100 billion large. 

Alec: [00:14:02] Well, yeah. If you call Apple 2 trillion market cap now they own about 5%, 100 billion. So 600 million is small in the scheme of things. 

Bryce: [00:14:12] So the top up.

Alec: [00:14:14] It's a top up. Yeah. It's a nibble. Yeah, yeah, yeah, yeah. He didn't take a full bite out of Apple. He. Yeah. Anyway, you get it. Yes. But speaking of tech, he also invested in another technology company. And of all the technology companies that are down at the moment and just just, you know, potentially big bargains, you wouldn't have expected this one. HP. 

Bryce: [00:14:38] Hewlett Packard. Yeah, he's done it again. 

Alec: [00:14:42] These investors have done it. 

Bryce: [00:14:45] Invested $3.7 billion in Hewlett Packard for an 11.4% stake. He's back in tech.

Alec: [00:14:53] Yeah, I think this is just for the dividend, though. Apparently some of the reporting around it is. Yeah, right. Yeah. Not exactly the sexy tech. No, the buffet still style scrum. Yeah, yeah. Apple, HP, he's coming around. Yeah, but look, that's not the story. I think the real story is energy stocks. So he topped up his position in Chevron and then Occidental. Have you saying they. 

Bryce: [00:15:19] Heard of not really across.

Alec: [00:15:21] They so they have been probably Buffett's Berkshire's favourite energy company for years now. Yeah like I don't know a lot about them to be honest, but they, they have been a berkshire's sort of staple in this space for a while. Yeah, right. So topped up the position there as well. Oxy is the ticker on over in the States if you're interested in doing your own research and learning more. But a few older school tech, Apple and HP, a few energy stocks, Chevron and Occidental, a couple of other stocks. But one in particular that stood out for me was Activision Blizzard. 

Bryce: [00:15:58] They went large. 

Alec: [00:15:59] Yeah. And so this is a merger arbitrage bet. So let's explain what that is. 

Bryce: [00:16:06] Go for it. 

Alec: [00:16:07] Okay. So when a takeover is announced, a takeover price is announced, the share price of the company that is being acquired will move towards the takeover price, but not to the takeover price. And the gap between the price that's been announced and the share price is basically it reflects the possibility that a deal won't happen. And as the deal gets more and more likely, as the board votes in favour of it, as shareholders vote in favour of it, as regulatory hurdles are removed or jumped over in theory, that takeover, that share price moves closer and closer to the takeover price because those it's more and more likely that the deal happens and investing in the company at the start of the takeover process process and then expecting that gap to close is known as merger arbitrage. Yeah. And so that's what they've done with Activision Blizzard. Microsoft have announced the takeover. Yes. And so Buffet is basically saying that the takeover is going to happen. 

Bryce: [00:17:08] Yeah. So I think Microsoft said that the takeover target price or what they're going to be paying would be about 95 bucks per share. And currently Activision is trading at 77.

Alec: [00:17:21] Okay. Yeah. 

Bryce: [00:17:22] So they're that's assuming Buffet is right then he's going to make a decent margin there. 

Alec: [00:17:29] So make 18 bucks a share on a $77 share price. 

Bryce: [00:17:32] Could play a big bet assuming it's going to go through. But look, if it doesn't, this might not be the end of takeover offers for Activision anyway.

Alec: [00:17:40] I think the the counterpoint to that is the Twitter story, because the Twitter story is a classic example of a merger arbitrage bet gone wrong. Twitter gets the Alan offer price of 50 for 20. The rest of tech sells off massively. But there would have been people that invested in Twitter for in this same logic, like Alan's acquiring it at 5420, it was trading in like the mid-forties, like 44 bucks, something like that, $42. So you're like, Oh, well, I'll make up the difference when Alan completes it. But then Alan starts tweeting about bought Tesla shares lose value, so the value of Alan's collateral goes down. Everyone's getting super nervous. Twitter falls meaningfully. It's now in the thirties. Was it Twitter? Yeah. So it's now trading at 37. And you know, in the last month it's lost 25%. 

Bryce: [00:18:31] Yeah. 

Alec: [00:18:31] Wow. So that's that's the counterpoint. When the merger gets less likely, the gap will. 

Bryce: [00:18:37] Grow. Yeah, yeah, yeah, yeah. I'm just looking at Activision Price. It's fascinating. So about the 10th of Jan or thereabouts was when Microsoft announced that they wanted to buy Activision at $95 a share. At the time it was trading at 63. Oh, so huge premium. 

Alec: [00:18:53] Yeah. 

Bryce: [00:18:55] It jumped up to about 82 bucks. And it's really just despite everything that's been going on in markets, it's only dropped about 5% from its peak. So you're right, it feels like the market is definitely signalling that this is likely to go through with the price at the moment and if it does 77 to 95. But that's not to say everyone should go out there and do this arbitrage.

Alec: [00:19:19] Definitely. Well, no, it. 

Bryce: [00:19:20] Comes with. 

Alec: [00:19:21] The Twitter example as a classic example of how it goes wrong. The Activision Blizzard, probably why Microsoft had to pay such a big price is because the company had been smashed by all those. The allegations about like the CEO and stuff like that and their workplace culture, they were getting investigated by like a California government department and there was a lot going wrong inside the company. So the share price was down on the back of that. Anyway, let's get back to Buffett. Activision Blizzard also goes in the portfolio for the merger arbitrage situation. He expects Microsoft to buy those shares of him in the coming months. 

Bryce: [00:19:58] So let's move through to financials. He's taken a 55 hour. He's bought 55 million shares in Citigroup, which is valued at about $3 billion. Now, he does love his financials. 

Alec: [00:20:12] Well, he loves them less than he. 

Bryce: [00:20:13] Yeah. So used to be a massive fan of Wells Fargo. Yeah, massive fan. 

Alec: [00:20:18] Trust added to the portfolio in 1989. 

Bryce: [00:20:20] There you go. Huge fan. And I don't think he owns any of it anymore. I think he's sold out almost entirely. 

Alec: [00:20:26] Sold the last chunk of it this quarter. 

Bryce: [00:20:28] Yeah. And he's also gone into Goldman and Jp morgan, but is I think equally becoming a little bit cold on them at the moment.

Alec: [00:20:38] Sold both of them in. The last few years. 

Bryce: [00:20:39] They sold both in the last few. 

Alec: [00:20:41] Years, sold JP and Goldman in 2020. 

Bryce: [00:20:43] But is now gone 3 billion large on Citigroup. Yeah so interesting interesting there and not really sure why. 

Alec: [00:20:52] He obviously say something in Citigroup that like they're undervalued, I guess. But it's an interesting one that he held Wells Fargo from 1999. He held them through the scandal. Do you remember that fake account scandal that they had held them all through that held them through the like massive drop in interest rates and like Wells Fargo does, a lot of consumer banking, small interest rate spreads hurt those consumer banks. And then he sells the last chunk of it just as interest rates start to rise in America. Yeah, so it's an interesting timing conversation, but. 

Bryce: [00:21:29] You know, I've just got the off never. 

Alec: [00:21:30] Going to doubt him. 

Bryce: [00:21:32] Yeah, well, I've just got the Financial Times up here as well. And general consensus is also a bit of confusion as to why he's done it. But they close out saying that there was similar confusion when he went large on Apple after years of saying he's not going to touch tech. So who knows what the Oracle of Omaha. 

Alec: [00:21:50] Yeah. 

Bryce: [00:21:51] Knows in the. 

Alec: [00:21:51] Background. So that's financials. He also bought into a company, Ally Financial Ticker. Why that? I think the insurance and a bunch of other financial services. This guy loves an insurance company. He's never met an insurance company. He doesn't want to bring on loss. 

Bryce: [00:22:08] Of financial. 

Alec: [00:22:09] Insurance. If you loved insurance as much as Warren Buffett, it would just make you a better investor. Like if that's what got you up in the morning, like insurance premiums, risk management, reinsurance you. 

Bryce: [00:22:20] I'd buy an insurance company. 

Alec: [00:22:22] You would buy one. 

Bryce: [00:22:23] Yeah, the buffalo. 

Alec: [00:22:25] I just I wouldn't know like where to start like QB and no Suncorp. Well yeah you should know what you're buying and I'm not, don't. 

Bryce: [00:22:32] Just buy them all bang. 

Alec: [00:22:34] Okay. And that is why earlier when we said you shouldn't emulate Price Lawsky, it's that cowboy. But look, let's close out the Warren Buffett stuff. Three companies that we couldn't group. Yeah, I'll say them. You give me your thoughts. Paramount Global. 

Bryce: [00:22:51] Yes, super interested on Paramount. This I mean, you look at what's happening in streaming at the moment, very competitive space. You look at what's happened with Netflix. Disney is surging and he's gone large on Paramount. So fascinated to know why. 

Alec: [00:23:06] Yeah, Paramount plus have you got it now.

Bryce: [00:23:08] I don't think I will. 

Alec: [00:23:09] I go to for the Uber thing. Yeah. What? To be fair, I didn't get it. My housemate got it. Yeah. Everything is exactly. Have you watch billions. Yes. It's similar to that. Like it's I can imagine no offence to any of our American listeners but it's very American of course. Yeah.

Bryce: [00:23:26] Super pumped PR. I'm sure it's an interesting play. 

Alec: [00:23:31] Yeah. 

Bryce: [00:23:32] For me. What else did he do? 

Alec: [00:23:34] Liberty. Global. Liberty Media. 

Bryce: [00:23:36] Formula One. 

Alec: [00:23:37] Formula One? Yeah. Yeah

Bryce: [00:23:39] Tick of approval for me just because I love Formula One. 

Alec: [00:23:42] Every article about this was like, Oh, I guess Buffett once tried to survive. 

Bryce: [00:23:47] Potentially. It's actually good market research. 

Alec: [00:23:50] I think he probably did some well, remembering a previous conversation we had with Andrew Brown, he spoke about the Liberty Media companies as some of the most difficult companies to analyse from, like a corporate ownership perspective. Now, I don't know if they've straighten that out or anything like that, but again, Buffett does the work to understand this stuff. Yeah. So A but yeah. Formula One not bad. Yeah. No. About having a moment. Yes. Well that moment lost though. Yes. I have a must try to survive. It will last. But I really would love to understand what the split of people who enjoy the sport are and people who enjoy the documentary.

Bryce: [00:24:27] Well, I didn't enjoy the sport. Now I love it. 

Alec: [00:24:29] Yeah, yeah, yeah. But like, do you think if Drive to Survive stopped, you would still be into Formula One?

Bryce: [00:24:35] Yeah, yeah. Like, I don't I don't care about try. I didn't even finish the last season. I knew what happened, but now I watch the season. 

Alec: [00:24:40] Oh, okay. 

Bryce: [00:24:40] Yeah. Like, it's my now I'm just, I'm ahead of the seasons now. 

Alec: [00:24:43] Yeah. Yeah. And this is what I think Netflix is going to be fine anyway. Let's think who has the cultural power to get Bryce Lasky to like a new sport? Netflix. Exactly. All right, final one. General Motors. 

Bryce: [00:24:56] If I'm to think about owning a car company, I would be going Volkswagen. But what do I know? 

Alec: [00:25:03] Nothing. Nothing. That's what we've established so far. So, no, I say I mean, every like their charts about the Tesla valuation are pretty crazy, even though it's come off a bit. General Motors, the reason that people are buying it at the moment is because of Cruise, that self-driving subsidiary that they bought. But I don't believe that's the reason Warren Buffett would buy the company. Mr.. I don't invest in cutting edge technology, invest in cash flow. Improving businesses wouldn't be taking a punt on an autonomous driving stock. Yeah, yeah, yeah. So he's got to say something else in General Motors. But I found that an interesting one because everything else you write about General Motors investor letters and stuff like that is crazy. Yeah, we've. 

Bryce: [00:25:47] Spoken about what he is is selling. And that was Wells Fargo, formerly one of his biggest positions and now no longer. So he's also active on the sell side, but still plenty of cash on his balance sheet that I'm sure will continue to see him deploy over the next few months if things continue the way they are. He's super patient investor and waits for moments like this. Yeah. 

Alec: [00:26:10] He spent less than half of the cash on his balance sheet. Yeah. So he said that in the last meeting. He wants about 3 billion in cash or short term treasuries. That's just like a buffer, but that still leaves tens of billions of dollars to spend. Yeah.

Bryce: [00:26:26] All right. Well, let's turn our attention to Cathie Wood before we do. We're going to take a very short break to hear from our sponsors. Alright. So we've had, we've had buffet. Now let's turn to the other end of the spectrum. High growth risk on pedal to the metal and that is Cathie Wood and her ark funds. Now, as we said at the top of the show, launched her her I guess her name into the into the world of investing, particularly during COVID, with a lot of success with the ETFs, huge inflows. Subsequently, her ETFs have taken a hit. But. Despite the massive sell off going on, ARK does continue to see inflows to her funds. Now this fascinating.

Alec: [00:27:08] This is a dynamic that is worth paying attention to because everyone thought that Ark's ETFs would get blown up in a market sell off. Everyone investors would retain their money, which would force Ark to then sell the units of that ETF, and then that pushes the price of those companies further down. But weirdly and I genuinely don't have an explanation other than people are buying the dip, even though it keeps dipping. Is Ark Innovation, the flagship ETF down 56% this year, down 61% over the past year, down about 20% from where when COVID hit. So all of those covered gains have been given back and then some. Ark Innovation ETF 7.8 billion AWAM assets under management has seen a net inflow of more than 1.5 billion. 

Bryce: [00:28:00] Yeah, so I had a bit of a read about this American. There's a lot to do with her cult status and there's just such conviction in her and she's such a great marketer. Like she is just she convinces you that despite what's going on in markets, I am doubling down on my convictions here. I am not wavering from the thesis of these companies. The market does like it doesn't matter what's happening right now. I am in this for the long term and I think as an investor you want to hear that from some of your fund, from the managers that you're giving your money to. And so I can see that she's been able to convince those that are investing in her funds that she's the right person to take control of your money now and take that make the best of this opportunity. But it is fascinating, huge, huge inflows when I would imagine if you were to look at similar ETFs both here in Australia and around the world, you might expect to see some some outflow activity, particularly from retail investors. 

Alec: [00:28:56] We should actually we should actually look at that. What? Because I actually don't know what has happened, but that information is all public. Have a look at it. Yes. And I reckon I would bet my future house on the fact that Vanguard's two super vanilla ones. Australian fish and chips. Yeah. Australians via yes. 

Bryce: [00:29:15] Yeah bass. 

Alec: [00:29:16] And then the international one would say inflows. Yeah. Probably like rain, hail or shine people about dollar cost averaging. Investors just keep that one ticking along. 

Bryce: [00:29:25] Well, let's pick that up next way. 

Alec: [00:29:26] Yeah, but. Ark. So innovation, we just spoke about the Genomic Revolution ETF down 48% this year. Their FinTech Innovation ETF down 56% this year. Transparency ETF down 33% this year. The ARK Space Exploration Innovation ETF down 23% this year. I mean, all of them are down. I saw this funny tweet that I screenshotted someone tweeted, They love how all of Ark's funds are increasingly the same. And this is stunning tongue in cheek. Like these aren't their acts. They may not be their actual holdings, but genomics. Tesla, Zoom. Roku Square. Robots Tesla Zoom. Roku. Squarespace Tesla Zoom. Roku Squid 3D Printing. Same again. Yeah, yeah, yeah. 

Bryce: [00:30:13] I mean, fickle. 

Alec: [00:30:14] Yeah. But the funniest thing I think with So Ark has become a bit of a meme ETF. There is a inverse Ark Innovation ETF by Tuttle Capital and it is Short Ark's ETF and it basically tries to give the inverse of Ark's returns. So if Ark Innovation ETF goes up 1%, it will go down 1% and vice versa. And as you can as you can guess, this year, Tuttle Capital Short Innovation ETF has had a good year. 

Bryce: [00:30:48] That's I did not know that. It's up 80% this year.

Alec: [00:30:51] Yeah. 

Bryce: [00:30:51] Wow. There you go. Well, that's classic. I really like that. I didn't know that existed. I definitely wouldn't be buying it. But if you are in it, well done. You've done pretty well this year. 

Alec: [00:31:03] I feel like I feel like it probably a lot of people viewed it as a tactical trade rather than shorting the S&P 500, because like there are some really established companies in there that make a profit. This is like the tactical. 

Bryce: [00:31:19] The growth. 

Alec: [00:31:20] Short, the unprofitable growth show. Yeah, yeah, I like that. So like, look, we probably missed our boat on this one, given that a lot of these companies are down like 90%. 

Bryce: [00:31:29] I mean, who knows? You know, we can never say that they're not going to go. 

Alec: [00:31:32] Even higher as a company can fall 10% a day forever or could. 

Bryce: [00:31:37] Fall 90% a day forever. 

Alec: [00:31:39] Home like, oh, my God. 

Bryce: [00:31:42] Anyway, let's hope that doesn't happen. But what is Cathie actually buying? Because we've said she keeps doubling down. So let's take a look at some of the stocks that she is doubling down on. 

Alec: [00:31:52] Okay. And as you get those stocks up, you name the stocks, I'll tell you how much they're down year to date. 

Bryce: [00:31:58] All right. So we're going to start with one of the largest positions that she's doubled, if not tripled down on, and that is Coinbase. So in the last two weeks, despite everything that's going on in crypto, which is also being smashed, people are saying we're going into a bit of a winter ark has added about 860,000 shares into Coinbase and at current prices at the time of recording anyway or writing, this was about a $60 million position. So Ren, what's the damage on Coinbase. 

Alec: [00:32:27] Year to date? Yeah, down 73%. 

Bryce: [00:32:30] Oh, well, I mean, if she's getting a bargain. 

Alec: [00:32:32] She is. So. Well, I think that is going to be the point of a lot of what we say here is she's either incredibly right or she's incredibly wrong. Yeah, yeah, yeah. But look, more so than, like Buffett, you know, like, yeah, yeah. The bull case in the bear case on HP, like the range of outcomes is a lot smaller band than like the bull and the bear case for Coinbase. Yes, that range of outcomes is like a hundred times your money will lose all of your money, you know?

Bryce: [00:33:02] Well, let's turn to another. And Roku. So a streaming platform it has now become the biggest holding in the Ark ETF double K overtaking Tesla. What are we talking here and the stock that is in favour with a lot of experts we spoke to. 

Alec: [00:33:19] Down 64% year to. 

Bryce: [00:33:21] Date. Okay. Not as bad as Coinbase. 

Alec: [00:33:23] And yeah, it's not really something we see a lot in Australia, but if you're interested in Roku, there's it's a lot bigger in America. It's technology is being built directly into TVs. I don't really get it, but Americans seem to really like, Yeah. 

Bryce: [00:33:38] Yeah, we'll have to go over to the States and do a bit of a road. 

Alec: [00:33:41] Trip where both Apple TV operates. Yeah. So, yeah, I guess it's it's like an alternative to that. Yeah. Yeah. 

Bryce: [00:33:48] All right, Zoom are a stock that went nuts during COVID. They've added. What's the damage? 

Alec: [00:33:55] Well, you say they're only down 45%. Only 45%. But you know why that is? No, because they started falling a lot earlier, down about 75% from like middle of last year. 

Bryce: [00:34:07] Okay, that makes sense. 

Alec: [00:34:08] I just want to say about Zoom, regardless of what you think about the stock, the thing that I am really impressed by is how they became the verb. 

Bryce: [00:34:17] Yeah, let's jump on Zoom. Yeah, like the Google. 

Alec: [00:34:20] We call Waze. We use Google Hangouts because it's free and it's part of what you pay for it. But yeah, yeah, yeah, yeah, but. But when we we still say, are we going to jump on the zone? Do it? Yeah, I think so. 

Bryce: [00:34:34] I say hangouts, but anyway. 

Alec: [00:34:36] Yeah. I've never heard you say that.

Bryce: [00:34:39] Okay, let's get going. So say they've added a position in say it's one of the super apps headquartered in Singapore, I think. Yeah. Digital entertainment, e-commerce, all things related. What's the damage? 

Alec: [00:34:52] Down 66% year to date. 

Bryce: [00:34:54] Okay. More bargains galore. And then roadblocks are one of my favourite companies. Not to favourite though. There are risks involved with roadblocks and investing. Just making that very clear. 

Alec: [00:35:04] Well. 

Bryce: [00:35:05] And what's the damage? I got this in when we when we IPO'd. So where are we are we. 

Alec: [00:35:10] Did we IPO? 

Bryce: [00:35:11] When. Yeah I'm part of Redbox. 

Alec: [00:35:13] Down 71% year to date. 

Bryce: [00:35:15] Below IPO price. Yeah it must be close to it. 

Alec: [00:35:18] IPO price. 70 bucks. By the looks of things, though, that's at least the first price on Google. It's now around that 29 East. 

Bryce: [00:35:26] So yeah, underwater if you're if you're on roadblocks and that's a bet on the future of online gaming and metaverse and those sorts of things.

Alec: [00:35:35] So just to sum up some of the biggest companies that they're buying, Coinbase, Roku, Zoom, SEA limited, Roblox. Are any of them profitable? Actually, I think a couple of them are choices. 

Bryce: [00:35:50] No. 

Alec: [00:35:51] I think Roku might be Roku is going to pay ratio according to Google. That's the star zone maybe. And Coinbase maybe. 

Bryce: [00:35:59] Do your own research. 

Alec: [00:36:02] Let's keep moving, but let's keep moving because the really interesting thing here, Cathie Wood, if she's been known about for to be an advocate for one company what is it Tesla. Yeah yeah. Was her biggest holding probably draw. I'd be interested to know what her returns were in the last three years. Ex Tesla. Yeah. Like if you strip Tesla out from the fund reallocated according to the distribution of everything else, Tesla drove a lot of their returns, but interestingly they sold about 333,000 shares of Tesla in the quarter, worth about 200 million, which again sounds like a lot of money. They still own 1.7 billion in the automaker. 

Bryce: [00:36:46] Yeah. 

Alec: [00:36:46] Carmaker car maker, robot company. Yeah. But still, they're reducing the weighting of Tesla in the portfolio. Yes. Is the headline. Yeah. Because everything else they're buying more of because they've got net inflows, but net they're selling Tesla which means they've decided that they're going to reduce the weighting of Tesla. 

Bryce: [00:37:04] Yeah. Well, speaking of weightings, it is the firm still the third largest holding in an ark. Roku is their largest at 8.27%. Zoom second largest at 7.85. And then Tesla not too far off at 7.79. So top three and then exact sciences and block close out the top five. 

Alec: [00:37:26] Yep. Looks also been smashed. Yeah.

Bryce: [00:37:28] So Coinbase is their ninth largest position at 4.2% and there are a total of 35 holdings in the company. So look, we've been saying that this is an opportunity for investors. Don't take this as a moment of fear and and feeling overwhelmed. We've seen we are seeing the best investors in the world deploying cash at this time. So I'm not saying that that's the right thing to do for everybody. But we said last week that market crashes in hindsight are an opportunity in market crashes in the future or risk or the way you look at them. So yeah, the big dogs are doing it. 

Alec: [00:38:07] Let me put it this way. Whatever asset class you want to invest in, this is a piece of advice about any particular asset class. This is just generally everything is down, house prices are softening. 

Bryce: [00:38:19] Yeah, I don't think they're down though. 

Alec: [00:38:22] Anyway, that's as good as you get in Australia. Interest rates are up, face value of bonds is down, stock market getting smashed, crypto markets getting smashed and left is worthless. 

Bryce: [00:38:33] I think high end art still doing very well.

Alec: [00:38:36] Okay. 

Bryce: [00:38:37] Okay. And luxury cars. 

Alec: [00:38:38] Very okay. Yeah. Good to know. Okay. Well, the majority of assets are down. So I think this is the moment where whatever you're interested in, have a look around. It's exciting. Yes. And so, you know, do your own work. Don't follow Bryce. If we could get that printed on shirts, maybe, right? Yeah, I'm excited. Sell your dogs. Buy good stuff. 

Bryce: [00:39:00] All right, Ren. Well, look, before we close out, there's plenty of content in the Equity Mates network and one of my favourites for this week, and one that I would recommend you definitely go and listen to is the interview on Crypto Curious. The team sat down with Australian cricket champion and all around good bloke Steve Smith.

Alec: [00:39:18] We got to shake his hand, we. 

Bryce: [00:39:19] Got to shake. 

Alec: [00:39:20] His hand to the. 

Bryce: [00:39:21] Classic style rant and I didn't get a photo but yeah, look on go and listen to that episode with the crypto curious. They dig into a bit of the of Steve Smith's NFT portfolio. So if you're interested in knowing what he's exciting him in the crypto markets, head over to crypto. Curious, what about you Ren? 

Alec: [00:39:39] So committee economists last week released a episode and Thomas gave a pretty interesting recap on the election, didn't speak about the results, but rather spoke about the four moats that traditionally protected the duopoly parties and how those moats were getting disrupted. So if you didn't think you'd had enough political coverage and you wanted your political coverage with a bit of an economic lens over the top, but I just found it a really interesting way to conceptualise and I guess ground the numbers that we saw in some of our business jargon and and the idea of them moats getting disrupted. So that was a really interesting one. I'd go suggest giving a listen. 

Bryce: [00:40:19] Nice on crypto curious Comedian v economist and head to Equity Mates dot com to find out more info on all the other shows in the Equity Mates network. Don't forget to head to Equity Mates dot com slash fine fest as well to register for early bird access. You only get early bird access if you're on the registration list. But again, as always, it's great to chat stocks and we'll pick it up next week. 

Alec: [00:40:40] Sounds good.