Cathie Wood’s ARK $21M Block buy wasn’t as bullish as it looked

Ark Invest, with its co-founder and chief executive officer (CEO) Cathie Wood, purchased almost $21 million in Block shares on Thursday after the company’s stock dropped by over 6%. At first sight, this might seem like an apparent expression of confidence in the fintech firm run by Jack Dorsey. However, rules established by Ark with regard to its own portfolio indicate otherwise. This is actually, according to their rules, routine rebalancing.

Ark restricts any individual investment to 10% of any single fund according to the diversification strategy discussed in the firm’s disclosures. The weight of a company in a portfolio changes as the stock prices fluctuate. Ark typically buys more stock to maintain a position that has decreased below its target. In contrast, it reduces its position when it increases too much.

It seems that this situation has also occurred in the case of Block. Before the purchase that took place on Thursday, Block had been the tenth-largest holding in Ark’s Next Generation Internet ETF (ARKW), valued at approximately $60 million, which accounted for 3.51% of the fund.

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