Cathie Wood Stake in $17.5 Billion Harry Sloan SPAC Hits 11%
(Bloomberg) -- Cathie Wood’s ARK Investment Management LLC now has a nearly 11% stake in a blank-check company backed by former Hollywood executive Harry Sloan.
Ark’s daily trading statement shows it added another 1.2 million shares of Soaring Eagle Acquisition Corp. on Tuesday. That takes the firm’s total holdings to nearly 18.5 million shares across the flagship ARK Innovation ETF (ticker ARKK) and the ARK Genomic Revolution ETF (ARKG), according to data compiled by Bloomberg.
The special-purpose acquisition company run by Sloan agreed in May to a $17.5 billion merger with cell-engineering company Ginkgo Bioworks Inc. The deal is expected to close in the third quarter, at which point Ginkgo’s stock will be listed on the New York Stock Exchange under the ticker symbol “DNA,” according to an Aug. 11 statement.
Ark has been expanding its position in recent days, meaning Soaring Eagle joins the ranks of companies in which it has a 10% or more stake. As of May, that list extended to around 30 names.
Concentration worries have dogged Ark since its ETFs surged in 2020, triggering inflows worth tens of billions of dollars to its small lineup. Since its thematic strategies target niche sectors like artificial intelligence and space travel, there are a limited number of stocks in which the cash can be deployed.
In March, the firm ditched clauses in its ETF paperwork that capped how much of each fund’s assets could be invested in a single company. At the same time, it introduced language saying its products may invest in some SPACs.
The outsized stake in Soaring Eagle may limit its flexibility in reducing the investment, according to Bloomberg Intelligence.
Such a large holding means it will be categorized as an insider, so the firm will be “subject to the short-swing profit disgorgement rules,” said Rebecca Sin, an ETF analyst with BI based in Hong Kong. “The rules stipulate that a company insider must return any profits made from the purchase and sale of the company stock within six months.”
Soaring Eagle, which began trading in April and initially rose as high as $10.37, retreated in early May and has drifted since. It closed Tuesday at $9.95, down 1.7% since its debut compared with a 5.4% drop for the IPOX SPAC Index in the same period.
Wood and her funds have had a dramatic year, with ARKK rising 26% through mid-February before tumbling 36% in the following three months. The fund has recovered since but is still down almost 3% year-to-date.
Multiple calls to the phone number indicated on Soaring Eagle’s filings to the U.S. Securities and Exchange Commission reached a full voice mail. Ginkgo didn’t respond to an email from Bloomberg seeking comment. ARK didn’t respond to a request for comment outside of business hours.
©2021 Bloomberg L.P.