Cathie Wood Loads Up $42M In DraftKings As Shares Drop On Short-Seller Report

Cathie Wood-led Ark Investment Management on Tuesday snapped up 870,299 shares, estimated to be worth about $42.2 million, in DraftKings Inc DKNG on the day shares of the sports betting company fell after it became the latest target of short seller Hindenburg Research.

Shares of the Boston, Massachusetts-based company closed 4.17% lower at $48.51 on Tuesday after the publication of a Hindenburg report named “A $21 billion SPAC betting it can hide its black market operations,” claiming the company’s fully-owned unit SBTech to be a red flag within the DraftKings business.

The New York-based investment firm deployed the Ark Innovation ETF ARKK and Ark Next Generation Internet ETF ARKW to buy DKNG shares. The investment firm also holds shares of the company via Ark Fintech Innovation ETF ARKF.

On a consolidated basis, Ark now holds 11.3 million shares, worth $572.2 million, in DraftKings. 

The short-seller report based on interviews with former employees and SEC filing reviews said that SBTech, which will soon power DraftKings’ back-end infrastructure, has a record of operations in the black market.

According to Hindenburg, SBTech attempted to hide some of the illegal operations prior to the merger by spinning off a unit into a newly formed company called BTi/CoreTech.

At the time of the SPAC merger, SBTech represented 25% of the company’s revenue and was the only positive contributor to positive operating income.

Some of the other key sells for Ark on Tuesday included Takeda Pharmaceutical Co Ltd TAK and Airbus SE EADSY and buys include UiPath Inc PATH.