Ark Funds Changes Weighting Caps: Could This Mean A Higher Tesla Allocation?

Cathie Wood and her Ark Investment Management funds are well known for having large weighting in high conviction stocks like Tesla Inc TSLA. The percentages in several names could increase with new wording from the company.

Single Security Cap: Ark Funds is eliminating a 30% cap on how much of each fund’s assets can be invested in a single security.

With a bullish $3,000 price target on Tesla, Ark Funds could decide to increase the allocation in the electric vehicle maker.

• Ark Innovation ETF ARKK has 10.8% of the assets in Tesla shares, the largest holding in the ETF.
• The Ark Autonomous Technology & Robotics ETF ARKQ holds 10.2% of assets in Tesla.
• The Ark Next Generation Internet ETF ARKW holds 10.6% of assets in Tesla.

Even with a rule in place to not hit 30%, Ark Funds has typically kept the Tesla weighting under 15% of assets and trimmed the position. The new rule could be in place to allow shares to appreciate as much in value over the next several years.

Ownership Of Companies: The other change that was made by Ark Funds was eliminating a 20% limit on the amount of a company that Ark Funds could own throughout its ETFs.

Ark Funds owns 10% or more in over 25 companies, including three companies that Ark Funds is a 20% owner in. Compugen CGEN, Stratasys SSYS and Organovo Holdings ONVO are three companies that Ark Funds has owned 20% of across its family of ETFs.

The move in the ownership cap also comes as Ark Funds was involved in investing in the PIPE of two SPAC deals. Ark was part of the PIPE for Quantum-Si merging with HighCape Capital Acquisition Corp CAPA and SomaLogic merging with CM Life Sciences II Inc CMIIU.