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In the beginning of 2022, many billionaire fund managers’ have changed their market sentiment drastically. Many are recently becoming bullish on the market, which is completely opposite to the crowd. In the last two quarters, we have seen the likes of Warren Buffet, Charlie Munger, Bill Ackman, Jim Simons, Cathie Wood, and Chamath Palihapitiya invest heavily into high growth industries like technology, innovation, e-commerce, and more. In contrast, there are still certain fund managers who remain cautious during this time. Managers such as Michael Burry are holding their ground on the belief that there will be a devastating market crash soon. This begs us to question whether we will see an upwards shift in the global markets. In this video we will take a deeper look into the contrasting fund managers’ outlooks of the market and how the current environment may be impacted by these views.


Recently on the All-in podcast, Chamath Palihapitiya declared that there would be another dip in the S&P 500 index. Chamath stated that large-cap companies would be negatively affected and the S&P 500 would bottom out at 3,800. The S&P 500 index is currently at roughly 4,200 points, which suggests that the one last dip is not too far away. The current market sentiment is that the buyers are buyers of growth stocks and sellers are sellers of value stocks.


This point is further supported by David Sacks, a billionaire entrepreneur and world-class venture capital investor. Sacks referenced a study showing how internet and Saas companies’ valuations have dropped significantly. EV/Forward Revenue multiples have spiked in the 2 year COVID-19 period and have declined from November 2021 onwards to historical averages. There is a possibility that this may continue to decline further but based on historical evidence, the bargain hunting period should begin now.


This sentiment is clearly shared by Cathie Wood, the CEO and CIO of Ark invest, who returned 170% in 2020. ARK’s ETFs saw large gains seen from shares in many unprofitable companies and cryptocurrencies. This was partly due to the underlying environment of low interest rates and extensive stimulus. However, ARK’s innovation ETF has recently been under fire. The ETF is down 55% from its 52-week high and down 22% year to date. ARK’s investors now are facing a rising interest-rate environment that stands to be much less forgiving to unprofitable companies trading at higher valuations. However, Cathie believes that rising treasury yields would not impact high-growth companies as much as it would do to mature companies. The average drop in Cathie’s top 40 stock holdings is about 41% over the past three months. Ark’s competitors are only down approximately 14% over the same period in comparison. The larger decrease is attributed to the high-risk, high-growth, high-disruption stocks that ARK Invest favours. Cathie, who favours companies that embody creative destruction, is not fazed by this. She claims that these losses are temporary, and that the bottom occurred on Jan 27th 2022. Cathie also believes that the stocks within the ETF will rebound to the prior levels that they were in and would continue to grow from there. Cathie’s strong sentiment towards the market rebounding is reflected through ARK’s investments, which have recently been skewed towards certain high growth companies. Ark’s persistence of investing in “disruptive companies” reflect their investment strategy, which is to focus on those that offer the greatest potential for change and innovation.
Other fund managers have also invested into companies with high-growth potential to reflect their bullish sentiments. Charlie Munger has recently doubled down and defended his position in Alibaba. He stated that the company is a dominant force in Eastern e-commerce and cloud and is expected to see considerable growth; Bill Ackman, who is usually apprehensive about technology stocks given their higher prices, invested in Netflix in January this year; Jim Simons, the head of one of the best performing hedge funds ever, Renaissance Technologies, bet on two meme stocks in the fourth quarter, AMC and GameStop.

The various investments by these billionaire fund managers all have something in common. Their timing also plays a key role in understanding the behavior of these fund managers. All of these investments have been made in Q4 of 2021 or Q1 of 2022, which demonstrates that fund managers are finding a lot of lucrative opportunities in the current market outlook.