over 2 years ago • 1 min
Cathie Wood’s Ark Investment Management increased its stake in DraftKings after the online gambling firm came under attack from activist short seller Hindenburg Research.
DraftKings shares fell as much as 12% on Tuesday as Hindenburg accused the company’s Bulgaria-based subsidiary, SBTech, of involvement in the “black market” and “organized crime”. DraftKings said it had reviewed SBTech’s business practices and was “comfortable” with the findings.
Hindenburg is an activist short seller that’s also targeted electric vehicle stocks Nikola and Lordstown Motors, which – like DraftKings – joined the stock market through deals with special purpose acquisition companies (SPACs). Activist short sellers bet that a stock will fall, before publishing reports attacking the company’s operations.
Ark, however, clearly saw Tuesday's sell-off as an opportunity. The influential money manager snapped up 870,299 DraftKings shares for its Innovation and Next Generation Internet funds, with the news helping push the stock 1.1% higher as of 10:35am in New York on Wednesday. The purchases bring Ark’s holdings of DraftKings shares to nearly 12.2 million.
For now, Wall Street analysts are brushing off most of Hindenburg’s accusations. Of the 28 analysts that cover the stock, 20 rate it a “buy”, eight rate it “hold”, and none say “sell”.
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