As we talk about those big drops for Some of these names that you have long Tracked in some cases now down 70 80 Percent this year what goes through your Mind We keep our Perspective in the long term uh you Either believe that this decade is going To be one of technological innovation or You don't uh you either believe that um Ai the cost of ai training falling in Half every nine months is going to yield Massive productivity advances where you Don't And It's clear that right now the market is Not pricing assets based on their Fundamentals Asset prices are being Whipped around by asset flows between Between Asset classes by allocators and so From our perspective uh you're getting Amazing sale prices in innovation assets And um we believe that everybody needs To have a meaningful exposure to Innovation in their portfolio that Many investors who Have Benchmark exposures to Traditional indices have unintentional Innovation shorts where if this really Is uh if if Being able to get a cancer diagnosis
From a blood vial is a meaningful Advance and gonna drive uh you know Billions of dollars in revenue then Assets will appreciate on the back end Of that and that will put um some Traditional service providers at risk if Ev autonomous trucks are going to be Cost competitive with freight rail over The course of this business cycle then Those traditional rail lines are Actually going to be materially less Valuable than you currently think They're going to be and so that position And your core index exposure is going to Be put into stress and so you better own The innovation opportunity that's on the Back end of that in the event that these Technology promises come to fruition Brett it all makes sense to invest in Innovation early on but to make that a Real possibility it kind of seems like You have to have these cash cushions the Very cash cushions that perhaps drove a Lot of these big tech gains in the last Two years but if you look at some of These companies even the ev spaces Biotech for example they don't have the Cash cushions to make that a reality how Do you square that with this Inflationary environment where perhaps Cash is king Well i don't think that's true uniformly Across the technology space if you look At for instance zoom it's massively cash
Flow positive and and i think that in in Some ways investors either want the Companies to generate cash and then they Punishment them on kind of the cash flow Generation that they're yielding or they Say oh oh these companies need cash in Their pocket in the biotech space Certainly in the therapeutics Business those are businesses where you Are spending r d to generate pipelines That will ultimately yield potential Cures to uh rare diseases and so um Those companies are frequently Partnering with larger companies to um To bring cash onto their books and and Upfront some of the potential revenue Recognition that would come from those Pipeline assets uh and uh you know over The last three years we've seen amazing Progression in demonstration of Capabilities in the likes of gene Editing um so i think that the um At this moment in the marketplace yes i Think that um traders are going out There and looking at the cash burn of Every position in the market and saying We're going to try to aggressively Target and short those companies that Are going to have to raise at any time Over the next year And that provides an opportunity for Investors with a long-term point of view To actually capture meaningful ownership Positions in these companies that are
Likely to yield Meaningful Meaningful cash flow generation events In the medium term So As an innovation manager that's taking Uh You know doing fundamental work on the Cash flow generative Capabilities of the assets in these Companies this is a great opportunity And that's what we're focused on And brett just to to try to put your Comments in context with this violent Selling that we have seen in the broader Market every day people are trying to Figure out have we possibly reached a Bottom from all this selling pressure For the broader market there is this Strong narrative out there that there Could be more challenging times ahead For technology you alluded to those who Might be betting against this sector Right now how do you approach that i Mean you're long-term in thinking you Made that very clear are you prepared to Accept more pain for this sector in the Short term Listen our clients hire us to to provide A concentrated exposure to disruptive Innovation that we believe will Recognize into Massive value appreciation over the Medium term and that's exactly what we
Seek to provide to them you know and we Communicate to clients that that's what We're going to do the worst thing we Could do for our clients would be to Suddenly change our spots and say oh We're worried about um you know the the Marginal inflation numbers and so we're Gonna um kind of back off on our Aggressive investments in technologies That are gonna change the world uh We think that clients um of our Strategies um size their positions in a Responsible way relative to the rest of Their portfolios so that they can take Advantage of these kinds of downdrafts That are not being driven by Fundamentals and buy into and at least Keep a relatively um stable Percent exposure to our types of Strategies or even double down And that's what you've seen you've seen Client inflows into our strategies Because people understand that the Medium-term Um [Music] Recognition of what's going on in Technology is going to result in Market business value creation this is Not a This is potentially a once in a Generation business cycle for technology And i think people understand that they Need to have a meaningful technology
Exposure to take advantage of them Brett let's talk about some of the Individual holdings within the ark Innovation fund i want to talk about Tesla and gm in particular tesla for a Long time now has been one of the major Holdings but in the last quarter it Looks like the fund sold about 13 Million dollars of the stock and Recently bought gm shares i have to ask About tesla's role in the ev universe do You think it's losing market share to Some of these newer names and to what Extent Tesla is incredibly well positioned it Remains the number one exposure in our Flagship strategy as well as in other Strategies And we think that the opportunity for Robo taxis for autonomous electric Vehicles that will transport you from Place to place at less than the cash Cost of operating your car so not even Taking into account the fact that you're You're saving the time and energy of Being an amateur driver on the road is a 20 or 30 trillion dollar business value Creation event we think over the course Of the decade this is going to be you Know Uh at uh multiples of the value Attributed to the global oil sector Today the business platforms that occupy Um this robo taxi
Opportunity and so there is room for Both multiple winners and for an Assessment that we can't be sure who Exactly is going to operate in that spot Cruise automation inside of gm is Demonstrably ahead of the field in terms Of capability they have a commercial Service operating in san francisco today They've expanded to most of san Francisco and uh if they're able to use That position to kind of secure a Footprint and select cities in the u.s That would be incredibly valuable to That company and we think tesla's Largest deployed fleet of robots in the World which is what their cars are gives Them a tremendous data advantage to Scalably solve that problem so you can Believe in in both companies and the and The strategies that the companies have Uh and so that's it's it's not a you Know tesla or gm it's within our Automation and robotics portfolio Gm is an Interesting exposure to the robo taxi Opportunity that we think is is Massively undervalued by the marketplace Today Brett we're almost at a time but you did Oh sorry chris i was just gonna say that You have obviously this uh exposure to Coinbase as well what was your reaction To the quarterly results there I mean i think that the the
The quarterly results were largely as we Expected we knew that trading volumes Were down um i think that the The fact is this is a a company with the Enterprise value of of below 10 billion Dollars now and um they're likely to be One of the leading companies in Providing the full vertically integrated Suite of financial Um services that they will transmit Through the the crypto asset market uh And uh i think people will look back on This five years from now and be like i Cannot believe that that company was Available at these prices um because the The entire financial services sector is Going to have to transition to Incorporate the capabilities that that Public blockchains provide to end Customers to um Own and transfer digital assets around The world and coinbase is in the the the Captured seat in terms of providing Those services and so um we think it's An incredible value and and that it's a Management team that knows how to invest Into the opportunities that lie in front Of it in an intelligent and aggressive Way
