Cathie Wood-led Ark Investment Management on Tuesday snapped up 870,299 shares, estimated to be worth about $42.2 million, in DraftKings Inc (NASDAQ: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 (NYSE:ARKK) and Ark Next Generation Internet ETF (NYSE:ARKW) to buy DKNG shares. The investment firm also holds shares of the company via Ark Fintech Innovation ETF (NYSE: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 (NYSE:TAK) and Airbus SE (OTC:EADSY) and buys include UiPath Inc (NYSE:PATH).