When investor Cathie Wood loses, he wins, and it started with a tweet

The stray tweet stood out: Why not start a fund to bet against Cathie Wood, the star investor who's been stumbling so hard?

"That's a great idea," Matthew Tuttle recalled thinking when it crossed his feed last year.

His fund that wagers against companies that previously merged with special purpose acquisition companies, or SPACs — another investment craze of the moment — had been performing well amid signs that the pandemic economy was losing steam. So Tuttle, 53, figured the time was ripe for a bet against Wood.

About a week later, he filed for what would become SARK, the anti-ARKK ETF, a fund that wins when Wood's popular Ark Innovation exchange-traded fund loses.

The Tuttle Capital Short Innovation ETF — a bantamweight beside Wood's $12 billion giant — has been winning a lot lately, with the once-stellar ARKK tumbling as traders brace for interest rate hikes.

Expectations for a more hawkish Federal Reserve have weighed on high-growth stocks like Zoom Video Communications, Roku and Spotify Technology that dominate Wood's funds.

Tuttle's fund tracks the inverse performance of ARKK using swaps contracts, attempting to achieve the opposite return of Wood's fund for a single day, a strategy described in a regulatory filing last year.

During that span, investors plowed roughly $298 million into SARK while pulling a net $92 million from Wood's ETF, according to data compiled by Bloomberg. Tuttle said investors continued pouring money into his fund this week, lifting the total to almost $350 million.

Meanwhile, short interest as a percentage of shares outstanding on ARKK has climbed to a record, approaching 10%, according to data from IHS Markit Ltd. Bets against Wood's other funds are also near all-time highs.

A spokeswoman for Wood declined to comment.

SARK's success underscores how quickly even the most successful investors can witness a swing of fortune, especially in a rapidly changing macroeconomic environment.

Wood's steadfast belief in technology's next big thing has collided with expectations for higher interest rates this year.

For Tuttle, the rotation out of growth stocks and into value that has buoyed his fund is a natural consequence of a more hawkish central bank.