Cathie Wood, chief of Ark Investment Management, often takes advantage of stock price drops after earnings reports by adding more shares to her portfolio.
That's exactly what she did this week. Wood sees earnings season as a chance to adjust her positions.
Investors and analysts have mixed views on Cathie Wood. Supporters praise her as a visionary in tech investing, while critics dismiss her as a mediocre fund manager.
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Known among followers as “Mama Cathie,” Wood drew significant attention with a stellar 153% return in 2020, bolstered by her clear, accessible discussions of her strategy across media platforms.
However, her long-term performance paints a more complex picture.
Related: Cathie Wood buys $25.9 million of major tech stock
ARK Invest's flagship fund, the ARK Innovation ETF (ARKK) , managing $5.8 billion in assets, has returned -10.9% year-to-date. Its annualized return is -27.8% over three years and a modest 1.3% over five years.
In contrast, the S&P 500 has climbed 21% this year, and its annualized return is 9.2% over three years and 15.3% over five years.
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Cathie Wood’s investment strategy explained
Cathie Wood’s investment philosophy centers on breakthrough technologies, with a focus on sectors such as artificial intelligence, genomics, and blockchain. She prioritizes long-term growth, even as it comes with the ups and downs of the tech market.
Wood believes these disruptive fields hold the promise of strong future returns. But ARK’s focus on high-growth stocks means fund values can be highly volatile.
Fraser Perring, a short-seller and founder of Viceroy Research, delivered a harsh critique of Wood in 2022.
Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income
"I wouldn’t even put your money with Cathie Wood,” he remarked to New York magazine. “She is part of the problem… She’s a capital depleter. With the amount of capital she’s evaporated, how can people even suggest she’s successful? She’s successful at failing.”
Morningstar portfolio strategist Amy Arnott calculated that Ark Innovation destroyed $7.1 billion of shareholder wealth from its 2014 inception through 2023. That put the ETF as No. 3 on her wealth destruction list for mutual funds and ETFs for the past decade.
In a July 2024 post on ARK’s website, Wood defended her position, admitting that “the macro environment and some stock picks have challenged our recent performance.”
However, she maintained that her “commitment to investing in disruptive innovation has not wavered.” According to Wood, many of ARK’s holdings are now in “rare, deep value territory.”
She added that if interest rates decline, her “disruptive innovation strategies should benefit disproportionately, as they did in the fourth quarter of 2023 and during the coronavirus crisis.”
Still, some of Wood’s clients seem to align with her critics. The ARK Innovation ETF has experienced a net outflow of $2.4 billion over the past 12 months, per ETF research firm VettaFi.
Cathie Wood buys 43,833 shares of AMD
On Oct. 30, Ark Funds purchased 111,080 shares of Advanced Micro Devices (AMD) after shares tumbled following its earnings results.
That chunk of stock was valued at roughly $15.7 million as of the Nov. 2 close.
AMD reported third-quarter earnings on Oct. 29, meeting expectations with adjusted earnings per share of 92 cents and slightly surpassing revenue forecasts at $6.82 billion, compared with the estimated $6.71 billion.
However, shares of the chipmaker fell more than 10% following weak revenue guidance for the fourth quarter, moderating investor enthusiasm.
Related: Analysts revisit AMD stock price targets after earnings
The company expects fourth-quarter sales to reach around $7.5 billion, falling just short of market expectations of $7.54 billion.
This year, AMD unveiled its MI235X AI chip and raised its AI chip sales forecast to $5 billion. CEO Lisa Su emphasized strong interest in the MI325X, with production shipments expected to begin this quarter.
PC sales within AMD’s client segment grew 23% to $1.9 billion, supported by high-end laptop sales featuring AMD chips for advanced AI capabilities. However, AMD’s gaming division saw a 68% drop in sales due to weaker demand for custom console chips.
Fund manager buys and sells:
- Cathie Wood sells two rocking tech stocks
- Experts cite stocks to buy after Fed rate cut
- Cathie Wood buys two big-time technology stocks
AMD is now Nvidia's largest rival in the AI chip industry. Despite the weaker-than-expected Q4 forecast, the company is poised for strong demand ahead as hyperscalers like Amazon (AMZN) ramp up their AI spending.
“Looking forward, we see significant growth opportunities across our data center, client and embedded businesses driven by the insatiable demand for more compute,” said AMD chief executive Lisa Su in a statement.
AMD closed at $141.86 on Nov. 1. The stock is down 3.7% year-to-date and is not in Ark Innovation ETF's (ARKK) top 10 holdings as of Nov. 1.
Related: Veteran fund manager sees world of pain coming for stocks
