Last December, Cathie Wood's ARK Innovation fund was languishing at multi-year lows, and Wood's reputation as a genius picker of future high-flyers tanked alongside the value of her flagship ETF. But this year, ARK has staged a rebound. Since sinking below $30 in late 2022, its price has jumped to $44 as of August 31, good for a 44% gain that's quadruple the S&P's advance in the same period. By mid-summer, ARK had restored its old oft-achieved standing as America's most actively traded, diversified ETF. (Wood's firm did not return a call for comment.)
Indeed, Wood profited from riding a number of this year's big winners, including Coinbase, DraftKings, Exact Sciences, and especially Tesla, its largest holding at 11% of the portfolio. But what do ARK's choices look like when examined from the perspective of fundamentals such as the dollars in earnings it offers for each dollar of investment, or how fast the profits of the companies it owns would have to grow en route to handing you a big return several years hence? I just made an assessment of ARK's investments centered on the basics. And I found a collection of companies that in total, are so overvalued, and so unlikely to perform the super-heroic feats necessary to garner even mediocre returns, that if such an array hadn't existed, it would have to be invented as the ultimate in dubious long-shots.
