Cathie Wood, head of Ark Investment Management, is an active trader. She often buys her favorite stocks when they fall and sells them when they rise.
The investment community has conflicting views toward Wood, who may be the country’s best-known investor after Warren Buffett.
Boosters say she’s a technology visionary, while detractors say she’s just a mediocre money manager.
Wood (Mama Cathie to her followers) rocketed to acclaim after a stupendous return of 153% in 2020 and lucid presentations of her investment philosophy in numerous media appearances.
ARK Investment Management
Cathie Wood's performance track record
But her longer-term performance is less impressive. Wood’s flagship Ark Innovation ETF (ARKK) , with $6.4 billion in assets, produced negative annualized returns of 6.6% for the last 12 months,
26.14% for the past three years and 0.31% for five years.
That’s quite woeful compared to the S&P 500. The index posted positive annualized returns of 23.56% for one year, 10.32% for three years, and 14.97% for five years. Ark Innovation’s numbers also fall well shy of Wood's goal for annual returns of at least 15% over five-year periods.
Cathie Wood’s investment strategy
Her investment philosophy is pretty simple. Ark ETFs usually purchase emerging-company stocks in the high-tech categories of artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics. Wood maintains that companies in those categories will change the world.
Of course, these stocks are quite volatile, so the Ark funds’ values frequently fluctuate up and down. Wood frequently adds to and subtracts from her top names.
Related: Cathie Wood sells $25 million of a lagging tech stock
Investment research titan Morningstar offers a harsh assessment of Wood and Ark Innovation ETF. Investing in young companies with slim earnings “demands forecasting talent, which ARK Investment Management lacks,” Morningstar analyst Robby Greengold wrote in March.
The potential of Wood’s five high-tech platforms listed above is “compelling,” he said. “But the firm’s ability to spot winners and manage their myriad risks is less so…. It has not proved it is worth the risks it takes.”
Ark's non-traditional stock picks
This isn’t your father’s investment portfolio. “Results range from tremendous to horrendous” for Wood’s young, often unprofitable stocks, Greengold said.
Wood has defended herself from Morningstar’s criticism. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she told Magnifi Media by Tifin in 2022.
Related: Cathie Wood unloads shares of rebounding tech titan
“We do not fit into their style boxes. And I think style boxes will become a thing of the past, as technology blurs the lines between and among sectors.”
However, some of Wood’s customers apparently agree with Morningstar. Over the past 12 months, Ark Innovation ETF suffered a net investment outflow of $2.2 billion, according to ETF research firm VettaFi.
Cathie Wood sells Tesla stock
On July 18, ARK Next Generation Internet ETF (ARKW) dumped 32,199 shares of electric vehicle titan Tesla (TSLA) , valued at $8 million.
Wood has been an evangelist of Tesla founder Elon Musk and his clean-car goals for years. The stock is Ark Innovation’s largest holding.
In June, Wood predicted Tesla shares would hit $2,600 in 2029. That would represent a more than 10-fold increase from Friday’s quote of $240.
The company’s stock has soared 60% over the past three months despite less-than-stellar news.
Tesla deliveries fell 4.8% in the second quarter from a year ago, the second consecutive decline.
Fund manager buys and sells:
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However, the 443,956-vehicle total for the second quarter exceeded the 439,302 average Wall Street estimate by 1%. And deliveries climbed 15% from 386,810 vehicles in the first quarter.
Related: Tesla Q2 deliveries surprise sends stock soaring despite China slump
Vehicle production fell 14% from a year earlier.
Tesla didn’t give any color behind the figures, but will presumably do so at its scheduled earnings release July 23.
Meanwhile, Musk confirmed on July 15 that Tesla is delaying unveiling its robo-taxi, which had been targeted for Aug. 8, to incorporate a design change. The event is now planned for October, Bloomberg reported.
Regardless of Tesla’s news, the stock’s gain allowed Wood to take profits. And that’s what she did.
Related: Veteran fund manager sees world of pain coming for stocks
