Celebrity money manager Cathie Wood has said throughout this year that the decline of her favored young, technology stocks has created buying opportunities.
And the chief executive of Ark Investment Management took advantage of what she saw as one Nov. 8. But she also continued selling another young technology stock.
Wood’s buying came amid the cryptocurrency turmoil that included an agreement for Binance, the world’s biggest cryptocurrency exchange, to take over Sam Bankman-Fried’s FTX.com. Wood is a major evangelist for cryptocurrencies.
Ark funds played the Nov. 8 volatility by snagging 420,949 shares of Coinbase Global COIN, the U.S.’ biggest cryptocurrency exchange. That stash was worth $21.4 million as of the Nov. 8 close.
Coinbase stock has plunged 81% so far this year, as cryptocurrencies and their infrastructure have hit major speed bumps.
On the selling side, Ark funds dumped 1,020,738 shares of online securities brokerage Robinhood Markets HOOD. That was worth $12.5 million as of the Nov. 8 close.
Wood also sold Robinhood shares Nov. 4. She may have lost faith in Robinhood, or she may just have taken profits if she bought at lower levels.
She snapped up Robinhood stock Oct. 28, when it closed higher than Nov. 8, but that wasn't her first purchase.
Wood’s Underperformance
Ark’s ETFs have tumbled this year, as their tech holdings suffered from weak earnings. Wood has defended herself by noting that she has a five-year investment horizon.
And the five-year track record of her flagship Ark Innovation ETF (ARKK) could indeed give investors comfort up to May 9. The fund’s five-year return beat that of the S&P 500 until then. But the five-year annualized return of Ark Innovation totaled only 1.5% through Nov. 8, far behind the S&P 500’s 10.03% return.
The fund’s performance also falls well below Wood’s goal for annualized returns of 15% over five-year periods.
Ark Innovation has dropped 64% so far this year, and it’s down 79% from its February 2021 peak.
The $6.8 billion fund’s underperformance may finally be starting to push investors away. Ark Innovation suffered a net outflow of $407 million in the three months through Nov. 7, according to VettaFi, an ETF research firm. But it has still registered an inflow of $1.25 billion year to date.
Fans & Critics
You might wonder why so many investors have stuck with Wood, despite her mediocre returns. The fact that she had one spectacular year certainly helps. Ark Innovation ETF skyrocketed 153% in 2020.
Also, Wood has become something of a rock star in the investment world, appearing frequently in the media. She is clearly an articulate advocate for her investment ideas, explaining financial concepts in ways that novices can understand.
Still, Wood has her detractors. On March 29, Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation.
“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.
Wood countered Greengold’s points in an interview with Magnifi Media by Tifin. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said.
