Celebrity money manager Cathie Wood has been one of cryptocurrency’s biggest proselytizers for a long time, predicting in January that bitcoin will hit $1 million by 2030.
And the chief executive of Ark Investment Management has put her money where her mouth is this week, taking advantage of cryptocurrency weakness to dive deeper into the space. Bitcoin has plunged 65% this year and recently traded at $16,624.
On Nov. 14-15, Ark Next Generation Internet ETF (ARKW) bought 588,586 shares of Grayscale Bitcoin Trust (GBTC), a bitcoin exchange-traded product. The stash was worth $5.4 million as of the Nov. 16 close.
It was Ark’s first acquisition of Grayscale since July 2021, according to Ark Invest Daily Trades website.
On Nov. 16, Ark funds snagged 245,622 shares of Coinbase Global (COIN), the country’s biggest cryptocurrency exchange, continuing the buying of recent weeks. The latest purchase was worth $12 million as of the Nov. 16 close.
Also on Nov. 16, Ark Fintech Innovation ETF (ARKF) snapped up 140,877 shares of Silvergate Capital (SI), a cryptocurrency-service-oriented bank, worth $4.4 million as of the Nov. 16 close.
Wood’s Underperformance
Meanwhile, 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 3% through Nov. 16, far behind the S&P 500’s 10.83% 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 61% so far this year and is down 77% from its February 2021 peak.
But the $8 billion fund’s underperformance hasn’t pushed investors away. Ark Innovation has registered a net inflow of $1.78 billion year to date.
Cathie Wood Has Fans and 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 intelligent and articulate, explaining financial concepts in ways that novice investors 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.
