It was ground hog day all over again for Cathie Wood, chief executive of Ark Investment Management, Wednesday, as she bought and sold familiar names.
Ark funds shed 508,792 shares of cloud-communications company Twilio (TWLO), valued at $32.7 million as of Wednesday’s close.
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The stock has dropped 56% over the last year, but has jumped 29% year to date, helped by a strong fourth-quarter earnings report.
Wood has dumped more than 1 million shares of Twilio this month, but it’s still the 13th largest holding in her flagship Ark Innovation ETF (ARKK).
Ark funds bought 122,547 shares of Block (SQ), valued at $9.2 million as of Wednesday’s close.
Block has slumped 42% over the past year amid the decline in financial services and technology stocks. But it has climbed 18% so far this year after strong revenue growth in the fourth quarter. The company is Ark Innovation’s fifth biggest holding.
Finally, Ark Innovation unloaded 18,954 shares of Exact Sciences (EXAS) Wednesday, valued at $1.3 million as of that day’s close. The company is a medical diagnostics provider famous for its Cologuard at-home colon cancer test.
Exact Sciences stock has climbed 28% thus far in 2023 and 3% over the last year, buoyed by strong earnings. Ark has shed more than 3 million of the company’s shares since the beginning of this year. But Exact Sciences is still the fifth biggest holding in Ark Innovation.
Cathie Wood’s Lagging Returns
Meanwhile, Wood’s performance hasn’t exactly lit the investment world on fire over the past year, as her young technology stocks have slumped. Ark Innovation has descended 38% during that period and 76% from its February 2021 peak.
Still, the fund has bounced back 24% so far this year, as tech stocks have rebounded in general.
Mama Cathie, as Wood is known to her fans, defends her strategy by noting that she has a five-year investment horizon. But the five-year annualized return of $7.8 billion-asset Ark Innovation was negative 0.75% through March 16, compared with positive 9.46% for the S&P 500.
The fund’s performance also doesn’t come close to Wood’s goal for annualized returns of 15% over five-year periods.
Still, Ark Innovation enjoyed a net investment inflow of $246 million during the past five days and a $453 million inflow over the last year, according to ETF research firm VettaFi
What Draws Investors to Wood
You might wonder why so many investors have stuck with Wood. The fact that she had one spectacular year certainly helps. Ark Innovation skyrocketed 153% in 2020.
Also, Wood has become something of a rock star in the investment world, appearing frequently in the media. She explains financial concepts in ways that novice investors can understand.
Wood does have her detractors. Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation last year.
“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.
Wood, of course, begged to differ. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said in an interview with Magnifi Media by Tifin.
