Famed money manager Cathie Wood, chief executive of Ark Investment Management, pared some of her familiar names Wednesday, in small amounts.
Her biggest trade involved Exact Sciences (EXAS). Wood’s flagship Ark Innovation ETF (ARKK) unloaded 39,560 of the company’s shares, valued at $2.5 million as of Wednesday’s close
Exact Sciences is a medical diagnostics provider famous for its Cologuard at-home colon cancer test. The stock has climbed 26% thus far in 2023, buoyed by strong earnings and the overall market’s January rally.
That said, the shares have descended 17% over the past year. Wood has unloaded more than 2 million Exact Sciences shares in 2023. But the company is still the fourth biggest holding in Ark Innovation.
That fund also shed 19,609 shares of online sports gambling platform DraftKings (DKNG), valued at about $359,000 as of Wednesday’s close.
The stock has lost 23% in the past year but has jumped 59% year to date amid strength in the sports-gambling market. DraftKings is the 11th biggest holding for Ark Innovation ETF.
Finally, in a minuscule trade, Ark Next Generation ETF (ARKW) shed 100 shares of Adobe (ADBE), which provides content creation software, including Adobe Acrobat. The kitty was valued at $3,275 as of Wednesday’s close.
Adobe shares have suffered from a Bloomberg report last week that the government is working on an antitrust lawsuit to dash Adobe’s planned $20 billion acquisition of Figma, a smaller player in the industry.
Adobe stock has dipped 3% so far this year and 30% over the past year amid concern about its growth prospects.
Ark's Lagging Performance
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 43% during that period and 76% from its February 2021 peak.
Still, the fund has bounced back 23% 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 $7.5 billion Ark Innovation was just 0.23% through March 1, compared with 10.01% 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.
Ark Innovation enjoyed a net investment inflow of $145 million during the past five days, and $687 million 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.
