Celebrity money manager Cathie Wood has been a bitcoin evangelist for quite some time, predicting in January that the digital currency will hit $1 million by 2030.
The chief executive of Ark Investment is certainly walking the walk now, taking advantage of bitcoin’s 65% plunge so far this year to dive in. Bitcoin recently traded at $16,854.
On Nov. 14, ARK Next Generation Internet ETF (ARKW) bought 315,259 shares of Grayscale Bitcoin Trust, a bitcoin exchange-traded product. The stash was worth $2.8 million as of the Nov. 14 close.
It was Ark’s first acquisition of Grayscale since July 2021, according to Ark Invest Daily Trades website.
Wood was likely attracted to Grayscale by the fact that its discount to the value of actual bitcoin hit a record high of 40% Monday.
She bought $100,000 worth of bitcoin when it traded at $250, she told the What Bitcoin Did Podcast in October. As of Nov. 15, that would be worth $6.7 million.
Cathie 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 4.01% through Nov. 14, far behind the S&P 500’s 10.89% 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 58% so far this year, and it’s down 75% from its February 2021 peak.
The $8.1 billion fund’s underperformance hasn’t pushed investors away. Ark Innovation has registered a net inflow of $1.72 billion year to date.
Fans & Critics Have Concerns About Ark, Wood
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.
