Famed money manager Cathie Wood, chief executive of Ark Investment Management, bought one of her big-name holdings and sold another Monday, replicating trades of recent weeks.
Ark Next Generation Internet ETF (ARKW) purchased 219,883 of online securities brokerage Robinhood Markets (HOOD), valued at $2.1 million as of Monday’s close. Wood last snagged the stock Feb. 10.
From November through January she dumped Robinhood shares. Robinhood is the 18th biggest holding in Wood’s flagship Ark Innovation ETF (ARKK).
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The stock has slid 12% over the past year amid muted stock-trading from individuals as the equity market dropped. But Robinhood shares have rebounded 19% year to date, helped by rising interest income and the overall market recovery.
Robinhood puts some of its customers’ uninvested cash into bank accounts to earn interest revenue. And the Federal Reserve has pushed interest rates sharply higher over the past year.
Meanwhile, Ark funds dumped 70,035 shares of Exact Sciences (EXAS) Monday, valued at $4.7 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 35% thus far in 2023, buoyed by strong earnings and the overall market’s rally. Shares have slipped 6% over the past year.
Monday represented the fourth day in a row that Wood has pared her Exact Sciences position. Ark has shed more than 3 million Exact Sciences shares since the beginning of this year. But the company is still the fourth biggest holding in Ark Innovation.
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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 32% during that period and 75% from its February 2021 peak.
Still, the fund has bounced back 26% 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 negative 0.35% through March 6, compared with positive 10.14% 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 $14 million during the past five days, and $538 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.
