Cathie Wood, chief executive of Ark Investment Management, made familiar trades of two big-name stocks Friday.
Ark funds bought 119,429 shares of Coinbase Global (COIN), the largest U.S. cryptocurrency exchange, valued at $6.4 million as of Friday’s close.
The company’s shares have tumbled 61% over the past 12 months amid turmoil in the cryptocurrency market. But they have rebounded 68% this year, helped by bitcoin’s recovery. Coinbase is the sixth biggest holding in Wood’s flagship Ark Innovation ETF (ARKK).
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Meanwhile, Ark funds sold 95,836 shares of cloud-communications company Twilio (TWLO), valued at $6.2 million as of Friday’s close.
The stock has dropped 50% over the last year, but has jumped 29% year to date, following the path of many other technology stocks. Twilio is Ark Innovation’s ninth largest holding.
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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 33% during that period and 77% from its February 2021 peak.
Still, the fund has bounced back 18% 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 $6.7 billion-asset Ark Innovation was negative 3.08% through March 10, compared with positive 8.64% 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 suffered a net investment outflow of $135 million during the past five days, according to ETF research firm VettaFi. But it enjoyed a $115 million inflow over the last year.
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.
