Cathie Wood, chief executive of Ark Investment Management, generally chases after young technology companies, but on Monday, she went old school.
Ark Next Generation Internet ETF (ARKW) bought 40,957 shares of software titan Microsoft (MSFT), valued at $11.1 million as of Monday’s close. That was the ETF’s first purchase of the tech bellwether.
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For Wood, buying shares of Microsoft is like you or I shifting some of our portfolio into cash during a time of danger.
At one point last year, when her young tech stocks were going down the tubes, she mused that perhaps she should have bought blue-chip stocks like Alphabet to stabilize her portfolio.
Ark funds Monday also snagged 180,841 shares of Teladoc (TDOC), the phone/video healthcare provider, valued at $4.4 million as of that day’s close. The company gained great notoriety early in the pandemic, when people couldn’t go to their doctors’ office.
But the trend faded over the past year, as people returned to their doctors’ offices, and Teladoc shares dropped 63% during that period. Still, they have rebounded 8% so far this year in line with other tech stocks. Teladoc is the ninth largest holding in Wood’s flagship Ark Innovation ETF (ARKK).
On the selling side, Ark funds unloaded 118,602 shares of Exact Sciences (EXAS), valued at $7.5 million as of Monday’s close. The company is a medical diagnostics provider famous for its Cologuard at-home colon cancer test.
Exact Sciences stock has climbed 34% thus far in 2023, buoyed by strong earnings. But it has eased 1% over the last year. 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.
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 37% during that period and 75% from its February 2021 peak.
Still, the fund has bounced back 29% 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 $7.4 billion-asset Ark Innovation was negative 0.93% through March 20, compared with positive 9.69% 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 $308 million during the past five days but suffered an $164 million outflow over the last year, according to ETF research firm VettaFi.
