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Katie Wood, president of Ark Investment Management, likes to take advantage of market dips to buy her favorite stocks at bargain prices — generally emerging technology stocks.
The market has given it plenty of opportunities in recent weeks, with the tech-dominated Nasdaq Composite down 10% since July 10.
Technology stocks have been dragged down by the AI craze, some corporate earnings that fell short of high expectations, and concerns about economic weakness.
The decline in technology stocks has drawn Wood to the market this week.
Cindy Ord/Getty Images for Bloomberg Businessweek
Mixed opinions about Wood
The investment community has mixed reviews of the woman who may be the country’s most famous investor since Warren Buffett. Supporters say she’s a technology visionary, while critics say she’s just an average money manager.
Wood (also known as Mama Kathy to her followers) has achieved massive fame after posting a staggering 153% return in 2020 and making clear presentations of her investment philosophy in numerous media appearances.
Related: Katie Wood Dumps $8 Million From Tech Stocks
But its longer-term performance has been less impressive. Wood’s flagship fund, Ark Innovation ETF (Binder) General Electric, with $5.3 billion in assets, has had negative annual returns of 8% over the past 12 months, 30% over three years, and 1% over five years.
This is very unfortunate compared to the S&P 500. The index has posted positive annual returns of 20% over one year, 8% over three years, and 14% over five years. Arc Innovation’s numbers are also well below Wood’s goal of at least 15% annual returns over five-year periods.
Katie Wood’s Direct Strategy
Her investment philosophy is simple. Ark’s ETFs typically buy shares of startups in high-tech categories like artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics. Wood argues that companies in these categories will change the world.
Naturally, these stocks are very volatile, so the values of Ark’s funds frequently go up and down. Wood adds and subtracts from its major names frequently.
Investment research giant Morningstar has a scathing assessment of the Wood & Ark Innovation ETF. In March, Morningstar analyst Robbie Greengold wrote that investing in startups with weak earnings “requires a knack for forecasting, which Ark Investment Management lacks.”
The potential of the five technology platforms Wood mentioned is “compelling,” he said, “but the company’s ability to spot winners and manage the many risks it faces is far less so… It has not proven to be worth the risks it is taking.”
Related: Vanguard Updates Its Outlook on Popular Stocks and Bonds Strategy
This is not your father’s investment portfolio. “The results range from phenomenal to horrific” for Wood’s young and often unprofitable stocks, Greengold says.
Wood defended herself against Morningstar’s criticism. “I know there are companies like that out there,” she said. [Morningstar] “Those who don’t understand what we do,” she told Magnifi Media by Tifin in 2022.
“We don’t fit into their stereotypes. I think their stereotypes will become a thing of the past, as technology blurs the lines between different sectors.”
Some of Wood’s clients seem to agree with Morningstar. Over the past 12 months, the Ark Innovation ETF has seen a net inflow of $2.3 billion, according to exchange-traded fund research firm VettaFi. Ark Innovation’s total assets have fallen 12% in the past 15 days alone.
Katie Wood Goes on a Buying Spree
Wood’s purchases this week included retail and technology giant Amazon, We informed you earlier..
Ark funds also snapped up 249,039 shares of the video streaming platform. year (For this year) This week, it was worth $13.8 million at Thursday’s close.
Roku is the second-largest contributor to the Ark Innovation ETF after Tesla. Roku’s stock is down 15% since July 17.
Morningstar analyst Matthew Dolgin wrote that the company’s second-quarter earnings report was “as encouraging as it gets.”
“Utilization and engagement rates continued to grow impressively, and the company maintained positive free cash flow and adjusted EBITDA. [earnings before interest, taxes, depreciation and amortization] “Since mid-2023.”
The fund manager buys and sells:
- Warren Buffett’s Berkshire to divest major bank
- Morningstar Reveals High Value Stocks to Own
- Katie Wood is flip-flopping on struggling tech stocks
Ark Funds acquired 117,617 shares of Coinbase Global (currency) the largest cryptocurrency exchange in the United States, was worth $22.6 million at the close on Thursday.
Coinbase is the third-largest contributor to the Ark Innovation ETF. The stock has lost 26% since July 22.
The company’s second-quarter earnings were “a little worse than we expected,” Morningstar analyst Michael Miller wrote.
Revenue more than doubled (108%) year-over-year but fell 13% from the first quarter amid weak volatility in the cryptocurrency market. Coinbase swung to a profit of $36 million in the second quarter from a loss of $97 million a year earlier.
Ark Funds acquired 1.29 million shares of the online brokerage firm. Robin Hood Markets (I stumbled) It was valued at about $22.9 million at Thursday’s close.
Robinhood is the eighth-largest shareholder in Ark Innovation. The stock is down 27% since July 16.
The company’s net revenue was $682 million in the second quarter, up 40% from a year earlier amid a jump in cryptocurrency and options trading.
Net income rose to $188 million, or 21 cents per share, from $25 million, or 3 cents per share, a year earlier.
Related: Veteran Fund Manager Sees a World of Pain Coming for Stocks
