Cathie Wood snares $40 million of roughed-up tech stocks

Should you follow Cathie Wood at all, you recognize the executive of Ark Investment Management likes to double down on her stock positions when they refuse.

And that’s exactly what she did this week.

Investors and analysts are split in their opinions of Wood, in all probability the country’s best-known investor after Warren Buffett. Boosters argue she’s a technology guru, while critics argue she’s merely a mediocre money manager.

Wood (Mama Cathie to her acolytes) exploded to fame after a whopping return of 153% in 2020 and clear explanations of her investment strategy in a spread of media appearances.

But her longer-term performance doesn’t exactly challenge Buffett. Wood’s flagship Ark Innovation ETF (ARKK) , with $5.6 billion in assets, produced annualized returns of 2% for the past one year, negative 28% for 3 years and positive zero.four% for 5 years.

That doesn’t come almost in regards to the S&P Five hundred. The index registered positive annualized returns of 27% for 3 hundred and sixty five days, 10% for 3 years, and 15% for 5 years.

Cathie Wood’s straightforward strategy

Her investment philosophy is without problems understood. Ark ETFs most often purchase emerging-company stocks within the high-tech categories of synthetic intelligence, blockchain, DNA sequencing, energy storage, and robotics.

Wood maintains that companies in those categories will change the area. Of course, these stocks are quite volatile, so Ark funds’ values often oscillate widely.

Renowned investment research firm Morningstar is highly essential of Wood and Ark Innovation ETF.

Related: Cathie Wood snatches $Eight million of battered tech stock

Investing in young companies with slim earnings “demands forecasting talent, which Ark

Investment Management lacks,” Morningstar analyst Robby Greengold wrote in a commentary. “Results range from tremendous to horrendous.”

Morningstar portfolio strategist Amy Arnott calculated that Ark Innovation destroyed $7.1 billion of shareholder wealth from its 2014 inception through 2023. That put the ETF as No. three on her wealth destruction list for mutual funds and ETFs worldwide the last decade.

David Loeb’s criticism of Wood

Big name investor David Loeb, chief executive of 0.33 Point, isn’t so high on Wood either. After she wrote a commentary defending her investment philosophy in 2022, he let fly on Twitter.

“Anyone teaching a value investing class or one on investment psychology should use this memo as a treatise to study the mindset of stonk hodlers,” he wrote. “Stonk hodlers” is slang for investors who hold (hodl) onto stocks (stonks) too long.

“Note the disparaging comments on luddites who have a seriously look into archaic measures of value like cash drift as short term traders,” Loeb continued.

Related: Cathie Wood buys $6.6 million of two rising tech stocks

Wood defended herself in a July 2024 posting on Ark’s web page. She acknowledged that “the macro environment and some stock picks have challenged our updated performance.”

But her “commitment to investing in disruptive innovation has now no longer wavered,” Wood said. Many of Ark’s stocks are in “rare, deep value territory,” she said.

And if interest rates fall, as experts expect, her “disruptive innovation strategies should benefit disproportionately, as they did within the fourth quarter of 2023 and worldwide the covid-19 crisis.”

A couple of of Wood’s customers it sounds as if accept as true with the critics. Over the last one year, Ark Innovation ETF suffered a net investment outflow of $2.four billion, in line with ETF research firm VettaFi.

Cathie Wood purchases

Wood every so often buys blue-chip tech stocks, adding ballast to buffer against tech-stock downturns.

On Sept. 9, Ark Self reliant Technology & Robotics ETF (ARKQ) snatched 20,147 shares of retail/tech titan Amazon (AMZN) . The kitty became valued at $three.5 million as of that day’s close.

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Amazon stock then traded at $175.40, down 12% from its record high of $200 July 2. It stood at $186.eighty five Sept. 13.

Dan Davidowitz, co-manager of $6.9 billion Polen Growth Fund (POLRX) , is also bullish on Amazon, the fund’s biggest holding.

“It has quite an awful lot of the foremost competitive advantages on this planet,” he told TheStreet.com in a conversation soon to be published as a component of our expert interview series. “It has underappreciated earnings growth and a relaxed valuation.”

Amazon’s business unit, AMD, DraftKings and Coinbase

Davidowitz discussed each and each of the company’s three business units: E-commerce; Amazon Web Services and products, its cloud division; and advertising.

Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income

Margins are making improvements to for all three divisions, and the fastest growth is coming where margins are very best, he said. The full company’s profit margin is 10%, above pre-covid levels. “And there’s an exceptional deal of headway for increases.”

In other noteworthy purchases by Wood this week, Ark Innovation acquired ninety three,258 shares of semiconductor dressmaker Progressed Micro Devices (AMD) . The cache became valued at $14 million as of Thursday’s close.

Ark Innovation snagged 359,386 shares of online sports gambling platform DraftKings (DKNG) , valued at $13.9 million as of Thursday’s close.

And on Wednesday, Ark funds scooped up Fifty three,708 shares of Coinbase Global (COIN) , the main U.S. cryptocurrency exchange. The cache became valued at $Eight.four million as of that day’s close.

The author owns shares of Amazon.

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