In recent years, Ark Investment Management CEO Cathie Wood has become the face of money management. Mama Cathie, as her fans call her, rose to fame after a 153% 2020 return and many media appearances presenting her investment strategy.
She has poorer long-term returns. Wood's $7.8 billion Ark Innovation ETF ARKK has returned 31% in the past year. Unfortunately, the annualized return has been negative 25% for three years and positive 2% for five.
The S&P 500 returned 34% for one year, 12% for three, and 15% for five, so that's not impressive. Wood targets 15% yearly returns over five years. Her investment approach makes sense. Ark ETFs buy young, small-company equities in AI, blockchain, DNA sequencing, energy storage, and robotics. She thinks those regions will affect the global economy.
Ark funds experience rollercoasters since these stocks are volatile. Wood often swaps her top names. Morningstar is harsh on Wood and Ark Innovation ETF. “ARK Innovation has dubious ability to successfully navigate the challenging territory it explores,” Morningstar analyst Robby Greengold wrote last year.
Wood's five high-tech platforms are “compelling,” he claimed. Ark is less adept in picking winners and managing their many dangers. Since 2014, the strategy's booms and busts have produced lackluster returns and high volatility.
Not an investing 101 portfolio. The method selectively invests in stocks with low current earnings, high valuations, and strongly connected stock prices, stated Greengold. The enormous volatility emphasizes their exceedingly uncertain futures.
Morningstar criticized Wood, but she defended herself. In 2022, she told Magnifi Media by Tifin, “I do know there are companies like that one [Morningstar] that do not understand what we're doing.” “We don't fit their style. I anticipate style boxes will disappear as technology softens sector lines.” Wood customers seem to agree with Morningstar. Ark Innovation lost $1.9 billion over its 12-month climb.
Ark funds sold 779,972 Twilio (TWLO) shares Monday through Wednesday. Wednesday closed with that treasure at $48.3 million. The stock fell 14% since Feb. 14, when earnings missed expectations. Wood may have reduced her position to avoid losses.
Ark funds acquired 249,420 Moderna (MRNA) shares this week, the biotech company known for its covid vaccination. By Wednesday's close, the acquisitions totaled $25.7 million.
Moderna shares have decreased 32% in the past year as covid vaccine revenue has declined. Wood may consider this as a purchase. Morningstar analyst Karen Andersen also thinks Moderna stock is worth $227, twice Thursday's $105 price. Finally, Ark funds sold 162,704 shares of Block (SQ), previously Square, which owns Cash App. By Wednesday's close, the cat was worth $13.3 million.
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