The Nasdaq Composite has gained 23% year-to-date, and Cathie Wood, head of Ark Invest, continues to make strategic moves. Known for her bold approach, Wood often capitalizes on opportunities to lock in gains during stock surges, and this week was no exception.
Investors and market analysts are divided on Wood’s reputation. Some praise her as a visionary in the tech investment world, while others argue her performance lacks consistency. With a stellar 153% return in 2020, Wood earned a dedicated following and the affectionate nickname “Mama Cathie” from fans, largely due to her frequent media presence and accessibility.
However, her track record in the long term doesn’t compare to legendary investors like Warren Buffett, whose Berkshire Hathaway has delivered an average of 20% annualized returns since its inception. In contrast, Wood’s flagship Ark Innovation ETF (ARKK), managing $5.6 billion in assets, has fallen 10% in 2024 and posted a negative 26% return over the past three years, with only a 3% gain over five years. By comparison, the S&P 500 has delivered positive returns, with a 36% annualized return for one year, 11% for three years, and 16% for five years.
Despite these challenges, Wood continues to actively trade within her funds. Her investment strategy focuses on disruptive technologies, particularly in areas like artificial intelligence, genomics, and blockchain. While this strategy has long-term potential, it also leads to significant short-term volatility, often causing wide swings in the value of Ark’s funds.
Morningstar, a well-known investment research firm, has been critical of Wood’s performance, particularly her focus on emerging companies with modest earnings. Analyst Robby Greengold has commented that Ark’s approach requires a high degree of forecasting accuracy, something he believes Ark Investment Management has struggled to demonstrate consistently.
In a July 2024 statement on Ark’s website, Wood acknowledged the challenges in recent performance but reiterated her commitment to disruptive innovation. She emphasized that many of her portfolio companies now represent “deep value” opportunities.
However, some investors remain unconvinced, as the Ark Innovation ETF saw net outflows totaling $2.55 billion over the past year, according to ETF research firm VettaFi.
Between October 11 and 16, Ark Invest sold 391,668 shares of Robinhood Markets (HOOD), worth approximately $10.5 million based on the October 18 closing price. Robinhood, which went public in July 2021, saw its stock price peak at $85 shortly after its IPO, but it later tumbled as stimulus payments ended and trading activity waned. By mid-2022, the stock had dropped to around $7.
Despite its previous struggles, Robinhood has staged an impressive comeback, gaining 110% this year and trading at $26.80 on October 18. The resurgence was largely driven by strong second-quarter earnings in August, which saw the company report 21 cents per share and $682 million in revenue, surpassing Wall Street’s estimates. This strong performance has pushed Robinhood’s shares up over 50% since the earnings announcement.
Wood’s recent sale may reflect a strategy of taking profits after Robinhood’s significant recovery. As of October 18, Ark Innovation still holds $270 million worth of Robinhood stock. Investors are now looking ahead to Robinhood’s upcoming Q3 earnings report, scheduled for October 30.