Ark Investment Management's chief, Cathie Wood, often focuses on technology stocks, betting on their disruptive potential in the long run. She likes to buy them when the prices fall.
That’s what she did this week, in particular acquiring a tech stock that has given up nearly 20% year-to-date.
Wood’s flagship fund, Ark Innovation ETF (ARKK) , underperformed the market in 2024.
Although it outpaced the S&P 500 and Nasdaq Composite in January and early February, ARKK is down more than 2% year-to-date as of Feb. 25, while the Nasdaq Composite and S&P 500 have returned -1.3% and 1.2%, respectively.
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Opinions on Wood vary. She is a visionary to her supporters, especially with a remarkable 153% return in 2020. However, her longer-term performance has raised doubts about her aggressive approach.
As of Feb. 25, Ark Innovation ETF, with $6.3 billion under management, has delivered an annualized three-year return of negative 6.18% and a five-year return of 1.19%.
In comparison, the S&P 500 index has a three-year annualized return of 12.46% and a five-year return of 15.53%.
Cathie Wood’s investment strategy explained
Wood’s investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values.
Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income
Investment research firm Morningstar criticized Wood and her ETFs last year.
Investing in young companies with slim earnings “demands forecasting talent, which Ark Investment Management lacks,” wrote Morningstar analyst Robby Greengold. “Results range from tremendous to horrendous.”
Still, some analysts say that things might change as Donald Trump returns to the U.S. presidency.
Todd Sohn, ETF and technical strategist at Strategas Securities, noted that since Trump's reelection in November, Ark Innovation ETF and Ark Next Generation Internet ETF (ARKW) have seen significant gains.
Since Nov. 5 the two ETFs have returned 16% and 20% respectively.
"We still strongly believe that ARKW is about as good a proxy for Trump 2.0 as one might find, with heavy exposure to bitcoin, crypto derivatives, Tesla and defense," Cohn told MarketWatch.
Wood recently expressed optimism about a shift to looser regulation under Trump’s presidency.
“What the new administration is doing is changing fear with optimism,” Wood told Bloomberg in January. It’s “highly underestimated how important deregulation is going to be to unleashing animal spirits. We are pretty excited about this.”
Not all investors share Wood's confidence. Data from ETF research firm VettaFi shows that the Ark Innovation ETF has faced $2.6 billion in net outflows over the past year, including $16.3 million in the pst five days.
Cathie Wood bought $1.8 million of Datadog stock
On Feb. 24, Wood’s Ark Next Generation Internet ETF bought 15,597 shares of Datadog (DDOG) .
That chunk of stock was valued at roughly $1.8 million as of Feb. 25’s close.
Wood last bought Datadog stock in October, when she added 52,000 shares.
Datadog produces software that monitors and secures an enterprise's entire technology infrastructure.
The stock underperformed the Nasdaq Composite Index in 2024 and has tumbled for nine straight trading sessions since Feb. 13, following 2025 revenue guidance that came in below analysts' expectations.
Related: Analyst revisits Palantir stock price target after slump
Datadog earnings for the December quarter were 49 cents a share, beating analysts' estimate of 43 cents. Revenue climbed 25% to $738 million compared with the consensus estimate of $714.5 million.
For 2025, however, Datadog projects $3.185 billion of revenue at the midpoint, short of Wall Street’s $3.24 billion estimate. The company also guided to adjusted earnings per share between $1.65 and $1.70, below analysts’ expectation of $1.98.
Several analysts lowered their price targets on Datadog after the report.
Wells Fargo downgraded Datadog to equal weight from overweight with a price target of $140, down from $152.
The analyst said that with slowing growth, rising investments, and uncertainty around AI contributions, it would be "hard to sustain a premium" valuation for Datadog, thefly.com reported.
Fund manager buys and sells:
- Billionaire Stanley Druckenmiller exits 2 tech giants
- Warren Buffett raises eyebrows with new beverage stock pick
- Cathie Wood buys $37 million of surging tech stock
As of Feb. 26, Datadog trades at a forward price-to-earnings multiple of 64.1, more than double that of AI star Nvidia.
According to stockanalysis.com, Datadog accounts for 0.91% of the ARKW portfolio, ranking 34th.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
