Cathie Wood, head of Ark Investment Management, actively trades her favorite stocks, picking her spots whether the prices are going up or down and showcasing her belief in the long-term potential of the companies she selects.
That’s what she has done recently. The asset manager bought into a stock for eight consecutive trading sessions.
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After her strategy underperformed the market in 2024, it's proving effective in 2025:
The flagship Ark Innovation ETF (ARKK) has returned 6% this year as of Feb. 21, surpassing the S&P 500 Index and the Nasdaq Composite, which have gained roughly 2% and 1%, respectively.
Opinions on Wood vary. To her supporters, she is a visionary, especially with a remarkable 153% return in 2020. However, her longer-term performance has raised doubts about her aggressive approach.
As of Feb. 21, Ark Innovation ETF, with $6.3 billion under management, has delivered an annualized three-year return of negative 2.42% and a five-year return of 1.03%.
In comparison, the S&P 500 index has a three-year annualized return of 13.14% and a five-year return of 14.27%.
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.
Investment research firm Morningstar criticized Wood and her ETFs last year.
Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income
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.”
The potential of Wood’s five high-tech platforms listed above is “compelling,” he said. “But the firm’s ability to spot winners and manage their myriad risks is less so. … It has not proved it is worth the risks it takes.”
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 25% and 28% 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. According to ETF research firm VettaFi, Ark Innovation ETF has seen a net outflow of $2.6 billion over the past year.
Cathie Wood bought $11 million of Beam Therapeutics
Wood recently bought Beam Therapeutics Inc. (BEAM) for eight consecutive sessions.
From Feb. 11 to 21, Wood’s Ark Innovation ETF bought 364,120 shares of Beam Therapeutics. That purchase came as the stock rose more than 14% over the period.
That chunk of stock was valued at roughly $11.1 million in total as of Feb. 21’s close.
Beam is the Cambridge, Mass., developer of precision genetic medicines using AI-driven gene-editing techniques.
Cathie Wood has said health care is the "most underappreciated application of AI."
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“We’ve got 37 trillion cells in our body, and they’re going to be sequenced as we’re looking for cures,” Wood told CNBC on Feb. 4.
“I think the most underappreciated application of AI is health care. I think health care is responsible for an incredible amount of storage out there right now. Data is the name of the game.”
Beam is scheduled to report earnings on Feb. 25. According to Zacks Investment Research, the consensus EPS forecast for the quarter is a loss of $1.10. For the year-earlier quarter, the company earned $1.73 a share.
Last month, investment firm Cantor Fitzgerald upgraded Beam Therapeutics to overweight from neutral without a price target, thefly.com reported.
Fund manager buys and sells:
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- Cathie Wood buys $37 million of surging tech stock
The investment firm has "renewed confidence" in the Beam-302 clinical-trial program and sees potential for more than 40% upside on a positive data readout for the program.
As of Feb. 21, Beam ranked 15th among Ark Innovation ETF’s holdings, accounting for 2.39% of the portfolio, according to stockanalysis.com.
The stock is up 22.7% year-to-date. It lost 9% last year.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
