The prominent asset manager Cathie Wood, chief executive of Ark Investment Management, bought shares of online content services provider Adobe Systems (ADBE) Jan. 9.
That may be Ark’s first trade in the stock for months. She also repeated her Jan. 6 trades of purchasing electric vehicle titan Tesla (TSLA) and selling semiconductor giant Nvidia (NVDA).
Ark Next Generation Internet ETF (ARKW) snatched 11,633 shares of Adobe, valued at $4 million as of the Jan. 9 close. Adobe shares have dropped 33% over the past year amid concern over flagging growth.
Meanwhile, Ark funds snagged 27,811 shares of Tesla Jan. 9, valued at $3.3 million as of that day’s close. Tesla has dropped 67% during the past year amid worries about production and demand issues. Investors also aren’t thrilled with Chief Executive Elon Musk’s distraction with his newly bought Twitter.
Tesla is the No. 3 holding in Wood’s flagship Ark Innovation ETF (ARKK), behind No. 1 Exact Sciences (EXAS) and Zoom Video Communications. (ZM)
Finally, Ark Innovation dumped 4,036 shares of Nvidia, valued at $630,746 as of the Jan.9 close. Nvidia has slid 43% in the past year amid the semiconductor industry’s slump.
Wood’s Returns Tumble
Meanwhile, Wood’s investment performance hasn’t exactly overwhelmed the investment world over the past year, as her young technology stocks have slumped. Ark Innovation ETF has dropped 62% over the past year and 79% from its February 2021 peak.
Wood has defended her strategy by noting that she has a five-year investment horizon. But the five-year annualized return of Ark Innovation was negative 2.3% through Jan. 9, compared with the S&P 500’s positive return of 9.1%.
The fund’s performance also doesn’t come close to Wood’s goal for annualized returns of 15% over five-year periods.
Ark Innovation’s subpar returns may finally be starting to push investors away. The $6.2 billion fund registered a net investment outflow of $433 million in the past month, according to ETF research firm VettaFi. But it still notched a $1.35 billion inflow over the past year.
What Draws Investors to Wood
You might wonder why so many investors have stuck with Wood. The fact that she had one spectacular year certainly helps. Ark Innovation skyrocketed 153% in 2020.
Also, Wood has become something of a rock star in the investment world, appearing frequently in the media. She explains financial concepts in ways that novice investors can understand.
Wood does have her detractors. Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation last year.
“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.
Wood, of course, begged to differ. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said in an interview with Magnifi Media by Tifin.
