Renowned investor Cathie Wood, chief executive of Ark Investment Management, on Monday purchased a heavy dose of biotechnology stocks.
All valuations below are as of Monday’s close.
Ark funds bought 860,480 shares of Ginkgo Bioworks (DNA) , a biotech company, valued at $2.6 million. The stock has lost 65% year to date.
Ark Genomic Revolution ETF (ARKG) snatched 604,154 shares of Butterfly Network (BFLY), an ultrasound device company, valued at $2.2 million. The stock has slid 46% so far this year.
Ark funds snapped up 320,227 shares of Exact Sciences (EXAS), a cancer diagnostics company, valued at $14.5 million. The stock has lost 42% so far this year.
Ark Genomic snagged 260,247 shares of Zymergen (ZY), a biotech company, valued at $439,817. The stock has given up three-quarters of its market value year to date.
Ark Genomic bought 67,384 shares of Atai Life Sciences (ATAI), valued at $284,360. Atai is a Berlin biopharmaceutical company developing mental-health treatments.
The company says on its website that the percentage of U.S. adults showing symptoms of depression and anxiety nearly quadrupled to 42% at year-end 2020 from 11% in 2019.
Atai stock has dropped 47% year to date.
On the selling side, Ark funds dumped 193,902 shares of Compugen (CGEN), an Israeli biotech company, valued at $407,194. The stock has slid 54% so far this year.
Trailing the S&P 500
As Ark funds have tumbled in recent months, Wood has defended her strategy by noting that she has a five-year investment horizon.
And the five-year track record of Wood’s flagship Ark Innovation ETF (ARKK) could indeed have given investors comfort, up to May 9. The fund’s five-year return beat that of the S&P 500 until then.
But the five-year annualized return of Ark Innovation totaled 10.26% through July 11, lagging the S&P 500’s 11.69% return, according to Morningstar.
Ark Innovation has fallen 54% so far this year, as Wood’s tech companies have hit the skids. And it’s down 73% from its February 2021 peak. Raging inflation and soaring interest rates have helped put the kibosh on tech stocks.
Many of Wood’s investors don't appear too worried about the underperformance. Ark Innovation enjoyed a net inflow of $2.04 billion in the six months through July 8, according to VettaFi, an ETF research firm.
“I think the inflows are happening because our clients have been diversifying away from broad-based benchmarks like the Nasdaq 100,” Wood said. “We are dedicated completely to disruptive innovation. Innovation solves problems.”
Deflation Risk
Meanwhile, Wood has said she sees deflation as a greater risk than inflation. Price gauges like the consumer price index are lagging indicators, she said. The CPI soared 8.6% in the 12 months through May.
Wood prefers statistics like the price of gold, which has slipped 4% from a year ago, and the dollar, which has risen sharply.
