Famed investor Cathie Wood bought shares of two major companies and sold shares of two others Nov. 4, continuing her double-sided trading pattern.
The chief executive of Ark Investment Management acquired 1,682,361 shares of online sports betting company DraftKings (DKNG) through several Ark funds. That kitty was valued at $19 million as of Friday’s close.
DraftKings sank 28% Friday, the biggest drop since it began trading in 2019, after the company said its user growth slowed in the third quarter.
Wood has said throughout 2022 that the decline of the young, “disruptive” technology companies that she favors has created buying opportunities. DraftKings has slid 59% year to date.
But Wood apparently doesn’t see Nvidia’s (NVDA) descent as a buying opportunity. Ark Innovation ETF (ARKK) dumped 167,914 shares of the giant semiconductor maker Friday. The shares were valued at $23.8 million as of Friday’s close.
Nvidia has tumbled 52% so far in 2022. Chip stocks have suffered this year amid supply-chain bottlenecks and slumping demand.
Ark funds snagged 161,565 shares of video streaming company Roku (ROKU), valued at $8 million as of Friday’s close. It has plummeted 78% year to date.
Ark Fintech Innovation ETF (ARKF) sold 277,519 shares of online securities brokerage Robinhood Markets (HOOD), valued at $3.4 million as of Friday’s close.
It has lost 30% so far this year, but has climbed 11% in the last month. Wood bought $1.7 million worth of Robinhood Nov. 1. So it’s difficult to make out what she thinks of this stock.
Wood’s Underperformance
Ark’s ETFs have tumbled this year, as their technology stock holdings suffered from weak earnings. Wood has defended herself by noting that she has a five-year investment horizon.
And the five-year track record of her flagship Ark Innovation ETF could indeed give 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 only 1.5% through Nov. 4, far behind the S&P 500’s 9.75% return.
The fund’s performance also falls well below Wood’s goal for annualized returns of 15% over five-year periods.
Ark Innovation has tumbled 64% so far this year, and it’s down 78% from its February 2021 peak.
The $6.9 billion fund’s underperformance may finally be starting to push investors away. Ark Innovation suffered a net outflow of $486 million in the three months through Nov.4, according to VettaFi, an ETF research firm. But it has still registered an inflow of $1.26 billion year to date.
Cathie Wood Gets a lot of Criticism
You might wonder why so many investors have stuck with Wood, despite her mediocre returns. The fact that she had one spectacular year certainly helps. Ark Innovation ETF skyrocketed 153% in 2020.
Also, Wood has become something of a rock star in the investment world, appearing frequently in the media. She is clearly intelligent and articulate, explaining financial concepts in ways that novice investors can understand.
Still, Wood has her detractors. On March 29, Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation.
“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.
Wood countered Greengold’s points in an interview with Magnifi Media by Tifin. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said.
