Famed investor Cathie Wood, chief executive of Ark Investment Management, unloaded one of her favorite stocks Jan. 23, perhaps trying to take advantage of its recent rebound.
Ark funds dumped 175,491 shares of Exact Sciences (EXAS), a medical diagnostics company famous for its at-home colon cancer test. That kitty was valued at $11.9 million as of the Jan. 23 close.
The stock has lost 11% over the past year, but it has jumped 119% since Oct. 14 buoyed by strong earnings and the overall market’s rally. Exact Sciences is the biggest holding in Wood’s flagship Ark Innovation ETF (ARKK).
Also Jan. 23, Wood continued her recent buying spree of electric vehicle titan Tesla (TSLA). Ark Innovation purchased 13,243 shares, valued at $1.9 million as of that day’s close. Ark has absorbed 819,906 Tesla shares in January alone, valued at $117.3 million recently.
Tesla is the No. 3 holding for Ark Innovation, after Zoom Video Communications at No. 2.
Wood’s Returns Tumble
Meanwhile, Wood’s performance hasn’t exactly overwhelmed the investment world over the past year, as her young technology stocks have slumped. Ark Innovation ETF has slid 47% during that period and 76% from its February 2021 peak.
To be sure, the fund has rebounded 20% so far this year, joining the technology stock surge.
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 0.48% through Jan. 23, compared with the S&P 500’s positive return of 9.11%.
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 $7.4 billion fund registered a net investment outflow of $242 million in the past month, according to ETF research firm VettaFi. But it still notched a $1.57 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.
