Cathie Wood's ARK funds experienced a brief surge following Donald Trump's recent election win.
Her flagship ARK Innovation ETF ( ARKK ) has returned 10.94% since Nov. 6, while the S&P 500 is up only 1.52%.
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Wood, CEO of Ark Investment Management, typically focuses on small- and mid-cap technology stocks, but she occasionally ventures into megacaps. This strategy likely aims to add stability to her funds.
Sometimes, she’ll even buy when the stocks are rising, and that’s what she did this month.
ARK’s long-term return is not so hot
Investors and analysts have varying opinions on Cathie Wood. Supporters see her as a visionary in tech investing, while critics say she’s an average fund manager.
Wood's followers nicknamed her “Mama Cathie,” driven by her transparent, accessible discussions of strategy in the media. She gained widespread attention with an impressive 153% return in 2020.
However, her longer-term performance isn’t so rosy.
Related: Cathie Wood sells $48 million of battered tech stock
The flagship ARK Innovation ETF, with $5.4 billion under management, has returned just 2.83% year-to-date, with an annualized three-year return of -22.9% and a five-year return of 3.61%.
In comparison, the S&P 500 is up 24.56% this year through Nov. 15, with a three-year annualized return of 9.52% and a five-year return of 15.29%.
Cathie Wood’s investment strategy explained
Cathie Wood’s investment strategy is simple: ARK ETFs typically buy shares in emerging, high-tech companies across fields like artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics.
Wood believes companies in these areas will revolutionize industries, though the stocks are notoriously volatile, leading to substantial swings in the ARK funds’ values.
Investment research firm Morningstar has expressed sharp criticism of Cathie Wood and the ARK Innovation ETF.
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, who described the ETF’s performance as ranging from “tremendous to horrendous.”
Wood defended herself in a July posting on Ark’s website. She acknowledged that “the macro environment and some stock picks have challenged our recent performance”, while reaffirming her “commitment to investing in disruptive innovation.”
Wood also stated that many of ARK’s investments are now in “rare, deep value territory” and anticipates her innovation-focused funds will benefit “disproportionately, as they did in the fourth quarter of 2023 and during the coronavirus crisis.”
Some investors echo Morningstar's concerns. The ARK Innovation ETF saw a net outflow of $2.67 billion over the past year, according to data from ETF research firm VettaFi.
Cathie Wood buys 189,496 shares of Amazon this month
Since the beginning of November, ARK Funds has bought 189,496 shares of Amazon ( AMZN ) .
This includes purchases of 5,843 shares on Nov. 4, 150,675 shares on Nov. 7, 4,469 shares on Nov. 13, and 28,509 shares on Nov. 14.
That chunk of stock was valued at roughly $38.4 million as of Nov. 15’s close.
This week, Amazon introduced “Amazon Haul” on its app, offering budget-friendly products priced at $20 or less. This initiative aims to compete with discount e-commerce retailers like Shein and Temu.
Related: Amazon unveils new service to compete with Temu
The company will begin its Black Friday sales early, starting on Nov. 21 and running through Nov. 29.
Adobe has recently projected U.S. online sales to hit $240.8 billion during the 2024 holiday season, marking an 8.4% year-over-year increase, according to thefly.com’s report on Sept. 25.
This growth signals a resurgence in consumer confidence as the U.S. economic outlook strengthens, a trend likely to favor major retailers.
Fund manager buys and sells:
While Wood continues to buy Amazon shares, the company’s executive chair, Jeff Bezos, disclosed selling $1.23 billion worth of Amazon stock on November 6 and 7, thefly.com reported. The shares were sold at a price range of $200.3935 to $211.5625 per share.
Amazon is not in ARK Innovation ETF’s top 10 holdings as of Nov. 15. The ARK funds held 348.8k Amazon shares at the end of the third quarter, with 249.6k of those shares acquired during Q3 at an average cost of $189.79, according to HedgeFollow.com.
Amazon closed at $202.61 on Nov. 15 and is up 33% year-to-date.
Related: Veteran fund manager sees world of pain coming for stocks
