Famed investor Cathie Wood, CEO of Ark Investment Management, pulled one of her favorite stocks from the market on Jan. 23, perhaps in an attempt to capitalize on the recent uptick.
Ark funds dumped 175,491 Exact Sciences shares (EXAS) – Get a free report, a medical diagnostics company famous for its home colon cancer test. That cat was valued at $11.9 million as of the Jan. 23 close.
The stock lost 11% over the past year, but is up 119% since Oct. 14, supported by strong gains and the market’s overall rally. Exact Sciences is the largest holding in Wood’s flagship Ark Innovation ETF (ARKK) – Get a free report.
Also on Jan. 23, Wood continued her recent buying spree of electric car titan Tesla (TSLA) – Get a free report. Ark Innovation bought 13,243 shares, worth $1.9 million at the end of that day. Ark absorbed 819,906 Tesla shares in January alone, recently valued at $117.3 million.
Tesla is the No. 3 position for Ark Innovation, behind Zoom Video Communications at No. 2.
Wood’s returns tumble
Meanwhile, Wood’s performance hasn’t exactly wowed the investment world over the past year as her fledgling technology stocks have plummeted. Ark Innovation ETF is down 47% over that period and 76% since peaking in February 2021.
Sure, the fund is up 20% so far this year, joining the rise in technology stocks.
Wood has defended her strategy by noting that she has a five-year investment horizon. But Ark Innovation’s five-year annualized return through Jan. 23 was negative 0.48%, compared to the S&P 500’s positive return of 9.11%.
The fund’s performance is also nowhere near Wood’s target of an annualized return of 15% over five-year periods.
Ark Innovation’s subpar returns may finally begin to push investors away. The $7.4 billion fund registered a net investment outflow of $242 million last month, according to ETF research firm VettaFi. But it still drove inflows of $1.57 billion last year.
What attracts investors to wood
You may wonder why so many investors stick with Wood. The fact that she’s had a spectacular year certainly helps. Ark Innovation skyrocketed 153% in 2020.
Wood has also become something of a rock star in the investment world, appearing regularly in the media. She explains financial concepts in a way novice investors can understand.
Wood has her detractors. Morningstar analyst Robby Greengold scathingly criticized Ark Innovation last year.
“ARKK shows little sign of improving risk management or its ability to successfully navigate the challenging territory it is exploring,” he wrote.
Wood, of course, begged to differ. “I do know that there are such companies [Morningstar] who do not understand what we are doing,” she said in an interview with Magnifi Media by Tifin.