Cathie Wood: Ark Builds AMD Position, Cuts Adobe

Her flagship Ark Innovation ETF has tumbled 44% over the past year and 75% from its February 2021 peak.

Famed money manager Cathie Wood, chief executive of Ark Investment Management, repeated some recent trades of big name stocks Monday, including buying Advanced Micro Devices  (AMD) – Get Free Report.

Ark Next Generation Internet ETF  (ARKW) – Get Free Report purchased 114,911 shares of the semiconductor designer. That stash was valued at $9.1 million as of Monday’s close.

AMD has dropped 35% over the past year amid the chip industry’s struggles, but has rebounded 23% so far this year along with the sector.

Ark Next Generation snagged 196,280 shares of video game platform Roblox  (RBLX) – Get Free Report, valued at $7.2 million as of Monday’s close.

The stock has slumped 27% over the last year, as video game demand shrank post-covid, with people staying at home less. Roblox has bounced back 29% so far this year, helped by strong earnings.

On the selling side, Ark Next Generation dumped 50,180 shares of Adobe  (ADBE) – Get Free Report, which provides content creation software, including Adobe Acrobat. The block was valued at $16.2 million as of Monday’s close.

Adobe shares fell 8% Friday, after Bloomberg reported that the government is developing an antitrust lawsuit to dash Adobe’s planned $20 billion acquisition of Figma, a smaller player in the industry.

Adobe stock has dipped 4% so far this year and 31% over the past year amid concern over its growth prospects.

Ark’s Lagging Performance

Meanwhile, Wood’s performance hasn’t exactly lit the investment world on fire over the past year, as her young technology stocks have slumped. Her flagship Ark Innovation ETF  (ARKK) – Get Free Report has descended 44% during that period and 75% from its February 2021 peak.

Still, the fund has bounced back 27% so far this year, as tech stocks have rebounded in general.

Mama Cathie, as Wood is known to her fans, defends her strategy by noting that she has a five-year investment horizon. But the five-year annualized return of $7.2 billion Ark Innovation was negative 0.15% through Feb. 27, compared with 9.64% for the S&P 500.

The fund’s performance also doesn’t come close to Wood’s goal for annualized returns of 15% over five-year periods.

Ark Innovation suffered a net investment outflow of $16 million during the past five days, according to ETF research firm VettaFi. But it enjoyed an inflow of $1.09 billion over the last 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.

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