Cathie Wood Watch: Ark Buys One Favorite, Dumps Another

Ark Innovation ETF has descended 48% over the past year and 77% from its February 2021 peak.

Famed investor Cathie Wood, chief executive of Ark Investment Management, continued dumping one of her favorite stocks Jan. 24 and bought another one.

ARK Genomic Revolution ETF  (ARKG) – Get Free Report picked up 87,383 shares of Teladoc Health  (TDOC) – Get Free Report, an online medical care platform. That stash was valued at $2.4 million as of the Jan. 24 close.

Wood likely was trying to take advantage of the stock’s 65% drop over the past year. Online businesses have suffered, as the pandemic sent some people back to the office, cutting their time on the Internet.

Teladoc is the ninth biggest holding in Wood’s flagship Ark Innovation ETF  (ARKK) – Get Free Report.

On the opposite side, Wood apparently is trying to take advantage of the recent rebound of Exact Sciences  (EXAS) – Get Free Report, a medical diagnostics company famous for its at-home colon cancer test.

Ark funds shed 100,326 shares of Exact Sciences Jan. 24, valued at $6.6 million. Ark funds tossed away 175,491 shares of the stock Jan. 23. All those shares together were valued at $18 million as of the Jan. 24 close.

Exact Sciences’ stock has lost 8% over the past year, but it has jumped 110% since Oct. 14, buoyed by strong earnings and the overall market’s rally. Exact Sciences is the biggest holding in Ark Innovation ETF.

PATRICK T. FALLON/AFP via Getty Images

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 48% during that period and 77% from its February 2021 peak.

To be sure, the fund has rebounded 19% 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 0.68% through Jan. 24, compared with the S&P 500’s positive total 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 apparently aren’t deterring investors. The $7.2 billion fund registered a net investment inflow of $164 million in the past five days and $1.45 billion over the last year, according to ETF research firm VettaFi.

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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