Cathie Wood Watch: Ark Continues to Shed a Big Holding

Wood’s flagship Ark Innovation ETF has dropped 47% over the past year and 75% from its February 2021 peak.

Famed money manager Cathie Wood, chief executive of Ark Investment Management, continues to unload shares of one of her biggest holdings.

Ark Genomic Revolution ETF  (ARKG) – Get Free Report sold 25,505 shares of Exact Sciences  (EXAS) – Get Free Report on Feb. 9, valued at $1.7 million as of that day’s close. The medical-diagnostics provider is famous for its at-home colon-cancer test Cologuard.

Wood apparently is trying to take advantage of the stock’s recent rebound. Exact Sciences’ stock has lost 20% over the past year, but it has more than doubled since Oct. 14, buoyed by strong earnings and the overall market’s rally.

Wood has dumped more than 2 million Exact Sciences  (EXAS) – Get Free Report shares since the beginning of the year. That would now be worth more than $129 million.

The company is still the third biggest holding in Wood’s flagship Ark Innovation ETF  (ARKK) – Get Free Report, behind No. 1 Tesla and Zoom Video Communications. Exact Sciences was No. 1 for part of January.

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 has slid 47% during that period and 75% from its February 2021 peak.

That said, the fund has rebounded 26% so far this year, joining the tech 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 2.38% through Feb. 9, compared with 11.21% 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, with $7.6 billion in assets, saw a net investment outflow of $250 million during the past five days, according to ETF research firm VettaFi. But it has enjoyed an inflow of $1.39 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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