Cathie Wood Watch: Ark Reverses Course, Buys Shopify

Cathie Wood, CEO of Ark Investment Management, reversed her stance on two major technology companies.

Renowned investor Cathie Wood, chief executive of Ark Investment Management, in Tuesday trading reversed her stance on two major technology companies.

For months she had been buying Coinbase Global  (COIN) – Get Coinbase Global Inc Report, the country’s largest cryptocurrency exchange, and selling e-commerce platform Shopify  (SHOP) – Get Shopify Inc. Class A Subordinate Report

But Ark went in the opposite directions on July 26. All valuations below are as of Tuesday’s close.

Ark funds unloaded 1,418,324 shares of Coinbase, valued at $75.1 million. Tuesday reports said that the Securities and Exchange Commission was investigating whether the company illegally let customers trade digital assets that haven’t been registered as securities.

Coinbase shares dropped 21% on Tuesday and have slumped 79% year to date.

As for Shopify, Ark funds snagged 1,765,929 shares of the company, which hosts online stores for many small businesses. That stock was valued at $55.7 million.

The company said Tuesday that it was dropping about 1,000 workers, or 10% of its workforce, reversing a bet that its surge of business earlier in the pandemic would continue.

Shopify shares slumped 14% Tuesday and have sunk 77% so far this year.

Looking at other big trades by Wood, Ark Genomic Revolution ETF  (ARKG) – Get ARK Genomic Revolution ETF Report sold 1,515,845 shares of 1Life Healthcare  (ONEM) – Get 1Life Healthcare Inc. Report, a chain of primary healthcare clinics, valued at $25.4 million.

The stock dipped 1.3% Tuesday. It has eased 4.7% year to date but has soared 78% since July 18.

Ark funds purchased 2,764,807 shares of Ginkgo Bioworks  (DNA) , a biotechnology company, valued at $7.2 million. The stock lost 6.1% Tuesday and has shed 69% so far this year.

Finally, Ark Genomic Revolution snatched 347,683 shares of Guardant Health  (GH) – Get Guardant Health Inc. Report, a cancer blood-test company, valued at $16.8 million.

The stock slipped 2.7% Tuesday and has descended 52% year to date.

Trailing the S&P 500

As Ark funds have tumbled in recent months, Wood has defended her strategy by noting that she has a five-year investment horizon.

At Ark Innovation ETF  (ARKK) – Get ARK Innovation ETF Report the five-year annualized return totaled 9.15% through July 26, trailing the S&P 500’s 11.59% return.

Ark Innovation has fallen 53% this year as Wood’s tech companies have slumped. And it’s down 72% from its February 2021 peak. Raging inflation and soaring interest rates have helped put the kibosh on tech stocks.

Many of Wood’s investors appear little worried about that underperformance. Ark Innovation enjoyed a net inflow of $2 billion in the six months through July 25, according to VettaFi, an ETF research firm.

“I think the inflows are happening because our clients have been diversifying away from broad-based benchmarks like the Nasdaq 100,” Wood has said. “We are dedicated completely to disruptive innovation. Innovation solves problems.”

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