Cathie Wood buys $22.1 million of battered tech stock
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Cathie Wood, chief executive of Ark Investment Management, typically focuses on technology stocks that she believes to have a disruptive impact.
Sometimes, she’ll buy even if a stock has shown little growth for a while — and that’s what she did last week.
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Investors and analysts have mixed opinions about Wood. Supporters see her as a visionary in tech investing, while critics say she’s a mediocre fund manager.
Wood's followers nicknamed her “Mama Cathie,” driven by her transparent, accessible discussions of strategy in the media. She gained widespread attention with an impressive 153% return in 2020.
However, her longer-term performance isn’t so rosy.
Related: Cathie Wood buys $38 million of surging tech stock
The flagship ARK Innovation ETF (ARKK) , with $5.4 billion under management, has returned 13.56% year-to-date, with an annualized three-year return of -15.4% and a five-year return of 4.63%.
In comparison, the S&P 500 is up 28.4% this year through Dec. 2, with a three-year annualized return of 11.44% and a five-year return of 16.03%.
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Cathie Wood’s investment strategy explained
Wood’s investment strategy is simple: ARK ETFs typically buy shares in emerging, high-tech companies across fields like artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics.
Wood says companies in these areas will revolutionize industries, though the stocks are notoriously volatile, leading to substantial swings in the ARK funds’ values.
Investment research firm Morningstar has expressed sharp criticism of Wood and ARK Innovation ETF.
Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income
"Investing in young companies with slim earnings 'demands forecasting talent, which ARK Investment Management lacks,'" wrote Morningstar analyst Robby Greengold, who described the ETF’s performance as ranging from “tremendous to horrendous.”
Wood defended herself in a July posting on Ark’s website. She acknowledged that “the macro environment and some stock picks have challenged our recent performance,” while affirming her “commitment to investing in disruptive innovation.”
Wood recently expressed optimism about a shift to looser regulation under Donald Trump’s presidency, particularly for technology, cryptocurrencies, and digital assets.
“In the last four years, we saw massive concentration toward very few stocks,” Wood said on CNN’s Inside Politics Sunday on Dec. 1. “I think the market’s going to broaden out right now and reward companies who are at the leading edge of innovation.”