Cathie Wood buys $4 million of soaring tech stock
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Cathie Wood, chief of Ark Investment Management, is going on a bit of a buying spree for a mega-cap technology stock.
She presumably buys mega-caps to help stabilize her funds, which mostly consist of more risky, small stocks. Sometimes she even buys mega-caps when they are rising. That was the case Monday.
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Investors and analysts are split in their views of Wood, possibly the country’s best-known investor after Warren Buffett. Her acolytes view her as a technology genius, while critics argue she’s just a mediocre money manager.
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Wood (Mama Cathie to her followers) rocketed to acclaim after a mouth-dropping return of 153% in 2020 and lucid presentations of her investment strategy in frequent media appearances.
But her long-term performance isn’t exactly Buffett-esque. Wood’s flagship Ark Innovation ETF (ARKK) , with $5.5 billion in assets, produced annualized returns of 31% for the last 12 months, negative 26% for the past three years and positive 3% for five years.
That pales in comparison to the S&P 500. The index posted positive annualized returns of 41% for one year, 10% for three years, and 16% for five years.
Cathie Wood has simple investing strategy
Wood’s investment philosophy is clear. Ark ETFs usually purchase emerging-company stocks in the high-tech categories of artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics.
Wood thinks that companies in those categories will change the world. Of course, these stocks are often volatile, so Ark fund values can oscillate sharply.
Renowned investment research firm Morningstar has lobbed strong criticism at Wood and Ark Innovation ETF.
Related: Cathie Wood unloads $10.5 million in surging fintech stock
Investing in young companies with slim earnings “demands forecasting talent, which ARK Investment Management lacks,” wrote Morningstar analyst Robby Greengold. “Results range from tremendous to horrendous.”
Morningstar portfolio strategist Amy Arnott calculated that Ark Innovation destroyed $7.1 billion of shareholder wealth from its 2014 inception through 2023. That put the ETF No. 3 on her wealth destruction list for mutual funds and ETFs over the past decade.
Hedge fund heavyweight Loeb rips Cathie Wood
Star investor David Loeb, chief executive of Third Point Management, which manages $28 billion, isn’t doing somersaults over Wood either. After Wood wrote a commentary defending her investment philosophy in 2022, he cut loose on Twitter.
“Anyone teaching a value investing class or one on investment psychology should use this memo as a treatise to study the mindset of stonk hodlers,” he wrote. Stonk hodlers is slang for investors who hold (hodl) onto stocks (stonks) too long.