Cathie Wood's ARK funds saw a brief surge following Donald Trump's recent election victory.
Its flagship ETF, ARK Innovation (SHEET) has returned 10.94% since November 6, while the S&P 500 is up just 1.52%.
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Wood, CEO of Ark Investment Management, typically focuses on small- and mid-cap technology stocks, but occasionally ventures into mega-cap companies. This strategy is likely aimed at adding stability to your funds.
Sometimes he even buys when stocks are rising, and that's what he did this month.
ARK's long-term performance is not so good
Investors and analysts have different opinions on Cathie Wood. Her supporters see her as a technology investing visionary, while critics say she is an average fund manager.
Wood's followers nicknamed her “Mama Cathie,” driven by her transparent and accessible discussions of media strategy. It gained widespread attention with an impressive 153% performance in 2020.
However, its long-term performance is not so rosy.
Related: Cathie Wood Sells $48 Million in Battered tech Stock
ARK Innovation's flagship ETF, with $5.4 billion under management, has returned just 2.83% so far this year, with a three-year annualized return of -22.9% and a five-year return years of 3.61%.
By comparison, the S&P 500 is up 24.56% this year through Nov. 15, with a three-year annualized return of 9.52% and a five-year return of 15.29%.
Cathie Wood's Investment Strategy Explained
Cathie Wood's investment strategy is simple: ARK ETFs typically buy shares of high-tech startups in fields such as artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics.
Wood believes companies in these areas will revolutionize industries, although stocks are notoriously volatile, causing substantial swings in ARK fund values.
Investment research firm Morningstar has expressed harsh criticism of Cathie Wood and the ARK Innovation ETF.
Related: Cathie Wood Net Worth: Ark Invest CEO's Wealth and Income
“Investing in young companies with thin earnings 'requires 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 himself in a July post on Ark's website. It acknowledged that “the macro environment and some stock selections have challenged our recent performance,” while reaffirming its “commitment to investing in disruptive innovation.”
Wood also stated that many of ARK's investments are now in “rare, high-value territory” and anticipates that its innovation-focused funds will benefit “disproportionately, as they did in the fourth quarter of 2023 and during the coronavirus crisis”.
Some investors echo Morningstar's concerns. The ARK Innovation ETF saw a net outflow of $2.67 billion over the past year, according to data from ETF research firm VettaFi.
Cathie Wood buys 189,496 amazon shares this month
Since the beginning of November, ARK Funds has purchased 189,496 amazon shares (AMZN) .
This includes purchases of 5,843 shares on November 4, 150,675 shares on November 7, 4,469 shares on November 13, and 28,509 shares on November 14.
That portion of the stock was valued at approximately $38.4 million at the close on Nov. 15.
This week, amazon introduced “amazon Haul” to its app, offering affordable products priced at $20 or less. This initiative aims to compete with discount e-commerce retailers such as Shein and Temu.
Related: amazon presents a new service to compete with Temu
The company will start its Black Friday sales early, starting November 21 and running through November 29.
Adobe recently projected that U.S. online sales will reach $240.8 billion during the 2024 holiday season, marking an 8.4% year-over-year increase, according to thefly.com's Sept. 25 report.
This growth signals a resurgence in consumer confidence as the U.S. economic outlook strengthens, a trend that will likely favor major retailers.
The fund manager buys and sells:
- Cathie Wood Buys $25.9 Million in Top tech stocks
- Cathie Wood Buys $15.7 Million in Falling tech stocks
- A major asset manager warns of electoral and stock market risk
As Wood continues to buy amazon stock, company CEO Jeff Bezos revealed that he sold $1.23 billion worth of amazon stock on Nov. 6 and 7, thefly.com reported. The shares were sold at a price range of $200.3935 to $211.5625 per share.
amazon is not among the top 10 ARK Innovation ETF holdings as of November 15. ARK funds held 348.8 thousand amazon shares at the end of the third quarter, of which 249.6 thousand were purchased during the third quarter at an average cost of $189.79, according to HedgeFollow.com.
amazon closed at $202.61 on November 15 and is up 33% so far this year.
Related: Veteran Fund Manager Sees a World of Hurt for stocks
