Cathie Wood, director of Ark Investment Management, is an active trader. She often buys her favourite stocks when they fall and sells them when they rise.
The investment community has mixed views on Wood, who may be the country's best-known investor after Warren Buffett.
Her defenders say she is a technology visionary, while her detractors say she is simply a mediocre money manager.
Wood (Mama Cathie to her fans) rose to fame after a stupendous 153% return in 2020 and lucid presentations of her investment philosophy in numerous media appearances.
ARK Investment Management
Cathie Wood's career path
But its long-term performance is less impressive. Wood's flagship ETF, Ark Innovation (SHEET) With $6.4 billion in assets, it produced negative annual returns of 6.6% over the past 12 months,
26.14% over the last three years and 0.31% over five years.
That's pretty pitiful compared to the S&P 500. The index posted positive annual returns of 23.56% for one year, 10.32% for three years and 14.97% for five years. Ark Innovation's numbers are also well below Wood's target of annual returns of at least 15% over five-year periods.
Cathie Wood's investment strategy
His investment philosophy is pretty straightforward. Ark ETFs typically buy shares of startups in the high-tech categories of artificial intelligence, blockchain, DNA sequencing, energy storage and robotics. Wood argues that companies in those categories will change the world.
Of course, these stocks are quite volatile, so Ark fund values frequently fluctuate up and down. Wood adds and removes stocks from his top names frequently.
Related: Cathie Wood sells $25 million worth of shares in failing tech company
Investment research giant Morningstar offers a harsh assessment of the Wood and Ark Innovation ETF. Investing in young companies with diminishing earnings “demands forecasting talent, something ARK Investment Management lacks,” Morningstar analyst Robby Greengold wrote in March.
The potential of Wood’s five high-tech platforms mentioned above is “attractive,” he said. “But the company’s ability to spot winners and manage its myriad risks is less so… It has not proven that the risks it takes are worth taking.”
Ark's Non-Traditional Stock Picks
This isn’t his father’s investment portfolio. “The results range from tremendous to horrendous” for Wood’s young and often unprofitable stocks, Greengold said.
Wood has defended himself against Morningstar’s criticism. “I know there are companies like that (Morningstar) that don’t understand what we’re doing,” he told Magnifi Media by Tifin in 2022.
Related: Cathie Wood dumps shares in recovering tech giant
“We don’t fit into their style boxes. And I think style boxes will become a thing of the past as technology blurs the boundaries between industries.”
Some of Wood’s clients, however, seem to agree with Morningstar. Over the past 12 months, the Ark Innovation ETF has suffered a net outflow of $2.2 billion, according to ETF research firm VettaFi.
Cathie Wood sells Tesla shares
On July 18, ARK Next Generation Internet ETF (ARKW) Tesla sold 32,199 shares of the electric vehicle giant (TSLA) valued at $8 million.
Wood has been an evangelist for Tesla founder Elon Musk and his clean vehicle goals for years. The stock is Ark Innovation's largest holding.
In June, Wood predicted Tesla shares would hit $2,600 by 2029. That would represent a more than tenfold increase from Friday's price of $240.
The company's shares have soared 60% in the past three months despite the less-than-stellar news.
Tesla's deliveries fell 4.8% in the second quarter from a year earlier, the second consecutive decline.
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However, the second-quarter total of 443,956 vehicles was 1% above the Wall Street average estimate of 439,302, and deliveries were up 15% from the first-quarter's 386,810 vehicles.
Related: Tesla's surprise second-quarter deliveries send shares soaring despite China slump
Vehicle production fell by 14% compared to the previous year.
Tesla has not disclosed any details on the figures, but will presumably do so in its earnings release scheduled for July 23.
Meanwhile, Musk confirmed on July 15 that Tesla is delaying the unveiling of its robotaxi, which was scheduled for August 8, to incorporate a design change. The event is now scheduled for October. Bloomberg reported.
Regardless of the Tesla news, the stock's surge allowed Wood to take profits. And that's what he did.
Related: Veteran fund manager sees world of trouble ahead for stocks
