Celebrity investor Cathie Wood, CEO of Ark Investment Management, went on to dump one of her favorite stocks on January 24 and buy another.
ARK Genomic Revolution ETF (ARKG) – Get a free report acquired 87,383 shares of Teladoc Health (TODOC) – Get a free report, an online healthcare platform. That stash was valued at $2.4 million at the close on January 24.
Wood was probably trying to take advantage of the 65% drop in the stock over the past year. Online businesses have suffered, as the pandemic sent some people back to the office, reducing their time on the internet.
Teladoc Is Ninth Largest Holding In Wood’s Ark Innovation ETF Flagship ETF (ARKK) – Get a free report.
On the opposite side, Wood is apparently trying to take advantage of the recent rise in Exact Sciences. (EXA) – Get a free reporta medical diagnostic company famous for its colon cancer home test.
Ark Funds sold 100,326 Exact Sciences shares on January 24, valued at $6.6 million. Ark funds dumped 175,491 shares of the stock on January 23. All of those shares together were valued at $18 million at the close on January 24.
Exact Sciences shares have lost 8% over the past year but are up 110% since Oct. 14, buoyed by strong earnings and the general market rally. Exact Sciences is the largest holding in the Ark Innovation ETF.
Drop of Wood returns
Meanwhile, Wood’s performance hasn’t exactly overwhelmed the investment world over the past year, as his young tech stocks have tumbled. The Ark Innovation ETF is down 48% over that period and 77% since its February 2021 peak.
To be sure, the fund has rallied 19% so far this year, joining the rise in tech stocks.
Wood has defended his strategy by noting that he has an investment horizon of five years. But Ark Innovation’s five-year annualized return was negative 0.68% through Jan. 24, compared to the S&P 500’s positive total return of 9.11%.
The fund’s return is also nowhere near Wood’s target of 15% annualized returns over five-year periods.
Apparently, Ark Innovation’s lackluster returns aren’t deterring investors. The $7.2 billion fund posted a net investment inflow of $164 million in the past five days and $1.45 billion in the past year, according to ETF research firm VettaFi.
What attracts investors to lumber
You may be wondering why so many investors have stuck with Wood. The fact that he’s had a spectacular year certainly helps. Ark Innovation skyrocketed 153% in 2020.
Additionally, Wood has become something of a rock star in the investment world, frequently appearing in the media. She explains financial concepts in a way that novice investors can understand.
Wood has his detractors. Morningstar analyst Robby Greengold issued a scathing review of Ark Innovation last year.
“ARKK shows little sign of improving its risk management or its ability to successfully navigate the challenging territory it explores,” he wrote.
Wood, of course, disagreed. “I know there are companies like that (Morningstar) that don’t understand what we’re doing,” he said in an interview with Magnifi Media on Tifin.
