Famed investor Cathie Wood, chief executive of Ark Investment Management, keeps unloading what was the No. 1 holding in Ark’s flagship fund.
Ark funds sold 683,698 shares of Exact Sciences (EXAS) Jan. 25, valued at $43.9 million as of that day’s close. It’s a medical diagnostics company famous for its at-home colon cancer test.
Wood apparently is trying to take advantage of the stock’s recent rebound. Exact Sciences’ stock has lost 7% over the past year, but it has jumped 113% since Oct. 14, buoyed by strong earnings and the overall market’s rally.
Wood has sold 959,515 shares of Exact Sciences this week, recently valued at $62 million. Exact Sciences is now the No. 3 holding in flagship Ark Innovation ETF (ARKK), after starting the week at No. 1.
Tesla (TSLA) is currently the top dog, followed by Zoom Video Communications.
Wood’s Returns Tumble
Meanwhile, Wood’s performance hasn’t exactly overwhelmed the investment world over the past year, as her young technology stocks have slumped. Ark Innovation has slid 45% during that period and 76% from its February 2021 peak.
To be sure, the fund has rebounded 21% so far this year, joining the technology stock surge.
Wood has defended her strategy by noting that she has a five-year investment horizon. But the five-year annualized return of Ark Innovation was negative 0.65% through Jan. 25, compared with the S&P 500’s positive total return of 9.09%.
The fund’s performance also doesn’t come close to Wood’s goal for annualized returns of 15% over five-year periods.
Ark Innovation’s subpar returns apparently aren’t deterring investors. The $7.2 billion fund registered a net investment inflow of $228 million in the past five days and $1.38 billion over the last year, according to ETF research firm VettaFi.
What Draws Investors to Wood
You might wonder why so many investors have stuck with Wood. The fact that she had one spectacular year certainly helps. Ark Innovation skyrocketed 153% in 2020.
Also, Wood has become something of a rock star in the investment world, appearing frequently in the media. She explains financial concepts in ways that novice investors can understand.
Wood does have her detractors. Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation last year.
“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.
Wood, of course, begged to differ. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said in an interview with Magnifi Media by Tifin.
