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The Street
The Street
Dan Weil

Cathie Wood Watch: Ark Buys Robinhood Again

Famed money manager Cathie Wood, chief executive of Ark Investment Management, is nothing if not consistent.

She bought two of her big name stocks Tuesday and sold another one, repeating trades of recent weeks.

DON’T MISS: Cathie Wood’s Theory Behind Her Firm's Tesla Investment

Ark Next Generation Internet ETF (ARKW) purchased 1,058,281 of online securities brokerage Robinhood Markets (HOOD), valued at $10 million as of Tuesday’s close. Robinhood is the 14th biggest holding in Ark Next Generation.

The stock has slid 19% over the past year amid muted stock-trading from individuals as the equity market dropped. But Robinhood shares have rebounded 17% year to date, helped by rising interest income and the overall market recovery.

Robinhood puts some of its customers’ uninvested cash into bank accounts to earn interest revenue. And the Federal Reserve has pushed interest rates sharply higher over the past year, leading to higher deposit rates.

Ark funds snagged 55,599 shares of Coinbase Global (COIN), the largest U.S. cryptocurrency exchange, valued at $3.4 million as of Tuesday’s close.

The company’s shares have tumbled 61% over the past 12 months amid turmoil in the cryptocurrency market. But they have rebounded 78% this year, helped by bitcoin’s recovery. Coinbase is the sixth biggest holding in Wood’s flagship Ark Innovation ETF (ARKK).

Meanwhile, Ark funds dumped 9,987 shares of Exact Sciences (EXAS) Tuesday, valued at $674,000 as of that day’s close. The company is a medical diagnostics provider famous for its Cologuard at-home colon cancer test.

Exact Sciences stock has climbed 34% thus far in 2023, buoyed by strong earnings and the overall market’s rally. Shares have slipped 7% over the past year.

Tuesday represented the fifth day in a row that Wood has pared her Exact Sciences position. Ark has shed more than 3 million Exact Sciences shares since the beginning of this year. But the company is still the fourth biggest holding in Ark Innovation.

PATRICK T. FALLON/AFP via Getty Images

Ark's Lagging Performance

Meanwhile, Wood’s performance hasn’t exactly lit the investment world on fire over the past year, as her young technology stocks have slumped. Ark Innovation has descended 34% during that period and 76% from its February 2021 peak.

Still, the fund has bounced back 24% so far this year, as tech stocks have rebounded in general.

Mama Cathie, as Wood is known to her fans, defends her strategy by noting that she has a five-year investment horizon. But the five-year annualized return of $7.4 billion Ark Innovation was negative 0.98% through March 7, compared with positive 9.81% for the S&P 500.

The fund’s performance also doesn’t come close to Wood’s goal for annualized returns of 15% over five-year periods.

Still, Ark Innovation enjoyed a net investment inflow of $133 million during the past five days, and $652 million 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.

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