Famed investor Cathie Wood, chief executive of Ark Investment Management, on Jan. 26 bought one of her favorite stocks, taking advantage of its stumble during the past year.
Ark funds purchased 125,702 shares of Teladoc Health (TDOC), an online health-services provider. The stock was valued at $3.5 million as of the Jan. 26 close.
Teladoc has tumbled 59% over the past year amid the overall slump in technology stocks. It’s the ninth biggest holding in Wood’s flagship Ark Innovation ETF.
Also, Ark Fintech Innovation ETF (ARKF) snapped up 98,028 shares of Pinterest (PINS), the graphics-focused social-media stalwart, valued at $2.6 million.
Pinterest stock has barely changed over the past year, despite the tech-stock rout, amid strong financial performance.
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.
Her flagship Ark Innovation ETF (ARKK) has slid 41% during that period and 76% from its February 2021 peak.
To be sure, the fund has rebounded 25% this year, joining a tech-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 0.61% through Jan. 26, compared with the S&P 500’s positive total return of 9.08%.
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 $7.3 billion fund registered a net investment inflow of $228 million in the past five days and $1.38 billion over the past 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.
