Cathie Wood, chief executive of Ark Investment Management, bought shares of payment-services company Block (SQ) Friday for the first time since March 30.
Ark funds purchased 544,277 shares of Block SQ, valued at $32.2 million as of Friday’s close. That’s bigger than the usual Wood purchase, which generally tops out about $20 million.
Block stock has slid 24% since March 21, after short sellers Hindenburg Research published a blistering criticism of the payment-services company. It has lost 39% over the past year. Block is the fifth biggest holding in Wood’s flagship Ark Innovation ETF (ARKK).
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Also Friday, Wood sold stock of e-commerce host Shopify (SHOP). Ark funds unloaded 599,948 shares, valued at $37.2 million. Shopify is the seventh biggest holding in Ark Innovation.
The company’s stock has soared 40% since May 3, after it announced a sale of most of its logistics business and laid off 20% of its workforce. Shopify dumped the logistics stake to focus on its core e-commerce platform business.
Its stock has jumped 86% year to date and 72% over the past 12 months.
Wood’s Lagging Returns
Meanwhile, Wood’s performance hasn’t exactly lit the investment world on fire over the past two years, as her young technology stocks have slumped. Ark Innovation has descended 76% from its February 2021 peak.
Nonetheless, the fund has bounced back 21% 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 $6.7 billion-asset Ark Innovation was negative 0.03% through May 5, compared with positive 11.14% 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.
Ark Innovation suffered a net investment outflow of $21 million during the five days through May 5, but enjoyed a $184 million inflow 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 offered a harsh critique of Ark Innovation in March. “Its dubious ability to successfully navigate the challenging territory it explores earns a rating of negative,” he wrote.
Wood, of course, begs to differ. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said last year in an interview with Magnifi Media by Tifin.
